Small Incubator Certification Program 2018 Annual Report Incubator Certification Program Overview

Business incubators nurture the development of Oklahoma Business Incubators entrepreneurial companies, helping them survive In 1988, the Oklahoma Legislature passed the and grow during the start-up period, when they are Oklahoma Small Business Incubators Incentives Act. most vulnerable. These programs provide their client The Act enables the tenants of a certified incubator companies with business support services and facility to be exempt from state tax liability on income resources tailored to young firms. The most common earned as a result of occupancy for up to five years. goals of incubation programs are creating jobs in a In 2001, the Legislature amended “the Act” to extend community, enhancing a community’s entrepreneurial the tenant’s tax exemption from five to 10 years. The climate, retaining in a community, building exemption remains in effect after the tenant is no or accelerating growth in a local industry, and longer an occupant in an incubator. In order to qualify diversifying local economies. for the tax exemption from the sixth through the 10th year, the tenant must make at least 75 percent of its Incubators vary in the way they deliver their services, gross sales to out-of-state buyers, to buyers located in their organizational structure and in the types of within the state if the product or service is resold to an clients they serve. As they are highly adaptable, out-of-state customer, or to the federal government. incubators have differing goals, including diversifying In addition, the Act enables the sponsor of a certified rural economies, providing employment for and incubator facility to be exempt from Oklahoma income increasing wealth of depressed inner cities, and taxes for a period of 10 years. transferring technology from universities and major corporations. Incubator clients are often at the forefront Since the inception of the Act, the State of Oklahoma of developing new and innovative technologies – has benefited from increased revenues and increases creating products and services that improve the quality in the number of start-up and expanding small of our lives in communities around the world. businesses. These businesses have created jobs and enhanced economic activity in the Oklahoma The earliest incubation programs focused on a variety communities in which they are located. of technology companies or on a combination of light industrial, technology and service firms – today referred to as mixed-use incubators. However, in Oklahoma Business more recent years, new incubators have emerged Incubator Association targeting industries such as food processing, medical The Oklahoma Association technologies, space and ceramics technologies, arts (OkBIA) was formed more than 20 years ago. The and crafts, and software development. Incubator purpose of the OkBIA is to provide information, sponsors have also targeted programs to support networking, guidance and assistance to incubator microenterprise creation, the needs of women operators, as well as to work with the Legislature to and minorities, environmental endeavors and promote and benefit business incubators and tenants. telecommunications.

A business incubator’s main goal is to produce Standards for Success successful firms that will leave the program financially The International Business Association’s viable and freestanding, usually in two to three years. (INBIA) developed a set of industry guidelines to help These incubator graduates have the potential to incubator managers better serve their clients. INBIA create jobs, revitalize neighborhoods, commercialize research has consistently shown that incubation new technologies, and strengthen local and national programs that adhere to the principles and best economies. Typically, 30 percent of incubator clients practices of successful business incubation generally graduate each year. outperform those that do not. The following industry guidelines are replicable and broadly applicable to incubation programs around the world, regardless of their focus or mission.

2 The Best Incubators Provide Services Such As: In summary, successful business incubators operate • Flexible space and leases as a business, have a positive impact on a community, and provide a nurturing environment, hands-on • Office services and equipment assistance and a variety of services for start-up and • An on-site incubator manager as a resource for fledgling firms during their most vulnerable years. business advice Research has shown that incubator companies are much more likely to grow into viable job-creating • Exposure to a network of outside business and businesses than startups without such support. technical consultants, often providing accounting,

