NHBRC
12/12/06
New $8 Million Business "Incubator" A Successful Collaboration of Government, Academia & Private Industry

LEBANON, NH - New Hampshire Business Resource Center Director Roy Duddy's enthusiasm is infectious when he discusses the recent opening of the Dartmouth Regional Technology Center (DRTC), a project that he calls "the gold standard for what a collaborative effort by state, federal and local government, and the private sector can achieve."

Located at Centerra Resource Park in Lebanon, DRTC is designed as a business incubator where fledgling technology companies can receive the business development support and services they need during their infancy. Companies will share common space as well as basic office services and office equipment, thereby lowering overhead. They will also lease their space at market rates on a month-to-month basis, allowing them greater flexibility.

According to the National Business Incubator Network, 87% of companies associated with an incubator are still in business after five years, compared to 25% who don't have incubator support. Experience has also shown that "embedded" incubators (those that are associated with or operating within a research or technology-focused organization ) are usually most successful in supporting the launch of growth businesses.

"DRTC's development was truly entrepreneurial in spirit and demonstrates what can be accomplished with innovation, partnerships and tenacity," Duddy said. "I think that in the years to come, you'll see that research which originated at Dartmouth has become the basis for companies that are nurtured through their early years at DRTC. Perhaps more importantly, it's those very same companies which will then graduate to become successful businesses that help drive the economic engine of the region."

DTRC's Beginning
The initial incubator conversation involved Gregg Fairbrothers, Adjunct Professor of Business Administration at Dartmouth's Tuck School of Business and Director of the Dartmouth Entrepreneurial Network, and David Pyke, Associate Dean of the M.B.A. program at the Tuck School of Business. After researching incubators and existing university-based entrepreneurship programs, they concluded that a partnership between government, academia and commerce would be key-but that a feasibility study was needed.

Enter Steve Epstein, former Executive Director of the Grafton County Economic Development Council (GDEDC), who contacted the state's Business Resource Center in the person of Roy Duddy. With support by then-Governor Jeanne Shaheen-the first of three governors who have supported the project-the State provided funding for the feasibility study. As a result of that study, Dartmouth agreed to donate land in Centerra Resource Park worth $720,000 to jump-start the project. Local economic development organizations, the Grafton County Economic Development Council and North Country Council, took title to the land, financing the construction and outfitting of the building through state and federal block grants and loans, and the sale of tax credits. The two organizations also committed to lease the property at no cost for 25 years to DRTC, a freestanding, nonprofit NH corporation.

U.S. Senator Judd Gregg, Chairman of the Senate Appropriations Subcommittee that oversees funding for the Economic Development Administration, helped obtain the bulk of the funding: $3.15 million in financing from the EDA. The State of New Hampshire provided $1 million in Community Development Finance Authority (CDFA) tax credits as well as Community Development Block Grants to assist with fit-up of anchor-tenant space. A grant from USDA Rural Development will be used to provide to the professional training and development services necessary to take companies to the next level.

According to Duddy, "The project was really a Rubik's Cube-there were so many pieces to the puzzle that had to be perfectly aligned."

Mike King, Executive Director of the North Country Council, concurs.

"There were so many individuals and organizations involved who helped, from the New Hampshire Community Development Finance Authority to Department of Resources & Economic Development Commissioner George Bald, former Director of the Division of Economic Development Stu Arnett, Councilor Ray Burton, Grafton County Commissioners and the mayor of Lebanon. We had the support of elected officials, including Senator John Sununu and Representative Charlie Bass, and Gregg Fairbrothers brought a number of partners to the table including vendors, contractors, entrepreneurs, and Dartmouth officials and graduates."

Duddy adds, "Without the extra effort put forth by the New Hampshire Business Finance Authority and Ocean National, this project wouldn't have been the success it is."

DRTC Already at 80% Occupancy
Dartmouth has also played a significant role in securing the initial tenants for the 32,000 square foot, $8 million facility, which includes lab and office space, shared conference areas, and a spacious break area with tree-shaded patio. The initial tenants are

• Mascoma Corporation. Mascoma has patented a genetically engineered organism that can more efficiently produce ethanol for fuel than other methods. This technology (which is based on work conducted and directed by Dartmouth Engineering Professor Lee Lynd, Ph.D.) could make ethanol an economically viable alternative to gasoline. Mascoma, which was previously located in Massachusetts, has secured $39M + a $14.8M matching grant from the state of NY to take its efforts to the next level.
• Wellan Medical Solutions. This start-up, which has invented a stabilizer for an ultrasound probe, has connections to the Thayer School and Dartmouth-Hitchcock Medical Center.
• DMS Microbiology Department. The department will be at DRTC for approximately three years while construction projects are going on at Dartmouth-Hitchcock Medical Center and Dartmouth College. However, if the space is needed for technology start-ups, DMS will relocate. While at DRTC, DMS will create at least 25 new full-time jobs.

According to Fairbrothers, in the future, the start-ups that take advantage of the incubator won't just come from Dartmouth, but they all will be able to benefit from the association with the college.

"All the companies will have access to some Dartmouth facilities, such as the library, as well as researchers, contract workers and other entrepreneurs who are spinning off companies based on College-based research," he said, adding that "all of them will be connected to the College's valuable network of venture capital alumni in private equity and technology industries."

DRTC's Future
The impact of a successful incubator can be huge. According to the National Business Incubator Association,

• every 50 jobs created by an incubator generates approximately 25 more jobs in the same community.
• for every $1 of estimated public investment provided by the incubator, approximately $30 is generated in local tax revenue alone by clients and graduates of NBIA member incubators.
• publicly supported incubators create jobs at a cost of $1,100 each whereas other publicly-supported job creation mechanisms cost more than $10,000 per job created.
• 84% of companies that are incubator graduates stay in the community and continue to provide a return to their investors.

Mark Scarano, who joined the Grafton County Economic Development Council as its Executive Director in August, is extremely impressed with the quality of the current tenants and those considering leasing the remaining space. "They all have substantial growth potential. This should be the start of growth in bio-technology in the Upper Valley area." In considering possible new tenants, the focus will continue to be on businesses with a proven concept and solid business plan.

Still, he cautions, this is just the first step in the process. The next step will be to develop space for graduates' companies that no longer need the services and support that the incubator provides and are ready to find more permanent facilities.

The GCEDC will be assisting companies with relocation once they're ready to move out of DRTC, while North Country Council will provide grant writing services and regional coordination. The collaboration with Dartmouth and the State will continue, too.

"We also plan to host business assistance seminars and other events at the incubator that will be open to existing businesses and those considering start-ups," Scarano adds.

"As complex as this project has been," concludes Duddy, "it was a tremendous experience that will help the entire region. With incubators under consideration for Plymouth and Lancaster, and other economic development initiatives in the works, I expect we'll see the impact of this project for many years to come."