A helping hand for Md. tech startups

A helping hand for Md. tech startups
Ann Lansinger, executive director of the Emerging Technology Center, and Billy Twigg, president and founder of Alexander + Tom, Inc., discuss a layout for one of his clients. ( photo by Donna Griffin)
Ann Lansinger is executive director of the Emerging Technology Center (ETC), a non-profit business incubator with headquarters in Canton that aids start-up technology-based companies. The ETC provides office space at subsidized rates, offers mentoring services and assists with other resources.

Lansinger has led the incubator since its inception in 1999. She was appointed by the Baltimore Development Corp.

Lansinger attended the University of Maryland Baltimore County (UMBC). Continuing her relationship with UMBC, Lansinger took over as the school's incubator manager in 1989.

After leaving UMBC in 1997, Lansinger was self-employed as a private consultant for two years. She worked with a company in Prince Williams County, Virginia, on incubator feasibility. In addition, she worked as a marketing assistant for a small information technology company.

Aside from her work with the ETC, Lansinger is president of the Maryland Business Incubation Administration. She also is chief coordinator for the National Business Incubation Association.

In an interview, Lansinger discussed the ETC and its mission.

What is the ETC and its purpose?

The Emerging Technology Center is a technology business incubator, and its sole purpose is economic development and technology commercialization. We achieve that mission by working with either newly formed companies or with companies that have come to us that are developing a new technology product or service and have a desire for business services, business adviser services. From an economic development point of view, we're hoping to grow technology companies in the city.

As executive director of the ETC, what is your job?

I've got a couple of hats that I wear. Since we're running a facility, I have a landlord hat. We rent space, we provide shared administrative resources within the facility, we do leasing, we do tenant problem consultations – that sort of thing. We provide a full menu of business services. My other hat is to direct a program of delivering customized mentoring services to each and every one of our tenants.

This means that we're going to help them with business planning, with market strategy, with product launch. We'll find assistance for them for legal issues, for revenue modeling, for any aspect of business that a company is likely to encounter. It's our contention that it would be difficult for any entrepreneur no matter how well prepared to start a business and have all the resources to bear or to know all the various aspects of business well enough personally.

So what we do is work with volunteer mentors in the city. We also have some in-staff expertise to sit down one-on-one with the entrepreneur, diagnose what their company's needs are and think through with them what they need to do in order to try to get to the next step of their company's growth more quickly and more effectively then they would have left on their own to find those resources.

Some of the people we work with that volunteer their time in the city are leading lawyers, accountants; we have people who do marketing for their business. We work with some academics and we work with serial entrepreneurs who have done this before. We also look to the universities. We can put them in touch with technology sources if they need consulting or they need partnering or they need to find interns or hire students. So there's virtually nothing we won't do to help a company get to the next step.

The ETC has three locations in Baltimore City. Is each location developed equally or is there an order of importance among the three sites?

There is no order of importance. [Canton], you'd call our administrative office. We just opened a new incubator over at the former Eastern High School, so that one's new. We still have a lot of space available for leasing there. The other one is the Bard Life Sciences Labs. That's at 600 East Lombard Street; it's a part of Baltimore City Community College. Now that one is one that we're planning to phase out within a year or so. And that's being done because I don't think the college is planning to keep that building for the long term and because the University of Maryland and Johns Hopkins [University] are both building life sciences research parks.

Do you plan on opening up another center?

No, I plan to shut down the Bard Life Sciences Labs and work with the two organizations that are going to be providing facilities to startup companies to help them with their incubation needs.

In your opinion, by joining the incubation process, does a business acknowledge it cannot stand alone in its earlier stages? How long after the incubation process begins does a business reach a level where it can stand on its own?

I think that's kind of different for each company. Some of our companies might have been started by a graduate student who has never had experience in business before. In a case like that, yeah, it's going to probably take a good two or three years. In another case, someone might come to us who started a company before it appreciates the value and need of the mentoring services, because as we said no one can do it alone and no one should be able to know it all.