marketing, engineering and legal advice Oklahoma Department of • Financing assistance Commerce and Incubators • Marketing assistance The role of the Department of Commerce in the incubator process is to certify the incubators pursuant Characteristics of Model Business Incubation to O.S. Title 74 Section 5071-79 and convene critical Programs: partners to assure standards of excellence. It is the Commit to the two core principles of business responsibility of the incubator owner to hire managers incubation to manage and market their incubators and provide business services to their tenants. Obtain consensus on a mission that defines the incubator’s role in the community and develop a As 2018 began, Oklahoma had 31 certified strategic plan containing quantifiable objectives to incubators. We certified one new incubator, Project achieve the program mission 3810 in Oklahoma City. One incubator, Pontotoc Structure for financial sustainability by developing and Technology Center in Ada, closed in 2018 because implementing a realistic business plan the school decided to go a different direction with the Recruit and appropriately compensate management space. As 2018 comes to a close, 31 certified small capable of achieving the mission of the incubator and business incubators are operating in Oklahoma (see having the ability to help companies grow Appendix), with tenants ranging from small service companies to high-tech research and development Build an effective board of directors committed to the operations and manufacturing entities. incubator’s mission and to maximizing management’s role in developing successful companies During 2018, Oklahoma incubator managers were Prioritize management time to place the greatest asked to complete a questionnaire to document their emphasis on client assistance, including proactive activities for the current reporting period. Based advising and guidance that results in company on the information received from the responding success and wealth creation incubator managers, 119 small businesses are Develop an incubator facility, resources, methods currently leasing space in Oklahoma’s small business and tools that contribute to the effective delivery of incubators. These incubator tenants provide 827 full- business assistance to client firms and that address time jobs. the developmental needs of each company Throughout the life of Oklahoma’s Certified Small Develop stakeholder support, including a resource Business Incubator Program, a total of 979 small network, that helps the incubation program’s client businesses have located in a small business companies and supports the incubator’s mission and incubator. Of those, 503 have graduated from the operations program and relocated to a larger facility and 257 Maintain a management information system and of those companies have remained in the state. The collect statistics and other information necessary businesses that remained in the state report they for ongoing program evaluation, thus improving a currently employ 2,122 people. Commerce believes program’s effectiveness and allowing it to evolve with the incubator program will continue to contribute the needs of the clients significantly to Oklahoma’s economy.

3 Oklahoma Incubator Program Growth During 2018, Oklahoma incubator managers were asked to complete a questionnaire to document their activities for the current reporting period. Based on the information received from the responding incubator managers:

30% OF INCUBATOR CLIENTS 119 GRADUATE EACH YEAR small businesses are currently leasing space A business incubator’s main in Oklahoma’s small goal is to produce successful business incubators firms that will leave the 827 program financially viable and full-time jobs freestanding. provided by incubator tenants

These incubator graduates have the potential to create jobs, revitalize NUMBER OF INCUBATORS neighborhoods, commercialize new technologies, and strengthen local and national economies. 0 10 20 30 40 50 NUMBER OF JOBS CREATED BY INCUBATOR CLIENTS

2018 0 250 500 750 1000 1250 2017 2018 2016 2017 2015 2016 2014 2015 2013 2014 2012 2013 2011 2012 2010 2011

NUMBER OF SMALL BUSINESSES LOCATED IN INCUBATORS 2010 0 50 100 150 200 250

2018 31 certified small business incubators are operating in Oklahoma, with tenants ranging from small service 2017 companies to high-tech research and development operations. 2016 2015 979 small businesses have located in a small business incubator, throughout the life of Oklahoma’s Certified Small 2014 Business Incubator Program. 2013 503 have graduated from the program or relocated to a 2012 larger facility.

2011 2,122 people are currently employed by 257 of the businesses that remained in the state. 2010

