Another Incubator Is About to Hatch

The burgeoning San Gabriel Valley technology corridor is expected to get a major boost Thursday with the opening of the Business Technology Center in Altadena, the largest high-tech incubator in California.

The 40,000-square-foot center will house between 30 and 50 start-up companies within three years, including many spinoffs from Caltech and the Jet Propulsion Laboratory in Pasadena, said Director Susan Prado. Most of the center’s occupants are expected to be software and Internet firms.

“We wanted to reinvigorate the high-tech industry, which had taken such a hit because of defense downsizing,” said Robert Swayze, manager of regional economic development with the L.A. County Community Development Commission, which used more than $5 million in federal grants to finance construction of the center.

“The Business Technology Center lends itself to an emerging technology corridor from Cal Poly Pomona [to] the City of Hope Cancer Center in Duarte to Caltech to the Huntington Medical Research Institutes in Pasadena, then to the Jet Propulsion Laboratory and all the way out to the media gulch in Glendale and Burbank,” Swayze said.

Incubators help start-up companies develop business plans, put them in touch with funding sources and generally network them into the local business community. Rental rates for incubators are often lower than for other commercial space and include shared use of business essentials ranging from copy machines to conference rooms.

Nationwide, the success rate for companies that graduate from incubators is 87%, compared with 20% for other start-ups, according to a recent survey by the National Business Incubation Assn., a nonprofit trade group in Athens, Ohio. Once they outgrow their incubator space, 84% of the graduates stay in the surrounding community, the study found.

That bodes well for the budding San Gabriel Valley software community, anchored by high-profile Pasadena firms such as EarthLink Network and CitySearch. William Lyte, chairman of the BTC Advisory Board, said he expects synergies to arise among the center’s tenants that will nurture the kinds of relationships that have propelled Silicon Valley start-ups for years.

The Business Technology Center has been operating in a limited capacity for two years, nurturing three companies in cubicles at the Calstart transportation incubator that recently moved from Burbank to Pasadena.

Offices at the Altadena building range in size from 160 square feet to 680 square feet. It includes a large space for an anchor tenant and a conference room that can seat 140 people. Occupancy fees run about $1 per square foot and include advanced phone, video and data connections.

The Business Technology Center will operate with an annual budget of nearly $400,000 and receive funding from the Community Development Commission. Swayze expects the center to take in $165,000 in its first year and become self-sufficient once 85% of the offices are leased, in three or four years. The incubator also will bring in money by renting conference space and signing up affiliate members, which will use the center’s resources but keep offices elsewhere.

The BTC is opening at just the right time for Carl Kukkonen, a 14-year JPL veteran who spun off his own company this summer to commercialize at least five technologies from the lab, ranging from infrared detectors to digital cameras to lasers that can monitor toxic gases.

“The key item was just the wonderful proximity to JPL,” said Kukkonen, president, chief executive and chief technology officer of ViaSpace Technologies.

It took NuCom Integrated Technologies a month to set up Internet equipment at its current Pasadena office. NuCom President and Chief Executive Bruce Nuanes said he doesn’t expect that to happen once he moves his 2 1/2-year-old software and systems engineering company to the Business Technology Center.

“The infrastructure is set up to handle the kind of systems that we need,” he said.

To be considered for admission, a company must submit a four-page application and a business plan describing its product and target market. Prospective companies also are asked to share some financial data and background information about key managers. Companies that intend to stay in Los Angeles County are heavily favored, said Larry Gilbert, Caltech’s director of technology transfer, who serves on the center’s entry committee. At the entry committee’s first meeting last week, only two of six candidates--culled from an initial group of nearly 40--gained approval to join the center.

“We want to pick those companies that we believe can be successful and the BTC can provide added value and enhance the probability of success,” Gilbert said. “For a lot of them, their business plans are incomplete, their ideas are incomplete and the focus is not there.”

The Los Angeles area is home to high-tech incubators such as EC2 at USC and Bill Gross’ privately funded Idealab in Pasadena. But there is still more demand than supply, said Rohit Shukla, executive director of the Los Angeles Regional Technology Alliance.

“Clearly, the need exists for this space,” Shukla said. “If things start to really go south in the technology economy, this will keep certain technology ideas alive.”

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Times staff writer Karen Kaplan can be reached at [email protected].