by Peter Bodley
Implementation of a business incubator project will be started by the city of Coon Rapids.
The Coon Rapids Economic Development Authority (EDA), which comprises the seven members of the Coon Rapids City Council, has authorized execution of a professional services agreement with Genesis Business Centers Ltd. to begin the process.
Genesis and its president Harlan Jacobs were retained by the EDA earlier this year to conduct a preliminary feasibility study to determine the potential for a business incubator program in the city.
The concept for a business incubator in Coon Rapids was first discussed at the council’s annual council/management retreat in early March, then was talked about further at a late April work session, which was attended by community members interested in the concept.
According to Community Development Director Marc Nevinski, a business incubator is where early stage companies can establish themselves through access to affordable space, infrastructure, investors, technical assistance, advising and academic resources.
“Early stage companies generally do not have much revenue and may be living off investor or personal dollars to start the company,” Nevinski said.
The feasibility study performed by Jacobs was to determine if there was support and resources to start a business incubator project in Coon Rapids.
The report found the environment does exist in Coon Rapids to support such a program, Nevinski said.
Specifically, Jacobs’ report states that:
• There is a supply of buildings and clean rooms.
• There is interest in the concept from potential funding sources and offers of in-kind technical support.
• Existence of high-tech and life science companies.
• History and infrastructure for investment in emerging companies.
• The presence of Anoka-Ramsey Community College.
Prior to bringing the recommendation for implementation of a business incubator in the city, Nevinski set up a meeting to discuss the opportunities and challenges of an incubator and if the EDA should pursue the program.
Taking part in that meeting were Mayor Tim Howe, Councilmember Scott Schulte, an area entrepreneur currently located in a St. Paul incubator and a representative of a local investor group.
“The conclusion of the group was that the EDA should continue to pursue such a program,” Nevinski said.
In addition, city staff prepared a program outline to detail the objectives and parameters of the program, according to Nevinski.
Target businesses for the incubator would be life science and medical device companies, plus other high tech and innovative areas, the program outline states.
But Nevinski said that does not rule out businesses whose products may be more traditional in nature.
“In any case, incubator companies will need to demonstrate a solid business plan and market potential,” he said.
According to Jacobs, the goal of the implementation phase agreement is “to identify and obtain the resources necessary to establish and successfully launch the proposed Coon Rapids incubator program.”
Under the staff plan, no new expensive facility will be constructed to house the incubator, Nevinski said.
Rather, the program would use existing, vacant buildings and two locations have been identified as potential incubator space, he said.
One is in the Minnesota Medical Enterprise Center in Evergreen Business Park where 24,000 square feet of space is currently available and includes three clean rooms, Nevinski said.
The other is the former Sherwin Williams store space on Coon Rapids Boulevard near Anoka-Ramsey Community College for companies who only require an office setting, he said.
The implementation plan recommended by Nevinski and endorsed by the EDA has five objectives.
• Recruiting and securing private funding for the program.
• Revitalizing existing investor groups and identifying new sources of venture capital, for example, revitalizing and reactivating the Anoka Sherburne County Capital Fund and the Anoka Investors LLC Investment Club.
• Securing appropriate leased space.
• Marketing and publicizing the program to media, target audiences and investor networks, including bi-national chambers of commerce.
• Developing a community advisory committee.
“This phase will move the EDA from an investigation stage well toward the implementation of an incubator program, although there will be a variety of future decisions to be made about the program,” Nevinski said.
These include contracts for additional consulting services, possible lease or tenant improvements and program evaluation, he said.
But if program funding from the private sector sources does not become a reality or if adequate investment/seed capital cannot be identified or if the real estate market is not receptive to the concept, then the program will likely not move forward, according to Nevinski.
The cost of the agreement with Genesis to begin the implementation process is $17,500 and will come from the city’s development account, Nevinski said.
Nevinski anticipates this phase to be wrapped up by Dec. 31, 2012, at which point the EDA will be in a position to make a decision on whether or not to commit totally to the project, he said.
Mayor Tim Howe liked the fact that the targeted companies would not just be life science and medical device businesses and saw the incubator as an opportunity for start-up green products firms.
Councilmember Denise Klint liked the idea, but she was concerned about the how much money the city would put into the project.
While Nevinski did not have an answer to that, he said that the goal was to align all parties in the incubator program with the EDA putting in a “little bit of upfront money.”
Indeed, the conceptual incubator budget presented in the staff’s draft program outline calls for an EDA commitment of $35,000 in 2012 out of a total budget of $155,000 and no money in 2013 in a budget of $110,000 with grants and sub-lease revenues providing the majority of the funding sources.
“Our goal is to keep the EDA’s costs to a minimum,” Nevinski said.
According to Nevinski, the EDA’s job will be to “place people (investors, landlords) to see the value in creating an environment where business can succeed.”
“It will be the EDA’s decision how much money it wants to put into it,” Nevinski said.
Councilmember Scott Schulte said the money the EDA was committing to the program at this point was a “great investment” and “minimal” compared with what it has spent on other projects.
In his proposal for the preparation and action plan for the incubator program, Jacobs anticipates his work will take some 180 days with the goal of “Coon Rapids becoming the obvious and compelling location in the Twin Cities where start-up companies are both welcome and encouraged to begin their operations.”
Some years ago, Jacobs was involved in business incubators in Columbia Heights and Elk River, Nevinski said.
Jacobs is founder and president of Genesis Business Centers Ltd., which is located in Hopkins.
According to its website, Genesis is an incubator/consulting firm that helps select high tech start-ups gain access to capital and business development services.
Jacobs has been involved in business incubator projects since 1986, including several start-up high tech companies which were eventually sold to larger firms and others which have thrived on their own, the website states.
Peter Bodley is at [email protected]