4 Success Stories Oklahoma’s incubators have many success stories. The examples below are just a few for 2018.

Purse Power, Inc. Purse Power continues to utilize the resources and connections of Launch Pad FT to grow their Launch Pad FT business. For 2019, Purse Power will continue Edmond, Okla. to refine their technology platform, increase the download and usage rates of their extension and Purse Power is a resident client of Launch Pad gather data about consumers’ ability to drive FT which is a business incubator at the Francis positive change by using their purchasing power. Tuttle Career Technology Center in Edmond. Purse Their tagline says it all: Purse Power – We have it. Power’s mission is to help women use their massive Let’s use it! purchasing power to create greater economic equality and safety for females of all ages. Their directory of women-owned and women-led businesses is rapidly Coast Audio Video becoming one of the largest of its kind in the world. By Center for Emerging Technology and helping consumers find and buy from companies that Entrepreneurial Studies (CETES) actively support women and by working to create one Lawton, Okla. of the largest funding streams in the country to reduce domestic violence, Purse Power is poised to shatter Chris Coast, president and CEO of Coast Audio glass ceilings and change lives. Video, has been a tenant of the CETES business incubator at Cameron University since April, 2016. Since their admission into Launch Pad FT, Purse Coast has more than 20 years of experience in the Power continues to define the market on how audio, video, and lighting industry. From the age purchasing power can be used to drive positive of 15, Coast attended AV conferences, attained change. During the summer of 2018, Purse Power several technology certifications, and used his participated in the Carnegie Mellon University MSIT training to serve his local church. After taking a job eBusiness Technology Program. During this program, at a local music store, he has helped produce local a team of some of the top e-commerce students in the and national music and entertainment acts. Coast country worked to help Purse Power identify ways to has gained knowledge and experience over the implement their mission as well as develop the initial years to further his passion. prototype of their technology platform. The program was a tremendous success and led to the creation During its time in the incubator, Coast Audio Video of a Purse Power Chrome Extension. This has grown from an ambitious start-up to a now extension easily identifies companies that are women- fully-fledged, flourishing company, providing a full owned or women-led while a consumer is shopping, range of services including design, service, and from a desktop online. Users simply download the audio/video installation, surveillance, as well as pro Google Chrome Extension and look for the Purse lighting systems. The team is comprised of certified Power logo beside the companies and products that experts in the AV industry and strive to be on the are led by women CEOs, or are 50 percent owned by cutting edge of technology to help achieve the women, or have at least 20 percent women on their company’s mission statement...”Connecting people board. to your message.”

The creation of the extension provided the opportunity Having matured to capacity within the CETES for Purse Power to partner with the National Coalition incubator, Coast Audio Video will now graduate to Against Domestic Violence (NCADV). For every opening its first brick and mortar office, located in download of the extension completed, Purse Power the heart of Lawton. will send a donation to the NCADV to help provide education, services, and support to those affected by domestic violence.

5 Next Frontier, LLC ecosystem we are creating at the University of Oklahoma,” said Daniel Pullin, dean of Startup 405 Michael F. Price College of Business OU. “His Norman, Okla. engagement with the Tom Love Innovation Hub and other collaborators is catalyzing the future A Norman-based , Next Frontier economy of Oklahoma and advancing the global LLC, received nearly $1 million dollars in funding from competitiveness of the nation.” the U.S. Department of Defense through the Small Business (STTR) program. Next Next Frontier LLC is part of a business incubator Frontier LLC is focused on developing innovative program, Startup 405, operated by the Norman software relevant to the design of next generation Economic Development Coalition (NEDC). hypersonic vehicles. A hypersonic vehicle is a vehicle that travels at least four times faster than the speed- “It is exciting to see the results of our joint efforts of-sound, or greater than Mach 4. A hypersonic to cultivate entrepreneurial activity materialize vehicle can be an airplane, spacecraft, etc. Dr. through success stories such as Next Frontier Prakash Vedula, founder and CEO of Next Frontier LLC,” said Maureen Hammond, Vice President of LLC, is a professor in the School of Aerospace and NEDC. “Dr. Vedula’s leadership and commitment Mechanical Engineering at University of Oklahoma to research and development of his innovative (OU). His journey into exploration of high-impact products will have a considerable impact within fundamental research and for the the state of Oklahoma and nation, yielding job, benefit of the local community and the nation at knowledge and wealth creation.” large is sure to inspire other entrepreneurs in the OU community. Quest RTS His startup focuses on development of fast and Meridian Tech. Center for Business Development innovative algorithms for prediction of complex Stillwater, Okla. flow behavior relevant to hypersonic flows. Product relevant to these algorithms will not only Chandler’s Acord Transportation dispatches enable efficient design of hypersonic vehicles but will dozens of trucks each day to transport materials also fill an important need in the context of national across Oklahoma such as fertilizers, propane, security. From recent news and events around the butane, asphalt, road oils and more. Until last world, it appears that there has been increased year, the task of dispatching drivers, logging emphasis to strengthen the U.S. position in global their deliveries and preparing invoices had hypersonic battlespace and Dr. Vedula believes that been a time-consuming, labor-intensive activity. his company’s product could be a key player in this The firm began using a beta version of a new context. software called Land Traffic Control developed by Stillwater’s Quest RTS specifically to automate the At a community level, Dr. Vedula believes there is a trucking industry’s daily dispatch challenge. great opportunity to make an impact in the state of Oklahoma and the environment for entrepreneurship Quest RTS – for Remote Technical Services – was is promising in Norman. He believes that such an founded in 2017 and released a beta version of entrepreneurship friendly environment could not the Land Traffic Control software in July of that have been possible without the visionary efforts of year. The public version of the software went live many leaders in the university and local community. at the end of July 2018. His company has close collaborations with the OU Gallogly College of Engineering and Tom Love “A lot of the smaller trucking companies are Innovation Hub, Norman Economic Development pretty analog on how they dispatch,” said Tony Coalition and University of Illinois, Urbana- Payne, Quest RTS founder and CEO. “They Champaign. have dispatchers receiving calls, writing down loads that customers want transported, then “Dr. Vedula’s intellectual leadership, energy, and calling truck drivers with their dispatch.’ Once enthusiasm are emblematic of the growing innovation the delivery is completed, drivers call back to the

