Business Incubators for a Variety of Niches

A growing number of specialized, market-specific business accelerators are helping entrepreneurs around the country get their businesses off the ground
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This story appears in the May 2011 issue of . Subscribe »

The dizzying array of sights, smells and sounds that welcomes visitors to North Market in Columbus, Ohio, makes it tough to know where to go first. No less than 35 food-related businesses populate the bazaar. The scent of fine cheeses directs shoppers' attention one way, competing with the aroma of delicious-looking baked goods from another nearby vendor. Fishmongers, butchers and produce sellers line the aisles, and the second-floor mezzanine has seating for those who can't wait to sample their delicious finds.

This warehouse, renovated to be reminiscent of a European public market, may not look like it, but it's one of more than 1,200 business incubators housing tens of thousands of entrepreneurial companies around the U.S. Business incubators--also known as business accelerators--help startups of all stripes take root, providing resources to turn them into thriving, growing companies. That help may include offering low-cost office space, providing access to consultants and other experts, creating networking opportunities and much more.

"An incubator's business mix and the services it offers largely depend on the particular market served, the resources available in a region and the focus of the local economy," says Linda Knopp, spokesperson for the National Business Incubation Association, a trade organization based in Athens, Ohio.

Over the past few years, Knopp has seen a rise in a more specialized breed of incubator. Different from the collections of disparate startups housed together in office parks, these more unusual incubators march to the beat of their own drums, developing businesses in a particular sector or focus. Unique and purpose-driven, these business accelerators have produced some impressive successes. Here's a look at some of the most interesting.

North Market
Location: Columbus, Ohio
Founded: 1876; emerged as an incubator in the 1980s
Number of businesses: 35

Market maker:
North Market Executive Director David Wible.

While it wasn't an incubator when it launched in 1876, North Market has evolved into Columbus' only public market--and a 44,000-square-foot home for 35 independently owned food-oriented businesses, says executive director Dave Wible. In the late 1980s, the North Market Development Authority (NMDA) was founded to preserve the historic North Market and led to the purchase and renovation of the current site in 1992. It has become a place where small food businesses can take root. The facility does not offer business counseling or training, but its board members include area business leaders who are experts in marketing, retailing, business law, accounting and other areas and who make themselves available to incubator businesses when needed. The market is supported by tenant rents, paid parking in its lots and a series of fundraising events, cooking classes and the like. The site attracts more than a million people each year.

Success stories: Jeni's Splendid Ice Creams grew from a small location in North Market to an eight-store chain and wholesaler of premium ice cream. Nida's Sushi started at the market as a small stand and now has two other businesses, inside and outside the market.

University of Hawaii Agribusiness Incubator Program
Location: Honolulu
Founded: 2004
Number of businesses: 12 active clients; 34 consulting clients in 2010

For small farm and agriculture businesses, the University of Hawaii is like boot camp. With its focus on Hawaiian agribusiness, the incubator has no tenants, but worked with 34 businesses in 2010. The program has a dozen active clients at a time who have access to an intensive regimen of six to nine months of weekly meetings, project management assistance, business plan development, financial and accounting assistance, website and marketing material development and more. The incubator also hosts multi-day workshops for Hawaiian agribusinesses, through which it serviced 54 businesses last year. It was created by the University of Hawaii through a grant from the Cooperative State Research, Education and Extension Service program from the U.S. Department of Agriculture.

Success stories: The program does not share client names, but businesses that were part of the incubator in 2010 had an average annual revenue increase of 36.4 percent and an average annual profit increase of 154.4 percent. The incubator helped launch 10 new businesses and introduced a dozen new products last year and also facilitated the takeover decision for the largest pineapple grower in Hawaii, saving 71 agriculture jobs.

Arts Incubator of Kansas City
Location: Kansas City, Mo.
Founded: 2001
Number of artists: 50

Jeff Becker, a sculptor by trade, had landed his big fish. He used his sculpting and design ability to launch Becker Industries and was installing large indoor playgrounds for companies like Discovery Zone, his biggest client at the time. But when the chain of indoor playgrounds went under, it took Becker's business with it. As he looked to his next venture, he was concerned that many of the arts-related business owners he knew weren't well-versed in good business practices. He decided to take what he had learned from his own business and help arts businesses make money. He withdrew his $1,300 in savings and pleaded with his Kansas City landlord to believe in him and let him grow into the space. To help him save money, friends and family members lent a hand with everything from cleaning to renovation of the space. It took four and a half years before Becker was caught up on his rent, but he realized his dream of helping arts businesses thrive. The Arts Incubator of Kansas City is "50 percent physical space and facilities to create art, and 50 percent programming and support that we provide for building the arts businesses," he says. The incubator uses the renowned Kauffman Foundation FastTrac NewVenture program, which helps artists research and write plans to turn their art into businesses. Becker helps artists sell themselves and prepare for presentations of their work. Today, the program is approximately 65 percent funded by earned income from rents and programs, 30 percent funded by donations and grants from individuals, foundations and corporations, and the rest is funded through state and federal programs.

Success stories: Matt Dehaemers, a multimedia artist, has been commissioned for numerous public and corporate art installations nationwide. Spencer Schubert turned his passion for sculpture into a successful art and commercial sculpture studio in Kansas City.

Location: San Pedro, Calif.
Founded: 2009
Number of businesses: Two, with 22 more under consideration

"We have the dirtiest air in the region, and we're interested in businesses that help clean it," says executive director Jeff Milanette. Founded by the San Pedro Bay Port Technologies Development Center, a coalition of the San Pedro and Wilmington chambers of commerce and the Port of Los Angeles, PortTechLA is a clean maritime technology center and business incubator focused on the green and clean technologies and innovations needed by the Ports of Los Angeles/Long Beach, port tenants and worldwide maritime shipping industries. The incubator, located in downtown San Pedro, has raised more than $800,000 so far from foundation grants and a government earmark, allowing it to offer space to fledgling businesses in these areas, as well as business counseling, networking opportunities and access to contacts in debt and equity financing. It also offers a monthly PortTech Enterprise Forum that provides training, networking and referrals to technology entrepreneurs, service providers and capital providers in PortTechLA's market segment. Last year, the incubator launched its first Port Tech Expo, a combination trade show and venture capital fair, which attracted more than 300 people, and Milanette says he is currently looking to buy a building that will house the incubator.

Success stories: Advanced Algae developed a process for growing oil-rich freshwater algae that consumes greenhouse gases and can be used for fuel. Marine Oil Technology created an oil filtration technology that can greatly reduce the need for oil changes in motor vehicles.

BEGIN New Venture Center
Location: St. Louis, Mo.
Founded: 2008
Number of businesses: 25 over the past two and a half years

BEGIN New Venture Center was founded with one of the first U.S. Department of Commerce grants made to a faith-based organization. The $3.5 million grant was made to St. Patrick Center in St. Louis, one of the state's largest providers of services to people who are homeless or at risk of becoming so. With that money, the organization launched an incubator open to businesses that are either started by people who are homeless or to small businesses that commit to hiring individuals who complete one of the organization's 28 housing, employment or mental health programs. The facility offers traditional office space and a commercial kitchen, which is used by food businesses and catering companies. Counseling, access to capital, credit repair services, micro-lending contacts, business planning and other services are available to incubator clients. "Most of all, the business has to have a mission to be a positive impact in someone else's life," says director Jan DeYoung.

Success stories: Craig & Toni Quality Products produces a line of barbecue sauce that recently gained a 106-store grocery chain as a customer. South St. Louis Pizza Company is a growing pizza purveyor that uses only fresh, local ingredients.


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