When high-tech fledglings fly, will they stay in Md.?

Incubating firms fear state lags in offices

New survey

June 21, 2000|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Tenants of Maryland's technology incubators say the programs provide a needed scientific boost for start-up companies but worry about what will happen when they outgrow their nests and need more space, according to a study released yesterday by the Maryland Technology Development Corp.

The companies surveyed were concerned about whether commercial space will be available to accommodate them after they graduate from the incubator programs.

State officials said the concern is valid.

"Fast-growing technology businesses cannot wait for space," said Richard C. Mike Lewin, Maryland's secretary of business and economic development.

"We will take a careful look at stimulating space," he said.

Lewin said he's familiar with technology companies that started in the past three years and that are adding as many as 50 employees a month.

"That means there will be 600 brand new employees within a year," he said. "Where are we going to put them when a brand new building takes 11 to 17 months to construct?"

Furthermore, Lewin said, efforts by the Maryland Technology Development Corp. - a quasi-public agency - to identify such issues allow Maryland to get a jump on setting its high-tech agenda.

The 60-page report identified five keys to success for incubator tenants: reliable Internet access; linkage to venture capital; shadow advisory boards and mentors; help with business basics; and shared services.

130 firms incubating

In addition to the eight publicly supported incubators in the state, which house 130 companies, two others are under development in Western Maryland.

Another is under consideration for the Eastern Shore, said Phillip Singerman, president of Maryland Technology Development Corp. (TEDCO).

The failure rate of new businesses is well over 50 percent, he said, but companies going through an incubation system have an 80 percent success rate.

Furthermore, an incubation graduate tends to locate in the same community as the incubator.

`Formidable' tool

"Incubators are a formidable economic development tool to help companies grow and revitalize communities," Singerman said.

The study's chief recommendation was to develop a systematic approach to handling the concerns of incubator clients.

"Having the knowledge of what the needs of incubator tenants are will allow TEDCO, in concert with the state's business incubators, to make informed recommendations on how Maryland can bolster its existing incubator practices," Singerman said.

The survey was commissioned by his agency and conducted free of charge by the Staubach Co., a Vienna, Va., real estate consulting firm specializing in the technology industry.

Second survey

The agency also worked with the National Business Incubator Association (NBIA) in a national and international survey to identify key programs, some of which could prove useful to Maryland incubators.

A newly appointed committee will take the results of both surveys and recommend ways to improve Maryland's incubation system, Singerman said.

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