Incubator Launches $2.5 Million Capital Campaign
YOUNGSTOWN, Ohio – In five years, the Youngstown Business Incubator wants to be a self-sustaining economic engine with no need of government funding. But it can't accomplish that goal on its own.
That's why business leaders Thursday unveiled a campaign to raise $2.5 million to help the incubator diversify its revenue stream, develop new markets, and to see its portfolio of tenant companies grow.
"If we want to continue, we need the resources," said Barb Ewing, chief operating officer of the incubator. "We've already had a tremendous impact."
The goal is to petition the business community for funding over the next five years, Ewing said. In that time, she anticipates the organization will develop many of the programs needed to operate without state help.
"Our job is to get out in front of every business leader we can to raise money," said Doug Sweeney, president of Sweeney Chevrolet Buick GMC in Boardman and campaign co-chairman. "I can't think of any forces that can make a difference like the Youngstown Business Incubator."
So far, the campaign has an early commitment of about $750,000 toward the goal, Sweeney reports.
An economic impact study released several weeks ago showed that in 2012 YBI companies recorded $76 million in sales, $41 million in expenditures in the local economy, and spent $23 million in salaries and wages, added Bruce Beeghly, co-chairman and founder and retired president of Altronic LLC, Girard.
Beeghly also noted that the YBI helped sustain 610 jobs last year, 407 of those positions were direct employees of YBI portfolio companies.
"The incubator is about the future," he said. "But it already plays a significant role."
The YBI, based downtown, is designed to accelerate the development of innovative, high-technology companies in the Mahoning Valley. The incubator offers low rents, resource networks, equipment and entrepreneurial counseling to its tenant companies to foster this growth.
However, state funding for the incubator program has thinned over the years, reports Jim Yukech, fundraising chairman and a technology specialist at Catholic Health Partners.
"Seven years ago, we were 80% dependent on the state," he said. Today, state funding accounts for about half of the YBI's annual budget of nearly $1 million. "We can't be dependent on it for the long-term. We need to be proactive now,” he stated.
With the addition of the National Additive Manufacturing Innovation Institute, or NAMII, the incubator has already begun moving in new and promising directions related to manufacturing, Yukech said.
As matters stand, the YBI is primarily focused on developing business-to-business software, Yukech said. But initiatives such as NAMII add a whole new dimension and opportunity for the incubator, and the organization must be prepared for future growth.
"We're looking to grow into other segments – health care, advanced manufacturing," he remarked. By 2020, it’s expected that $5 billion worth of new products would be developed through additive manufacturing. “That's where we need to position the YBI," Yukech explained.
The YBI's Ewing said that the incubator is exploring a "spectrum of programs" that include equity opportunities, affinity agreements and service agreements with other organizations and companies.
Chuck Stein, president of Strategic Development Services based in Columbus, a company that works with business incubators throughout the world, said that the YBI represents the "purest" form of economic development in a community.
"There are 30 companies located here engaged in interstate commerce," he said, emphasizing that these firms bring in money from outside the region. Within five years, he thinks the YBI could be at least 80% self-sufficient.
"Our intention is to make a business case," he said, and present it to community leaders for their support. "I think there are only two or three incubators in the country that have the impact of the Youngstown Business Incubator," Stein declared.
The objective is to convince business leaders that it's in their best interest to invest in the YBI, and the returns are likely to ripple through the entire community, added Mike Broderick, CEO of Turning Technologies and a campaign co-chairman.
His company sought help from the incubator 11 years ago as a startup with an idea to develop remote audience response technology, Broderick said. "Jim Cossler got it," he noted, referring to the incubator's CEO who could not be present at the event.
The YBI took a chance on his company, and the incubator provided an estimated value of $250,000 through below-market rent, services and equipment, Broderick recalled.
Today, that $250,000 investment has translated into a $15 million payroll and 250 jobs in the Mahoning Valley, he said. In 2007, Inc. magazine recognized Turning as the fastest-growing privately held software company in the country.
Creating a cluster of such tech companies can help turn the Mahoning Valley economy around, Broderick added.
"Turning Technologies can't turn it around alone," he said. "But 20 can, and the Youngstown Business Incubator can be instrumental in making that happen."
Copyright 2013 The Business Journal, Youngstown, Ohio.
CLICK HERE to subscribe to our free daily email headlines and to our twice-monthly print edition.
Copyright 2013 Youngstown Publishing Co. DBA The Business Journal
Developed by Tyler Clark Consulting.