In a case like that we could probably get through the incubation process much quicker. In terms of a life sciences company, it will probably take them a little longer for the simple reason that it takes them a little longer to get the products out on the market.

How do the business owners generally react to the incubation process in terms of their mindset -- knowing that they are being incubated as opposed to creating the business solely on their own merit?

They're here for that reason. Most of them come here because they're looking for that kind of help. It's a low-cost way of getting very top-level talent in to advise you. Now that key word here is advise; we're not directing them. We will provide them with the most up-to-date and the most well-thought through advice possible. They make the decision of whether or not to take that advice, so they have total and complete freedom.

When speaking with a potential client, how does the ETC express that it is qualified to assist startup companies?

I have almost 15 years of experience in the business incubation industry, so I've got a long background. We have an entrepreneur in residence who has a very deep business and technical background. We've got connections with the four major research universities in our area. So we can link them directly.

Then we have a list of between 30 and 40 volunteers. These are people who are partners in law firms, who are high-level partners with the leading accounting firms in town or people who have done it before, maybe have started a couple companies. So I think that our background and experience speaks for itself.

Are the companies you handle mostly startups or do you deal with established companies that may be in trouble?

In our case, our admission criterion is that they be a startup company. We define that as less than five years old. They have to be producing a technology product or service, and they have to be interested in coaching services. If someone came to us in dire straits and they were 15 years old, I think that we would [determine] their needs and point them in the right direction, but we would not take them into the incubation program per say because they don't fit our criteria. However, we have on occasion had graduate companies that have been through the program come back because they have been faced with a significant challenge or opportunity.

Does the ETC gain anything when an incubated company succeeds and, on the opposite end, does the ETC lose anything if an incubated company fails to achieve its goal?

Well, yes and no. Obviously our accountability is going to be measured on the success rates of our companies. So we hope to see that our companies survive and thrive -- it makes us look better. But, going beyond that, people who come into the facility pay rent and that rent is based strictly on facility-related expenses. We have to break even on the real estate; we do not make any profit on the real estate.

People who go into our incubation program will provide us with either royalty or a small amount of equity in the company. A typical equity position is 1% per year for each year in the program. And our risk there of course is going to be if the company stays small and doesn't particularly become profitable, we're not going to get any revenue from its stock.

If, however, we have one that really makes it quite well, we will make money on the stock and any money that comes from the stock will go right back into the program to assist other entrepreneurs coming through the system. The ETC, per say, will profit as our companies profit, but not the individual people who work for the ETC. It goes strictly to the program.

Last year, the U.S. Department of Commerce's Economic Development Administration and the Maryland Technology Development Corp. combined to give the ETC a $400,000 grant. How has the grant money served the incubation process?

That money was spent towards building out the Eastern High School property. We have taken that building, which was empty for a number of years, and John Hopkins bought it a few years ago. Johns Hopkins renovated the first two floors of the three story building for their own IT administrative offices.

It was always their intention that an incubator would occupy the third floor of the building, so a number of partners got together several years ago to put together a nice funding program and plan for putting an incubator into that facility. We've put the money in that area deliberately in order to provide the best and most modern system of IT, broadband, and telecom to the clients who go in there.

Would you say that you have a lack of startup companies?

Yeah, we did for a couple of years. During 2000 there was something called the Internet bubble, it bust. A lot of those startup companies that we would normally have attracted were unable to get funding during that period of time because a lot of investors were frightened off because of the IT situation. Now we're seeing a turnaround. I think since the beginning of this year, we've got 12 or 13 new companies into the ETC. During the entire year before that we didn't have that many. So, we're seeing a turnaround, but what we experienced I think is the same thing the entire economy experienced in 2002-03 in terms of a turndown in the technology economy because of the IT bust. So the pendulum swung from one extreme to the other and it's starting to come back.

