Business incubators are all the rage in Portland. Now tech accelerators are spreading around the state. Managing editor Linda Baker reports on Oregon’s accelerator fever.
Oregon has business accelerator fever. In the last two years alone, Portland birthed The Portland Seed Fund, Portland Incubator Experiment, and the TIE Westside Tech Incubator, among others. The business models vary, but the common goal is to provide early stage companies, mostly in tech sectors, with small amounts of funding and access to mentors, workshops and angel investors.
Now rural areas are part of the contagion. VentureBox, a for-profit tech accelerator in Bend, will debut its first class of seven companies on Feb. 15. An initiative of EDCO, the program also grew out of discussions with the Oregon Entrepreneurs Network, which landed a $75,000 grant to create a series of Accelerator Boot Camps in Central and Eastern Oregon. Founded in 2010, the nonprofit Sustainable Valley Technology Group in Ashland just hired its first permanent executive director and is seeking start up companies that aim to increase efficiencies or decrease consumption.
The sluggish economy helped catalyze VentureBox, says executive director Jim Boeddeker. “It grew out of an organic desire to replace the [area’s] intoxication with real estate,” he says. Aiming to grow a technology cluster in Bend, VentureBox provides participating companies —which pay $1,500 for a 12 week class in addition to putting up 2 percent equity in their companies — with volunteer mentors and project coordinators. Participants develop their business skills and improve efforts to attract investors and secure angel capital.
I asked Boeddeker why, as he puts it, accelerators are “the hottest topic in the country.” Credit the “dramatic drop” in the cost of starting up companies, he says. In “the old days,” launching a new company cost about $3-$10 million and required a lot of hardware. Today $150,000-$300,000 can realistically fund a web or mobile application company “and it can often happen inside of a four to six month period,” Boeddeker says. That range is a good fit for angel investors, who don’t have the resources of a venture capital team to evaluate bigger deals. “So they are more interested in companies with an accelerator model.”
Funded by the city of Medford, Jackson County and several foundations, Sustainable Valley charges companies $200 a month for access to space, mentorship and angel investors. “The public sector is looking at how to stimulate business development in communities,” says Dennis Leidall, the organization’s executive director, who came on board two weeks ago. The real advantage of accelerators is they “force regions to map their assets,” he adds, noting that an incubator’s board members, typically retired or semi-retired from successful companies, play a critical role in supporting young emerging companies.
The Bend and Ashland entities differ from some (better funded) Portland accelerators such as the Seed Fund, which provides participating companies with $25,000 in addition to mentors and workshops. Still, Leidall, who came to Ashland from Santa Barbara, where he ran the technology commercialization program at UC Santa Barbara, said he was impressed by Southern Oregon’s efforts to nurture an entrepreneurial ecosystem. “A lot of communities with population ten times this size don’t have these resources,” he says, citing the Southern Oregon Angel Investment Network as another example. “It’s commendable.”
The proliferating number of accelerators raises the question: Can a city or region host too many incubators? Are we witnessing an Oregon accelerator bubble? It’s worth noting that outside of the tech world, several incubators, including the Portland Fashion Incubator and Souk have folded over the past few years. “Accelerators are startups themselves” Leidall notes. “So some will be successful and some won’t.”
In a competitive entrepreneurial environment, the measure of a good accelerator is the financial backing it attracts. “The best accelerators select good companies and develop them into the best led businesses,” says Boeddeker. “A successful accelerator should have range of investors circling around them waiting for the class to graduate.”
Linda Baker is managing editor of Oregon Business.