6 office with the bill of lading on what they delivered, and that’s what’s going to make them successful,” the number of gallons used on the run and the hours Rickelman said. they spent on the road. Office staff writes down the numbers, then attempt to create an invoice in a timely In addition to the Land Traffic Control software, manner. When there are so many truck drivers and Quest also developed a companion scanning so few dispatchers, it becomes a bottleneck,” Payne software and a “dashboard” that permits users to said. track all their drivers, deliveries and other critical Land Traffic Control provides digital alerts to drivers information in real time. via mobile devices. Payne describes it as an enterprise resource planning (ERP) software. News of the Quest RTS innovation traveled quickly across the trucking industry as people “They get their loads, we know when they’ve began to hear about the successful beta test and accepted a load, and as soon as they complete a automation features built into the software. load and enter the gallons, the back office knows in seconds that the load is complete and has all the “We are actually starting to get cold calls,” Payne information.” said. “They are hearing about our software and integration. I just think word-of-mouth and “After our first batch went in automatically, we got a community is going to be great for us.” call from the CFO at Acord Transportation telling us that we absolutely knocked it out of the park,” Payne said. “He was just ecstatic.” XRG Technologies The Forge Tulsa, Okla. Lee Durbin, Acord Transportation’s chief financial officer said, “Using Land Traffic Control, we have In 2017, XRG joined The Forge business incubator streamlined our work flow and eliminated a ton of in downtown Tulsa with hopes of learning how to busy work.” successfully launch and grow a business. For the past year, Quest RTS has been headquartered Focusing on fired equipment, XRG delivers at the business incubator on the campus of the advanced engineering and procurement Meridian Technology Center. Payne describes it as a solutions to the power, refining and petrochemical collegial atmosphere in which he can bounce ideas industries. and challenges off of fellow entrepreneurs. Since its incubator graduation in 2018, the “This has been amazing for us,” Payne said of the company has grown by 66 percent in personnel incubator experience. “There are so many brilliant and and has acquired business from companies such bright people here. It’s nice not to be on an island by as ExxonMobil, Chevron, Valero, Suncor and the yourself.” likes. XRG’s first-year revenues reached nearly $1 million with the help of the Forge and its fantastic Brad Rickelman is assistant director of the incubator, mentors. Through the Forge’s programming, XRG which is formally known as the Center for Business acquired business acumen and resources that Development. are helping the company grow tenfold over the next few years bringing in millions of dollars to the “Tony came to us with this great idea and is going Oklahoma and Tulsa economy. gangbusters on it,” Rickelman said. “But in terms of being a businessman, he was just flailing.” XRG now employs 10 engineering professionals and is currently in the process of hiring four more. The incubator staff and fellow entrepreneurs offer The company has already outgrown its first office assistance and feedback that a small business such space (outside the business incubator) and is as Quest RTS might not otherwise afford. now looking for larger offices to accommodate the “We are trying to assist them in becoming a better anticipated growth. manager, a better owner, a better business person

7 8

1 1 1 1 1 1 1 awhuska 1 1 1 1 2 2 1 Oklahoma 1 1 Stroud Certified 1 4

Incubators 1 1 1 1

1 2 1

# Number of incubators in the area Suort Services Offered Current Te of Tenant umber Incubator ocation Businesses Caacit of Other Services Targeted Tenants Provided Comuter etork Phone Service Business Planning Marketing Assistance Conference oom