Do you feel the problem of a lack of companies has been corrected?

I don't think corrected is the exact word I would use. I would say it's more like the startup environment is definitely improving. All of the incubators in Maryland -- not just ours -- are starting to see an increase in applications of new companies. I believe it's because there's been an improvement in the funding cycle, there's more money available. As far as what's happening in the city, we have a much larger incubator network than some of the other incubators in the state do. We have a lot more space to fill and a lot more capacity to handle to start working with startup companies than some of the others do.

Why incubate technology companies versus other small businesses, and are there any specific problems that put small tech firms at risk?

A lot of the technology companies have to perfect the product or finish their research and development or in the case of life sciences to go through clinical trial and FDA requirements before they can start selling the products they've delivered. In the meantime, these people are more likely to need external investing than perhaps some other companies might. In some cases, technology companies will provide consulting services in order to bring in revenue to help pay for their research and development for their eventual product.

But, the problem is still the same, most of the companies need outside investments and a lot of other companies do not, so we feel it's especially important to try and incubate the technology companies because we feel that these folks have a longer time between the beginning of the company and the eventual launch of a product and because, quite frankly, a lot of these companies are started by scientists or technologists that may not have a wide-ranging business background.

Does the ETC make efforts to recruit minority- and female-owned businesses?

We certainly do. We have been working specially with Morgan [State University] in the past several months. Over the years it has been difficult to identify entrepreneurial talent there because they never had a tech transfer office. People like me work with the tech transfer offices to identify what's going on within the universities, who the potential entrepreneurs are or where the potential commercial possibilities are. They now have tech transfer office. We've been over there on several occasions.

We're looking to Morgan specifically to try and help us find talented minority entrepreneurs for our new incubator at Eastern, [which is] close to Morgan. We have met with several of their folks and we have two minority entrepreneurs that have just been recently accepted into the new incubator that have ties to Morgan.

How many minority- and female-run businesses have previously been incorporated into the incubator process?

Not nearly as many as we would like. I think that in the technology business, it's still true that a lot of the technologists have been white males. [Incorporating minorities and females] is one of our major goals.

What special issues face minority- and female-run businesses that are trying to blossom in the Baltimore area?

I don't think there are [any]. I think that there are set-aside grants and I think that those people have the ability to compete on a totally even footing with other companies for some of the federal and state grants that are available. We've got a very nice minority company here right now, which is competing for funding, and I think they'll get it.

I have no reason to believe that women and minority firms won't be extremely successful when commercialized, because we've got some incredibly bright women and minorities that we have been working with, we just need to find more of them.

In early June, the ETC appointed five new board members from various technological backgrounds to increase its total number to approximately 20 members. What have the new members done to enhance the board?

They're bringing different points of view. We had a wonderful board meeting, people were really engaged, people were arguing, "We should be doing this, we should be doing that." I think we need to do some planning in order to bring us to the next step. I love that because I can get folks in who are really engaged with different points of view -- some are representing academia, some are representing private business, some are representing the legal and accounting professions. We don't want to be in a position when we're only listening to people who think like us.

What is the ETC's greatest success story?

One called Reactive Nanotechnologies is one of our graduates. I think they've gotten over $8 million in funding and now have 21 people working for them. Another one is Key Technologies, which is an absolutely wonderful customized design engineering firm right over here in Federal Hill.

What makes those businesses successful?

In terms of Reactive Nanotechnologies, they've got a platform technology -- it's nanotech. They've developed this really cool film that is like an instant soldering mechanism, and when you join compounds together it ignites almost instantaneously -- completely dissolves itself in flame. They've got this new technology that is totally interesting to NASA, to the construction industry, to a number of industries and they're doing very well.

Is there an individual mark that you would hope to leave on the center?

I would like to leave behind a thriving incubator network that is producing new clusters of technology companies in the city and leaving behind more opportunities to have meaningful employment.