The Incubator Business Startup at Auburn University

Start your own business and be your own boss. It’s what we paradoxically both desire and fear, with good reason. Forgoing a steady paycheck for the unknown is like walking a high wire without a safety net.

Business incubators cushion potential falls by providing a fertile, controlled environment to hatch ideas, and offer affordable workspace, equipment, infrastructure and mentoring. Unlike accelerators (another popular haven for budding entrepreneurs), incubators typically do not take equity in the businesses.

Starting a company has never been easier, but it’s harder than ever to make one a success, writes James Surowiecki in “Epic Fails of the Startup World” in a recent issue of The New Yorker magazine. While crowdfunding and angel investing make it relatively easy for startups to raise money today, the life of a new company remains “often brutish and short.”

So it stands to reason that a fledgling company is more likely to succeed if it incubates before leaving the nest. In the normal course of business startups, only one in 10 succeeds, but of those fledged in a full-service incubator, the number jumps to four or five successes in 10, says John Weete, executive director of the Auburn University-affiliated Auburn Research and Technology Foundation, which operates the Auburn Research Park and the Auburn Business Incubator.

At the Auburn Business Incubator, undergraduates and seasoned business leaders alike are turning their eureka! moments into viable companies ready for commercialization.

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Services include flexible leases that include utilities, assistance in finding business service providers, receptionist assistance, office equipment, free parking and janitorial services. Tenants (also referred to as clients) share many amenities, such as conference and training rooms equipped with audiovisual and teleconferencing capabilities.

Tenants can choose to lease either enclosed offices or cubicles.

Having opened May, 2011, the Incubator is relatively new, and additional services are being phased in. These include student internship and entrepreneurship programs, assistance in accessing investment and grant money, management assistance, networking opportunities, linking to consultants and access to business training programs.

Sponsorship from the City of Auburn Industrial Development Board helps support these programs.

Weete looks for true startups for the Incubator, which can accommodate 17 new businesses. Getting a spot is competitive, and vacancies usually open only when clients graduate. Most leave after about three years.

Current Incubator businesses represent a variety of sectors. Several of the clients are student-owned companies or began when the owners were students.

John McNutt graduated from Auburn University in 1995 in visual art and graphic design. He started McNutt & Co. in 2001, a full-service advertising, marketing and public relations firm. As an established company, it’s not a typical incubator tenant, so McNutt offers his services at a reduced rate to other incubator clients and serves as their mentor.

Before moving to the Incubator, McNutt leased office space in Auburn. When he ran into difficulties with his landlord, he moved his business into an 800-square-foot building in his backyard.

“I couldn’t bring clients there, and you’re never out of your PJs; it wasn’t the best situation, ” McNutt recalls. “I was in a pretty dark place. Coming here renewed my vigor for the business community. I was excited again after getting crushed.”

John McNutt.

John McNutt nurtures his fledgling Lucky Mfg. company in the Incubator, and also his somewhat older advertising and marketing firm, McNutt & Co.

Since McNutt & Co. wasn’t a new business, initially he didn’t qualify. But the Incubator needed tenants at the time, and he had another business just getting off the ground, Lucky Mfg. That company manufactures its proprietary invention called The Vault, a movable solid-steel storage unit about as hard to crack as Fort Knox that can be used on job sites and haul anything from lawnmowers and motorcycles to team gear and tailgate setups. Lucky Mfg. has two full-time employees and McNutt plans to hire more when in full production.

Ben Gustafson was still in high school when he co-founded the software development company BenTy with classmate Tyler Smith in 2011. Now a senior at Auburn University majoring in software engineering, with a minor in business analytics, Gustafson has been running the company out of the Incubator since November 2012.

One of BenTy’s best projects to date is Classroom Mosaic, a teacher observation platform allowing schools, school districts and state departments to align their observation criteria to federal teaching standards and school initiatives.

Teacher observations are federally mandated, and this past academic year Classroom Mosaic was used to enhance the learning of nearly a quarter million students in eight countries. Gustafson and Smith have five employees. They plan to release a second product this summer and have several more in the pipeline.

“Ultimately, the Auburn Business Incubator has given me access to many people and resources I would not have had otherwise, ” says Gustafson, who credits Doug Warrington, AU’s director of business development, for guiding him through the complexities of the business world.

Focus Engineering, which designs custom precision prototypes and batch production for automotive and aerospace companies, has been in the Incubator since January 2012. The Incubator serves as the business and engineering office, and the machine shop is located in the Auburn Industrial Park.

Founder Sakthi Kandaswaamy, the company’s director and manufacturing engineer, says the Auburn Business Incubator has been the “back bone” of the company, providing office space and amenities at a low cost and helping to hire employees and connecting them to potential customers.

“Producing precision machined parts is a high-rated skill that not everybody can do, ” says Kandaswaamy, who has a Ph.D. in industrial engineering from Auburn. “Making customers give us that first chance was the challenge. One opportunity is all we need to become a lifetime vendor for a customer.”

A passion for playing tennis led Haitham Eletrabi to found Perform, which helps tennis players improve their racket skills with their smart phone. Eletrabi is developing a sensor that captures the players’ game and compares it to ideal swings and movements to give players performance feedback. Perform launched in April, making it one of the Incubator’s newest companies.

Originally from Cairo, Egypt, Eletrabi moved to the states to get his Ph.D. in civil engineering from Auburn. He has three part-time employees. After he leaves the Incubator, he plans to launch a newer version of the product and similar products.

Eletrabi says the Auburn Business Incubator is important to his success because “their connections and expertise are priceless.”

Lutalo Aryee knows how to maximize social media’s potential. He not only started a social media consulting business but also used social media to help him get elected twice to the Tuskegee City Council.

Aryee started A Simple Business Solutions in 2011 to provide strategic social media marketing and management to business owners. He has been an Incubator client since November 2013. “I’m surrounded by a diverse group of business owners, and we are able to trade ideas and collaborate on projects, ” says Aryee.

Born and raised in Chicago and now living in Tuskegee, Aryee would like to become the primary social media consulting company in the region and in 10 years expand internationally.

No matter how comfortable the nest, the time comes to take flight. The Auburn Angel Network, a network that invests in early-stage companies, was one of the Incubator’s original tenants, based there from May 2011 to September 2013.

“During our two years at the ABI, we grew from one small investor network in Auburn with 40 members to four networks with almost 200 members, ” says Clay Corman, the Angel Network’s founder and CFO. “The ABI provided us with the facilities and services that helped fuel our growth. Combining the quality of the facilities with the price, it’s a no-brainer for early-stage companies.”

Cliff Hare, chairman and CEOP of Michigan Natural Gas, a retail provider of natural gas to residential and commercial customers in Michigan, graduated from the Incubator in April and moved into a larger facility in Opelika. Hare says the Incubator provided great value in class-A office space for a reasonable price, and the resources and support necessary to grow his business.

Weete says support from Speaker of the House Mike Hubbard and Auburn University Vice President for Research and Economic Development John Mason helped make the Incubator a reality. It has become so popular that a virtual incubator program is now available, started by Assistant Director Phil Dunlap.

The first phase of the Auburn Business Incubator takes up about 4, 400 square feet in one of the Auburn Research Park buildings. Phase 2 is in the early planning stage and will provide space to roughly triple the number of clients who can grow in the Incubator before spreading their wings.

Jessica Armstrong is a freelance writer for Business Alabama. She lives in Auburn.

text by Jessica Armstrong • photos by Art Meripol

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