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San Jose Incubators Rated High for Giving Life to Businesses
Friday, June 20, 2008
By Lisa Sibley and Emma Ritch, Silicon Valley / San Jose Business Journal
City officials say San Jose is seeing a good return on its investment of more than $19 million in business incubator programs. The success of the city’s life science center was touted this month at an international conference in San Diego, and its environmental center won an award at an international incubator association conference in Texas last month.
The National Business Incubation Association recognized the city's Environmental Business Cluster as the 2008 Randall M. Whaley Incubator of the Year, an award that establishes it as the best of 1,100 incubators in the country. That follows a study last year by consulting firm New Energy Finance that named the cluster one of the best of the 167 incubators across the globe that work on commercializing clean-energy technologies.
The environmental cluster, the country’s first, has helped 145 businesses bring products to market and resulted in 1,000 jobs in San Jose in its 14 years. Seventy percent of these businesses hadn’t planned to move to San Jose before they were recruited by the cluster, executive director Jim Robbins said.
The city of San Jose gets about $3 in sales tax revenue for each dollar it invests in the incubator, he said.
For its part, the San Jose BioCenter is credited in a report released on June 17 with creating more than 150 jobs in the city and more than 300 jobs globally, generating more than $700 million in growth capital.
The life-sciences and emerging-technologies incubator, located in Edenvale Technology Park, is operated by the San Jose State University Research Foundation in partnership with Prescience International. It opened in 2004 and has 22 tenant companies and 10 affiliate companies.
It is recognized for helping San Jose's bioscience sector experience a year-to-year growth rate of about 28 percent from 2002 to 2008. That rate outpaces the Bay Area and the rest of the United States by a healthy margin. Typical growth rates range from 8 percent to 12 percent, according to the report’s author, Michael Schuppenhauer, a biotech industry consultant in Half Moon Bay.
The report was tied into the 2008 BIO International Convention held June 17-20 in San Diego. It included participation from the city of San Jose’s Office of Economic Development, the Redevelopment Agency and the San Jose BioCenter — a strong driver of this local growth, according to its executive director, Melinda Richter.
The San Jose BioCenter had a $2 million budget for the 2007-08 fiscal year, and is a "break even" organization," Richter said. The facility was established with about $10 million from the Redevelopment Agency.
Richter said the center has been such a success that it always has seven to 10 companies on a waiting list. In addition, this fall the center is expanding its facilities from 40,000 square feet to about 80,000. Many of the companies that have outgrown the center move into other buildings in the area, she added.
"We don't invest in our companies," said Richter, explaining how they differ from other incubator models. "We charge for the services and the space."
Robbins, her counterpart at the environmental cluster, said the honors it won will make it easier to raise grant money and easier to recruit startup companies to San Jose.
The cluster is awaiting word on an $11.5 million Department of Energy grant that would help establish the Electronic Transportation Development Center in San Jose. That center is working on a design for electric school buses that could be sold across the nation. A bus manufacturer also is negotiating to move its headquarters to San Jose if grant money comes through. The effort could create 840 jobs and $1.2 billion in sales in the next three years for the San Jose area.
"Grants like that are based on our track record," Robbins said. "This award could create more opportunities for our companies and help attract startups to San Jose."
Lisa Sibley can be reached at 408.299.1841 or sibley@bizjournals.com. Emma Ritch can be reached at 408-299-1830 or eritch@bizjournals.com.
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