Ceramic Incubator Helps Startups Get Off the Ground
The Southern Tier of New York is home to one of the few business incubators that focus on ceramic manufacturing and related technologies. “Focusing on a specific industry allows us as an incubator program to provide quality and industry-specific amenities, resources and assistance,” says Jon Wilder, executive director of the Ceramics Corridor Innovation Centers (CCIC).
The two CCIC facilities, located at Alfred and Painted Post, total 70,000 square feet. Established in 1992 by Alfred University and Corning Inc. with state funding, CCIC operates under the umbrella of Alfred Technology Resources and has an annual budget of around $1 million.
Growing Jobs and RevenuesCCIC’s tenants and graduates (startups that have moved on to commercial production) have created nearly 2,000 jobs and almost $900 million in total sales since the program’s inception. Twenty-four new businesses have been created, with almost half graduating to off-site locations. The incubator companies have paid their employees more than $53 million in wages, and those employees, in turn, have paid about $6 million in state income taxes—making the program an economic boon for the state of New York. In addition, approximately $67 million worth of construction has been generated. To date, graduated firms have constructed or purchased an additional 596,000 square feet within the region.
A U.S. Department of Commerce study conducted in 1997 showed that not-for-profit incubators have been quite successful in producing companies that have good growth records. Photonics Technologies, Corning’s photonic telecommunications business, is a good example. This company started out at the Painted Post facility with less than 10 employees and grew to several hundred three years later. Now, the company has more than 1100 employees at its new off-site location.
CCIC’s smaller firms have increased in sales and square feet from 10-30% within a three-year post-graduate period. It is estimated that larger firms have doubled sales and square feet within the same period. Overall, 94% of CCIC program graduates are still operating successfully, compared to an average success rate of 87% of incubator graduates reported by the NBIA. The average time for a CCIC company to graduate from the center is 3-5 years, while the average number of employees is 5-8 for the smaller firms and 20-30 for the larger firms.
The University ConnectionForty-six incubators in the U.S., including CCIC, are affiliated with a university. An incubator that is well integrated into a good university provides significant benefits to the clients, according to NBIA’s Dinah Adkins, president and CEO. “The degree of benefit depends on the degree of integration and how close the relationship is between the university and the incubator,” says Adkins.
CCIC attributes much of its success to such a close relationship. “Our strong relationship with our stakeholders, Alfred University and Corning Inc., has been key to our success,” says Wilder. “This has enabled us to provide a first-rate success package for tenants to draw from, including an excellent mentoring program and access to the resources of the New York State College of Ceramics at Alfred University and the Center for Advanced Ceramic Technology (CACT).”
These resources include faculty expertise, testing labs, technology transfer and assistance with development issues. “We also provide high-tech, affordable, flexible space specifically targeted to ceramics, glass and advanced materials firms’ needs,” adds Wilder. “This space can be retrofitted to accommodate tenants’ changing needs.”
Being part of a technology cluster is also important to being successful since it has long been recognized that technology-based wealth is created near the intellectual center where the technological idea was conceived.
Taking Advantage of SynergyAdvanced Ceramics, Inc., a five-employee company that provides ceramic machining services, joined CCIC in October 1992. “[Partners] Craig Wright and Gary Del Regno had heard about it through industry contacts,” relates Richard Baldwin, the company’s office manager. “They thought it would be a good place to get inexpensive financing, affordable rents, help in learning how to run a business, and possibly some synergy with other tenants. Perhaps the major benefit has been access to funding at reasonable or inexpensive rates.
“We’ve also found synergy with other tenants, and in the process have become suppliers and customers to each other,” he adds. “We’ve been able to talk with other tenants who may have been in business for a little longer period, and have gotten advice in a number of areas. I would say the only negative is that since we are a small organization compared to some of the other tenants, we sometimes feel overshadowed by these larger entities,” Baldwin says.
“Almost all of our tenants are startups, and they all have very serious concerns about making their businesses work,” Wilder says. “They’re under a lot of pressure—they’ve put everything on the line, and it’s our job to be sympathetic and give them all the attention they need. Ultimately, their success is our success, because our mission is to create jobs for New York State.”
Indeed, Advanced Ceramics is apparently yet another CCIC success story. The company became profitable in just two years and, as Baldwin explains, “a recent sales effort has increased our requests for quotes from a previous yearly volume of about 8-10 to well over 200. In fact, we’re planning to ‘graduate’ next June.”
When that happens, will Advanced Ceramics stay close to its roots? “We’ve considered locations as far afield as Idaho or Colorado, but we’ll most likely stay in the area because we all live here, and we have a great deal of synergy with our client base here,” says Baldwin.
Future ExpansionAs far as CCIC itself, a request for $6.5 million in funding has been submitted to the state to expand the Painted Post facilities by 56,000 square feet. Additional strategic partnerships will be sought, including increased relationships with CACT, and more interaction with local industrial development agencies and other economic development partners. CCIC also recently launched an export readiness program that will provide a variety of services including assessment of target markets, sales potential and resource needs; education on protection of intellectual property; and education on compliance with regulatory requirements.
Through CCIC and other business incubators, startup companies have a better chance than ever of becoming profitable in the long term. “The formula works,” Wilder says simply. “There are plenty of good ideas ‘out there,’ and plenty of highly entrepreneurial people who just need a jumpstart to turn those ideas into commercial reality.
“The history of this country has been all about rolling up your sleeves and creating success stories,” he concludes. “From our standpoint, it’s highly rewarding to be part of that tradition as we fulfill our mission.”
For More InformationFor more information about CCIC, contact Jon Wilder, executive director, at (607) 587-9444, e-mail firstname.lastname@example.org or visit http://www.ceramicscorridor.org.
SIDEBAR: Finding the Right IncubatorJust as incubators screen prospective clients, so too should entrepreneurs screen prospective incubators. Following are some questions to ask when considering entering an incubation program.
Does the incubation program offer the services and contacts you need?
What services do you need to make your venture successful? Business plan development, legal and accounting advice, marketing, Internet access, manufacturing facilities? Is access to a particular market critical? Then consider finding an incubator that specializes in that market. Special focus incubators are programs that work with companies within a particular niche, such as gourmet foods, biotechnology, the arts and software. Be sure the program offers what you need or can connect you to service providers who can meet those needs.
Do you meet the incubator’s criteria?
Find out the incubator’s qualifications for accepting clients before applying. For example, some incubators expect prospective clients to have fully developed business plans, whereas others require a less developed idea and offer business plan development assistance.
Is the program’s fee structure right for you?
Most for-profit incubators exchange space and services for an equity share in their client companies, whereas most non-profits charge fees for space and services. If a large cash infusion and speed to market are essential for your business success, then giving up equity in your company in order to secure quick cash may be right for you. But if you believe you have the skills to raise your own funding (with some assistance), don’t want to give up any equity in your venture and are willing to build your company more slowly, then paying fees for services and space may be a better choice.