Mike LeHere, director of Akron’s Industrial Incubator, did the next to impossible in this economy — he raised money for entrepreneurs and their companies.
By Kim Palmer
In a time when government funds are scarce, the Economic Development Administration and the city of Akron are committing approximately $3.5 million to the Akron Industrial Incubator.
The Incubator is not only one of the first of its kind nationwide, launching in 1983, but it has created 700 jobs and 50 companies over the last 10 years.
Smart Business spoke with Mike LeHere, director of the Akron Industrial Incubator, which houses 22 companies, to talk about entrepreneurs and job growth in Northeast Ohio.
What is the Incubator going to do with the $3.5 million grant money?
We will begin a buildout later this year — about 100,000 to 110,000 additional square feet. The new spaces will have a higher level of finish.
They will be climate-controlled and have access to wet labs and conference rooms. This will allow us to help a portion of the market we have recently been focused on — technology commercialization.
Why are incubators like the one in Akron getting so much attention lately?
Most of the new jobs being created in our economy are coming from companies of 20 employees or less. But it is a tough sell to get investors interested in these companies, especially since the crash — equity investors are becoming more selective.
In an incubator, (companies) can act in a sheltered environment. There is a substantial amount of resources available, and that allows entrepreneurs to build skills. Because when companies fail, it is usually because they are either undercapitalized or poorly managed.
When did the Akron Industrial Incubator begin, and how does it help local entrepreneurs?
We opened our doors to our company in May 1983. It was called the Akron/Summit Industrial Incubator back then — county government was involved in the initial phase.
We work with entrepreneurs to at least initially help them evaluate their product or service to determine if there is a market sufficient to support the business. Then we help them with the business plan and address the issue of capitalization.
Once they are able to package the funding, we provide space at a reduced rate, less than market rate. From there, we provided day-to-day consulting services to help resolve operational problems and provide a sheltered environment. That way, they can operate, and we can help them gain the skills they will need as a business owner to operate a successful company.
Are products manufactured on site?
Yes, our initial focus has been manufacturing, assembly and distribution — although in recent years, we’ve changed the focus onto technology commercialization and are looking for new technologies that through the incubator we can provide a path to market.
We also have a specific interest in polymer technology because of the strength of Akron’s polymer community, and also tech sensors and controls, and even software development.
How and why did AII get the grant, and what are the plans?
There was an opportunity through the Economic Development Administration to get a grant for $1.75 million, which will be matched dollar for dollar, so there will be available in the neighborhood of $3.5 million.
The grants are awarded on a competitive basis. The EDA has recognized that this has been a very successful program and that the money has been leveraged and has shown results in job growth.
Over the life of the program, however, most of the job creation has been in the last 10 years. We created more than 700 new jobs and graduated more than 50 companies. Also, we track our companies through the first three years until they graduate, and then we track for another year or two once they leave. The success rate has been in the 90 percent range.
How many companies will the new building hold?
It would all be conjecture because this buildout will have a much higher level of finish, and tech companies have different needs, but we will be able to serve a portion of the market that we have not been able to address. The concept is that you can take a tech company that is in the concept phase, and with the labs, go on to the prototyping of the product basically go from cradle to market.
What has been the difference between the early days and today?
When we opened our doors back in ’83, it was a rather new and unique concept. If you check the latest statistics, there are over 800 incubators, and in the last 10 years, there has been significant growth in incubators in communities.
Communities now think that entrepreneurs are something they need to attract. It is especially important in technology commercialization, where we develop the technology based companies, because then we can employ the technical graduates that come out of the university of Akron and Kent and keep them here.
How does a company or entrepreneur get involved with the incubator?
In most cases, it comes from either a referral from a resource base or from somebody reading an article. Most often they come in curious, wanting to investigate. But we do aggressively pursue entrepreneurs because often they stay underground.
We begin to develop the idea, and if that idea has merit, you link them to resources. The second element is not only to help develop the idea, but to commit the idea to writing and have an operating plan that not only looks at the market and how large it is, but can you get that service to market competitively.
If it appears so, then you identify what it is going to need to do that — and they identify how much it will cost to do that.
We can’t guarantee funding to anyone, but you can expose them to funding. Then you package the funding, and we can facilitate that. If they are successful in packaging the funding, then they come to the fourth element — the physical incubator.
How involved are you and you staff with these companies?
On a daily basis, we don’t interfere with the operation, but we are available on a daily basis. We are talking to them all the time. We are here and these things are available if you need them, and if you experience problems, you know where to get help.
What is the average incubation time?
It used to be about three years. But what we have found is that it takes longer to incubate a technology company, and so that period of time is stretching out to five years.
Have you had luck keeping these companies in the area after they graduate?
Not only do we encourage that they stay, but when the company graduates, we assist them in finding a location in the area. That is one of the reason EDA made the decision to give us this reward — we have demonstrated success in the past. How to reach: Akron Industrial Incubator, (330) 375-2173