HUDSON: It’s a do-or-die year for TECHudson.
The city-sponsored business incubator was launched two years ago with the hope of helping entrepreneurs grow their software technology into job-producing companies.
But the incubator is a startup itself and not immune to the same early struggles faced by its clients.
Most agree that unless someone other than City Hall is willing to open its wallet to support operations, the center won’t survive far into 2014.
Acting Executive Director George Buzzy knows he’s got his work cut out for him.
“I hope people who read this — other successful entrepreneurs and businesses — will say these guys are doing something good and step up to support it,” he said.
The clock is ticking.
The City Council gave the center $174,000 in 2011 and $200,000 in 2012 after the incubator’s founder, Jim Phipps, argued that it would be hard to find other financial support unless the city showed it had skin in the game.
The vote was not unanimous. The majority agreed to give it a go.
However, the support from other sources never manifested.
When the incubator asked for more money this year, the council reluctantly agreed to a much-reduced $50,000 grant, plus the promise of another $25,000 if Buzzy can find funds to match it.
The other financial support for the center came from a $100,000 grant from the Ohio Third Frontier to fund Buzzy’s position for a year while he works to find more money, and a $10,000 pledge from the Burton D. Morgan Foundation if he can raise an additional $20,000 this year.
Buzzy said he feels pretty confident that he can meet the total of $45,000 in city and Morgan Foundation matches and get the center through this year, but the center needs $200,000 a year to operate and there is no sustainable source of income on the horizon.
And the city well may have run dry.
At-large council member Hal DeSaussure was on the council for the original vote, when he spoke against giving the incubator money to launch.
“It’s a long process to get an incubator up and running,” he said. “I really didn’t feel our council would have the patience to see it through, and indeed our council doesn’t have the patience to see it through.”
Still, he voted in favor of supporting it this year, saying he’s just making good on the city’s original commitment.
“I think it’s unfair at this time to pull the rug out,” he said. “I think things are turning around there slowly and I would like to see this year be a breakout year.”
“But if it’s status quo into next year,” he said, “I don’t see there will be continued support for it.”
Buzzy said TECHudson fills a need.
Akron’s business accelerator is largely filled with advanced materials and biomedical companies, and Youngstown’s incubator specializes in business-to-business software.
TECHudson focuses on software and technology startups.
What the other incubators have that Hudson lacks is cheap or donated space in old factories or warehouses.
TECHudson pays market rate for the space used by clients on Executive Parkway. The young clients chip in a little, but the bulk of the rent is subsidized by the nonprofit organization.
“This is fancy. We don’t need this,” Buzzy said. “We really need a large donated space.”
Incubators also typically arrange low-cost help for clients on everything from legal and financial advice to marketing and sales support.
Incubator tenants
TECHudson has four tenants:
• Pinklejinx: Creates birthday kits to help children have a fun experience.
• SGM Games: Designs game software, specializing in funny topics.
• Cutter Croix: Makes software for construction contractors.
• The North Land Realty Team: A realty company with what it believes is a cutting-edge strategy.
“Hudson has a campaign to bring 100 new jobs to the city, and we’ve brought 10 in,” Buzzy argued.
Not every company will succeed. TECHudson had three other clients that have come and gone.
“They tend to fail or go back to a home office,” he said.
That kind of risk is inherent in an incubator. It’s a long-term investment, he said. The goal is to give startups enough of a break that they can get on their feet, grow and leave the nest to establish a solid company in the general market place.
Ideally, a successful incubator has an even broader reach.
Buzzy said he’d love to have enough financing to help create a school curriculum and work with high school seniors on entrepreneurship programs, and launch an investment fund for people who want to support a particular company.
But without enough money for basic necessities, TECHudson may not exist at all next year.
Satellite idea
Another option would be to see if one of the region’s successful incubators — such as Akron and Youngstown — would take TECHudson under its wing as a satellite, Buzzy said.
“Or we could suspend [operations] and wait for additional funding down the road,” he said.
Lack of outside support isn’t the only issue nagging at council members.
Ward 3 Councilman Alex Kelemen, who voted against giving the center a grant this year, named three: Clients aren’t required to stay in Hudson, the lack of inexpensive space in the city, and the likelihood that the city will never see its investment returned in tax-paying jobs.
“It doesn’t seem we’d come even close to getting our money back,” he said.
But as with most other city officials, he agreed the biggest obstacle is a financial one.
“I have no way to judge whether something is working. I have to rely on whether others are investing in it,” he said. “If they’re jumping in and helping, then I could say maybe it’s moving along.”
Kelemen said he would love to see TECHudson be a success, and he called Buzzy “a great guy, and very qualified.”
But the incubator needs “substantial outside help. It doesn’t have to equal [what the city is putting in], but it has to start getting something. If we finish 2013 the way we started it, I don’t see much of a future, and I think everyone agrees with that.”
For more information about TECHudson, its clients or to help support the nonprofit organization, go online to www.techudson.org.
Paula Schleis can be reached at 330-996-3741 or pschleis@thebeaconjournal.com. Follow her on Twitter at http://twitter.com/paulaschleis.