All together now | Maine takes a regional approach toward a new breed of business incubation
By the time this article is published, the Regional Cluster Alliance, a multi-state consortium of technology and entrepreneurship players throughout New England, will have submitted a proposal to the U.S. Department of Commerce’s Economic Development Administration for an innovation grant called the i6 Challenge Grant. The i6 will award $2 million grants to six regions to improve the research-to-commercialization ecosystem and new company formation process.
The consortium includes universities, specialty research institutes, incubators, tech and trade councils and networks, equity organizations and economic development groups from throughout New England. Through its LINK initiative (Leveraging Innovation, Networks and Knowledge), RCA will pursue the EDA and matching funds to support programs designed to develop clusters — a sector-based regional economic practice that increases high-wage jobs, innovation, productivity and economic activity.
The LINK initiative expects to secure some 40-50 organizations throughout New England, a good dozen of them from Maine. Most of Maine’s tech councils are expected to participate.
The thrust of this initiative is to connect and support technology and entrepreneurship players throughout the region. The primary players are support cast providing vertical market support (sector specific resources) and horizontal market support (services that span different sectors). Both are key to helping emerging and established businesses grow and innovate.
A new approach
One of the earliest supporters of the consortium was Steve Bazinet at the Maine Center for Enterprise Development, an innovation and entrepreneurship support and incubation center based at the University of Southern Maine in Portland. MCED offers space and programs that support early-stage, predominately high-growth entrepreneurs.
MCED’s Top Gun program recognizes the need to assist entrepreneurs in transforming their ideas into successful ventures through mentoring and assistance coupled with networking with the region’s most experienced innovators and business leaders. MCED’s capacity to thrive and grow in southern Maine will be a function of its ability to keep its visibility and service level high.
Prior to the 1980s, business incubators represented inexpensive space and some shared services (reception, copying, mailbox, conference room). With the emergence of early-stage risk investors that expanded in the 80s and 90s, new models for business incubation materialized in which tenants were screened for their growth plans and viability, and consulting and mentoring were offered for the cost of rent (and sometimes a small amount of equity.)
While there have been only a few notable long-term successes at the high end of the service scale (usually due to funding issues), the model continues to intrigue the marketplace of entrepreneurs and the VC community, some of whom are experimenting with in-house incubation or new variations like Tech Stars in Boulder, Colo., and Boston, and Y Combinator near Palo Alto, Calif.
Money matters
All struggle for funding streams that enable the organizations to sustain themselves. In some cases, such as at one Boston area center, the incubator has developed such a strong reputation among multiple constituencies — universities, venture and angel capital funds, and the technology industry — that its center has expanded to meet the outsized demand for locating in its hub of startup activity. Tech Stars and Y Combinator offer a specialized form of mentorship coupled with a competitive evaluation for entry and a bit of seed money (typically less than $100,000); these models have caught a lot of attention, though it’s still too early to declare success.
Organizations like MCED (or the Target Technology Incubator in Orono and others) benefit from robust local and regional entrepreneurship ecosystems — networks for connection, capital for growth, experienced communities of management and domain experts to mentor, and local and regional business and public sector systems for support.
EDA’s i6 Challenge Grant provides a unique opportunity to cultivate such ecosystems. State-based applicants, including one from Maine, will compete with 12 other Northeast states for a single grant EDA will award to this region. The Regional Cluster Allaince’s approach, while competitive with state approaches, is meant to serve each state individually while concurrently serving the New England region as a broader economy. While each state tends to focus on improving its own lot relative to its neighboring states, RCA recognizes the importance of collaboration in the face of state-to-state competition and was formed to link common assets to create value for each and for the whole.
With the relatively small economy that Maine represents regionally, the state and its stakeholders must ensure that they connect with resources out of state — something Maine’s 2008 Cluster Strategy report highlighted. As someone who has backed some of Maine’s innovative companies, I can attest to the need to optimize for success (and reduce risk) by tapping the local and regional work force, capital, networks and knowledge it takes to build successful businesses.
Michael Gurau is president of Clear Innovation Partners, a Freeport-based firm formed to catalyze and sustain innovation and entrepreneurship in rural and urban economies, and is leading the RCA’s i6 application. He can be reached at mg@clearinnovationpartners.com. Read more Venture Builder.
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