The young startup incubator run by the Goleta Entrepreneurial Magnet is well below capacity but not without potential, leaders say, which is why its merits are under evaluation.
GEM executive director Dave Adornetto last week presented the Goleta City Council with an annual report of the partnership created in 2012 by the Goleta Valley Chamber of Commerce, the City of Goleta and UC Santa Barbara to attract and nurture local tech startup businesses.
“The spirit of the partnership is strong,” said Adornetto, who also serves as director of UCSB’s Technology Management Program. “Unfortunately, the impact we hoped to be making we’re not at this point in time.
“I think we can do a whole lot more to reach into our campus, including faculty.”
Much of the discussion focused on GEM’s incubator space within the Orbital ATK building at 600 Pine Ave. in Old Town Goleta.
After opening in the summer of 2014, the startup space has failed to maintain steady paying tenants, with just 30 percent of the facility filled last week.
Counting the startups that Adornetto lets use the office space for free — many of them student teams coming out of UCSB’s TMP New Venture Competition — just half the facility is filled, he said.
Offering free or subsidized rent hasn’t worked as well as organizers had hoped.
Adornetto said rent is currently subsidized at $1,500 per month, which at full capacity translates to $9,000 a month in revenue for GEM. He said the partnership that gained nonprofit status in 2014 has a cash balance of $85,000.
“We compete with their living rooms and their kitchens,” he noted of startup entrepreneurs. “Even when we offer free rent we don’t see them very often.
“When you don’t get that kind of activity, it’s difficult to create that hub of energy.”
Adornetto volunteered for the director role in July with the departure of Doug Lynch, who said he wanted to go on to different endeavors.
He took the leadership transition as an opportunity to evaluate GEM, which is funded by the three entities and local angel investor Chris Felipe, each at $50,000 per year for three years.
After visiting other campus incubators, interviewing past GEM tenants and establishing a six-member board of advisers that include former CEOs and entrepreneurs, Adornetto said he learned a lot.
He said GEM might want to look at a separate foundation to fund it, or try to find a new location that’s easier to find and access from UCSB.
Adornetto described GEM as a safe landing place for young startups, comparing it to the other incubators in town: Impact Hub, Noospheric, SYNERGY Business & Technology Center, Tech Haus and Workzones.
He emphasized the word “safe” because some other incubators offer entrepreneurs help in exchange for stakes in their fledging companies.
GEM needs to continue offering a subsidized, scaling rent that increases over time, Adornetto said, along with expanding its access to local angel investors.
Councilman Tony Vallejo questioned whether the location was as important as finding funding sources.
Mayor Pro Tem Jim Farr said he always envisioned the GEM incubator as part of the revitalization of Old Town.
“We’re all very much invested in this process,” he said. “I’d be more enthusiastic if you find a place in Old Town. Can you promise it stays in Goleta?”
Adornetto said he couldn’t rule out anything at this point but promised to come back to the council before any decisions were made.
He conceded that some good startup teams may have gotten away from GEM, neglected in last summer’s transition.
The council members said they were impressed with the presentation and would be looking forward to following GEM’s progress.
— Noozhawk staff writer Gina Potthoff can be reached at gpotthoff@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.