Small Business Incubator Certification Program 2019 Annual Report Incubator Certification Program Overview Business incubators nurture the development Oklahoma Business of entrepreneurial companies, helping them Incubator Association survive and grow during the startup period, when they are most vulnerable. These programs The Oklahoma Business Incubator Association provide their client companies with business (OkBIA) was formed more than 20 years ago. The support services and resources tailored to young purpose of the OkBIA is to provide information, firms. The most common goals of incubation networking, guidance and assistance to incubator programs are creating jobs in a community, operators, as well as to work with the Legislature enhancing a community’s entrepreneurial climate, to promote and benefit business incubators and retaining businesses in a community, building tenants. or accelerating growth in a local industry, and diversifying local economies. Oklahoma Business Incubators In 1988, the Oklahoma Legislature passed the Incubators vary in the way they deliver their Oklahoma Small Business Incubators Incentives Act. services, in their organizational structure The Act enables the tenants of a certified incubator and in the types of clients they serve. As facility to be exempt from state tax liability on they are highly adaptable, incubators have income earned as a result of occupancy for up to differing goals, including diversifying rural five years. In 2001, the Legislature amended “the economies, providing employment for and Act” to extend the tenant’s tax exemption from five increasing wealth of depressed inner cities, to 10 years. The exemption remains in effect after and transferring technology from universities the tenant has graduated from an incubator. For tax and major corporations. Incubator clients are years starting before January 1, 2020, in order to often at the forefront of developing new and qualify for the tax exemption from the sixth through innovative technologies – creating products and the 10th year, the tenant must make at least 75 services that improve the quality of our lives in percent of its gross sales to out-of-state buyers, communities around the world. to buyers located within the state if the product or service is resold to an out-of-state customer, or to The earliest incubation programs focused on the federal government. a variety of technology companies or on a combination of light industrial, technology and For tax years starting after January 1, 2020, the service firms – today referred to as mixed-use requirement for the sixth through the 10th year is incubators. However, in more recent years, new not required. The exemption will be in effect for ten incubators have emerged targeting industries years as long as the tenant graduates from a certified such as food processing, medical technologies, incubator. space and ceramics technologies, arts and crafts, and software development. Incubator Since the inception of the Act, the State of Oklahoma sponsors have also targeted programs to support has benefited from increased revenues and increases microenterprise creation, the needs of women in the number of start-up and expanding small and minorities, environmental endeavors and businesses. These businesses have created jobs telecommunications. and enhanced economic activity in the Oklahoma communities in which they are located. A business incubator’s main goal is to produce successful firms that will leave the program financially viable and freestanding, usually in Oklahoma Department of two to three years. These incubator graduates Commerce and Incubators have the potential to create jobs, revitalize The role of the Department of Commerce in the neighborhoods, commercialize new technologies, incubator process is to certify the incubators and strengthen local and national economies. pursuant to O.S. Title 74 Section 5071-79. It is Typically, 30 percent of incubator clients graduate the responsibility of the incubator owner to hire each year. managers to manage and market their incubators and provide business services to their tenants. 2 Oklahoma Incubator NUMBER OF SMALL BUSINESSES LOCATED IN INCUBATORS Program Growth 0 50 100 150 200 250 31 certified small business incubators are operating 2019 in Oklahoma, with tenants ranging from small service companies to high-tech research and 2018 development operations and manufacturing entities. 2017 During 2019, Oklahoma incubator managers were 2016 asked to complete a questionnaire to document their activities for the current reporting period. Based 2015 on the information received from the responding 2014 incubator managers: 2013 2012 127 2011 small businesses 2010 are currently leasing space 946 in Oklahoma’s full-time jobs small business NUMBER OF JOBS CREATED BY INCUBATOR CLIENTS provided by incubators incubator 0 250 500 750 1000 1250 tenants 2019 2018 NUMBER OF INCUBATORS 2017 0 10 20 30 40 50 2016 2019 2015 2018 2014 2017 2013 2016 2012 2015 2011 2014 2010 2013 2012 1,023 small businesses have located in a small business incubator, throughout the life of 2011 Oklahoma’s Certified Small Business Incubator 2010 Program. 530 of those have graduated from the program or relocated to a larger facility. 2,246 people are currently employed by 297 of those businesses that remained in the state. Incubator Standards for Success Characteristics of Model Two Core Principles That Business Incubation Programs Characterize Effective Business Incubation: Commit to business incubation’s two core principles Obtain consensus on a mission that defines the The incubator incubator’s role in the community, then develop a aspires to have a strategic plan containing quantifiable objectives to positive impact on achieve that mission its community’s economic health by maximizing emerging 1 Structure the program for financial companies’ successes. sustainability by developing and implementing a realistic business plan Recruit and appropriately compensate management capable of achieving the incubator’s mission and helping companies grow 2 The incubator itself is a Build an effective board of directors committed dynamic model to the incubator’s mission and to maximizing of a sustainable, management’s role in developing successful efficient business operation. companies The Best Incubators Provide: Prioritize management time to place the greatest emphasis on client assistance, including proactive advising and guidance that results in Flexible space and leases company success and wealth creation Office services and equipment Develop an incubator facility, resources, methods and tools that contribute to the effective delivery of business assistance to client firms, as well An on-site incubator manager as a resource as address each company’s developmental needs for business advice Develop stakeholder support, including Exposure to a network of outside business a resource network, that helps the incubation and technical consultants, often providing program’s client companies and supports the accounting, marketing, engineering and incubator’s mission and operations legal advice Maintain a management information system Assistance with financing and collect statistics and other information necessary for ongoing program evaluation, thus improving effectiveness and allowing the program to Assistance with marketing evolve with clients’ needs 4 Success Stories Oklahoma’s incubators have many success stories. The examples below are just a few for 2019. Ninja Technologies data on any device. This brings these Launch Pad FT veterans into the focus of efforts to combat Edmond, Okla. cyber-criminal activity. Ninja Technologies joined Launch Pad FT Green Tree Project in June 2019. When Ninja Technologies Project 3810 was accepted to the Business Innovation Oklahoma City, Okla. Center’s incubator program they were given a highly secure and safe space to grow This is the time of year when many people their company. Ninja Technologies came welcome living trees into their homes for into the program with industry insight and the holidays, but the trees’ lives usually ready to make a meaningful change in the end as the holidays wind down. Often, the unregulated and dangerous electronics trees are simply thrown away, releasing recycling industry. Their core function is carbon dioxide into the air. However, one to help IT departments of any size, from Oklahoma City family established a rental government and non-government clients, tree business that gives new life to trees after securely recycle their used devices. the Christmas season. Through their business planning and Much like the trees she rents out, Samantha other Launch Pad FT relationships, Ninja Walker says The Green Tree Project has Technologies was introduced to another roots. “In 2016 we had a four-year-old child local company focused on bringing service placed in our home,” Walker said. “He had members into meaningful civilian careers. been through seven homes in six months. Through this relationship, and in partnership He was a brokenhearted kid.” with the Department of Labor and the state of Oklahoma, Ninja Technologies has Walker and her husband foster children developed an educational and on-the-job with special needs. That Christmas, they training pathway program that empowers went all out for the little boy - a fresh-cut veterans to translate their military experience tree, gifts, the works. But at the end of the into a highly focused cybersecurity holidays, they found the child in tears again. program. These veterans