Southwest Technology Altus Aviation 1 0 Center Business Mfg. and Incubator General Use

Northwest Technology Alva Mfg./ Mixed 2 0 Center Small Business Use Incubator

Tri-County Technology Bartlesville Mfg./Mixed 12 4 Internet access, Center Business Use Mail/message service, Assistance Center shared copier and fax, business counseling

RCIDA (Rogers County Chelsea Mfg./Mixed 1 1 Training, safety classes Industrial Development Use through NE Tech Authority) NE Tech Business Incubator

Central Oklahoma Drumright Mfg./Mixed 2 1 Business Job Use Development Corporation

Duncan Center for Duncan Advanced 22 7 Business Development Mfg.

Francis Tuttle Edmond Mixed Use 12 7 The Launch Pad

Strate Center for Enid Mixed Use 12 6 Coaching, training and Business Development goverment contracting assistance

Major County Fairview Mfg./Mixed 6 3 Business guidance, Economic Use legal and Development advice, fax, copy, Business Incubator secretarial assistance

Caddo iowa Business Fort Cobb Mfg./Mixed 4 2 OBAN coordinator Development Center Use on site

Artist Incubation, Inc. Guymon Artists 2 1 X X X X X Gallery space, openings

Hobart Economic Hobart Mfg./Mixed 5 1 X X X X X Financing Development Authority Use Business Incubator

RCIDA / NE Tech Inola Mfg./Mixed 6 2 Shared fax and copier Business Incubator Use

Center for Emerging Lawton Technology 8 7 X X X X X Students, interns, Technology and -based faculty, video Entrepreneurial Studies conferencing, printing, - Cameron University printer/copier/scanner

9 Suort Services Offered Current Te of Tenant umber Incubator ocation Businesses Caacit of Other Services Targeted Tenants Provided Comuter etork Phone Service Business Planning Marketing Assistance Conference oom

Great Plains Lawton Mixed Use 24 15 X X X Business strategy Technology Center financial management

Startup 405 Norman Technology 6 3 X X X X (formerly eTec) -based

Acorn Growth Oklahoma Aerospace 10 3 X X X X X Financial planning, Companies City Defense business development and capital

Moore Norman Oklahoma Mfg./Mixed 7 4 X X X X Business guidance and Technology Center City Use support, event Business Development promotion, financing, Center conference center

Project 3810 Oklahoma Mixed 6 2 X X X X Paint Booth City Use

The Catbird Seat Oklahoma Mfg./Mixed 6 0 X X X X Business guidance and UCO City Use support, event promotion, financing, conference center

RCIDA / NE Tech Oologah Mfg./Mixed 2 2 X X X Training, safety classes Business Incubator Use through NE Tech

Tri-County Technology Pawhuska Mixed 12 5 X X X Business guidance and Center Pawhuska Use support, event Incubator promotion, financing, conference center

Pioneer Technology Ponca Service 7 3 X X X Color copier, fax Center City and machine, receptionist LightMfg. on site management counseling, free business classes

Seminole Business Seminole Mixed Use 2 2 Development Center

Technology 15 15 Website development, or Innovative seed capital assistance, Process/ metnoring shared Service receptionist and clerical

Accelerate OSU OSU 20 11 Accounting and legal Student-Led services, grant writing Ventures assistance and offer funding assistance.

10 Suort Services Offered Current Te of Tenant umber Incubator ocation Businesses Caacit of Other Services Targeted Tenants Provided Comuter etork Phone Service Business Planning Marketing Assistance Conference oom

Central Oklahoma Stroud Mfg. 1 1 X X Business and Job Development Corp

Tonkawa Business Tonkawa Mfg./Mixed 4 1 X X X X Incubator LLC Use

Hemphill Create Tulsa Mfg. 10 6 X X X Industrial warehouse / manufacturing space and services such as cutting steel and forklift operationg for tenants

The Forge Tulsa High Growth 6 3 X X X Milestone management, Mfg./Energy/ mentoring, business Tech coaching

Northwest Tech Small Waynoka Mfg. 2 1 X X X Business Incubator

11 900 N. Stiles Ave., Oklahoma City, OK 73104 • 405-815-6552 • 800-879-6552 • OKcommerce.gov