Business incubators' nature is to nurture
Nick Pinkston Profile
Title: President and co-founder of CloudFab.com
Education: Business marketing degree from the University of Pittsburgh
Qualifications: Co-founded HackPittsburgh and P&R Solutions
Nick Pinkston of Squirrel Hill believes 2011 will be the year for his online custom manufacturing venture, CloudFab.com .
His company allows customers to use three-dimensional printing technology to design customized parts online, have them manufactured and shipped.
Pinkston said he wouldn't have made it through 2010 without the help of Innovation Works and its offshoot, AlphaLab, a business incubator that provides money and expertise to young entrepreneurs who have a good idea but are lacking the cash or ability to market their ideas.
With $25,000 in financing from AlphaLab and the help of its business experts, Pinkston, 24, was able to get his business started.
He started CloudFab in May and signed up his first major customer in November.
"This year will be a big deal for us," Pinkston said. "Actually, it will be a make-or-break year."
Business incubators such as AlphaLab are designed to nurture start-ups like CloudFab. It's difficult to start a new business, and incubators can provide the business expertise, technical advice, office space and access to funding to help entrepreneurs.
In 1980, there were only a dozen business incubators in the U.S., according to the National Business Incubator Association. There are now 1,100.
Rich Lunak, CEO of Innovation Works, said incubators are essential for start-ups.
His organization in the past decade has helped create nearly 3,000 jobs in the Pittsburgh region by providing $48 million in investment.
Lunak said that while Pittsburgh may not be able to compete with regions like Boston or Silicon Valley, Southwest Pennsylvania has shown the fastest rate of growth in investment in the country and, according to the National Venture Capital Association, is second in the number of deals.
"We're growing four times the rate of other regions," he said.
Robert Wooldridge, executive director of the Center for Technology Transfer and Enterprise Creation at Carnegie Mellon University, said "the challenge is getting easier, but it's still a challenge.
"MIT's research budget is five times that of CMU. Stanford's is three times CMU's. But Boston-based venture capital comes here to invest."
The center takes university-related research and creates new companies to apply that research to the business world.
In the past 15 years, that work has resulted in the creation of 200 companies and 9,000 jobs, Wooldridge said.
CMU also has a new incubator, Project Olympus, which takes research developed at the university and helps find a niche for it in the business world.
"People come to a university to do research and teach," Wooldridge said. "Researchers are not focused on commercializing research. The average researcher just does not think about it."
Wooldridge said his organization doesn't provide any space for start-ups.
"Incubators are not just space. They're advice, access to networks, grant writing. These are all things helping companies move forward," he said.
He said he's been able to raise $130,000 in financing from what he learned at AlphaLab.
"It's been a feat of networking," he said.
Jim Jen, executive-in-residence at Innovation Works, said 75 percent of the companies that receive aid have been successful in getting an idea or product to market.
Jen said young entrepreneurs like Pinkston can benefit from the support. Pinkston is a passionate, aggressive businessman, Jen said, and that's usually what it takes to get a business off the ground.
"I like what he's doing," he said. "Nick has really pushed it."
Western Pennsylvania business incubators, facts:
• AlphaLab, South Side
Invests in small technology companies
• Pittsburgh Life Sciences Greenhouse, Oakland
Since 2002, has spent $16 million helping 60 companies
• Center for Technology Transfer and Enterprise Creation, Carnegie Mellon University
• LaunchCyte, South Side
Created six companies since 2000
• Pennsylvania Smart Infrastructure Incubator, Carnegie Mellon University
Partnership with Bombardier
• Institute for Entrepreneurial Excellence, University of Pittsburgh
• Technology Collaborative, Oakland
Helps robotics, cybersecurity and digital technology companies
• Idea Foundry, Oakland
Specializes in technology transfer, entertainment industry
• Riverside Center for Innovation, North Shore
Has helped 3,000 small businesses since 1992
• Indiana University of Pennsylvania Small Business Incubator
• StARTup Incubator, Edinboro University
Works with art-based businesses
• Small Business Development Center, St. Vincent College
Helps businesses in Westmoreland and Fayette counties
• e-Magnify, Seton Hill University
Focuses on businesses owned by women
• Small Business Development Center, University of Pittsburgh
• StartingGate, Chippewa, Beaver County
Helps companies in Beaver and Lawrence counties
Business incubator facts
• Companies aided experience average sales growth of $239,000 a year.
• For every $10,000 in federal funds invested, 47 to 69 jobs are created.
• Incubators provide 20 times more jobs than projects such as water and sewers .
Source: National Business Incubator Association