The Youngstown Edison Incubator Corporation, operating as YBI, is a 501(c) 3 charitable, non-profit corporation. With a physical presence in downtown Youngstown, it is an active collaborator and resource provider in a 21 county region of northeast Ohio, but most specifically in Mahoning, Trumbull and Columbiana counties. YBI focuses its marketing, portfolio company recruiting, networking and resource acquisition efforts on a larger geographic market comprised of the Cleveland to Pittsburgh corridor seeking to attract those technology entrepreneurs to the Mahoning Valley.
Community leaders committed to the development of an incubator in the late 1980's as the Mahoning Valley, historically heavily dependent on the manufacturing sector, had experienced a tremendous erosion of its employment base. The Incubator concept was borne from the donation of a suitable facility in downtown Youngstown as well as an opportunity to join the Edison Technology Incubator Program, as operated by the Ohio Department of Development (ODOD). Constructed in 1915, the main facility is five floors, approximately 25,000 square feet and includes an attached two story, 10,000 square foot storage facility. The facility was renovated in two phases. In the first phase, after securing federal, state and local government grants exceeding $1.3 million, it commenced operations in late 1995 as a mixed use incubator. In 1997, YBI undertook the second phase of the building renovation, estimated at $830,000 and funded by a federal grant and private donations.
ODOD provides a significant amount of the operating funds. Presently, YBI is one of 12 such incubators. Other operating funds are generated by foundations, private donations, rents and service fees.
In the late 1990's at the direction of ODOD, YBI undertook an extensive analysis to align its operations with Ohio's policy to strategically invest its financial and human capital resources into five core competencies: information technology, biomedical, power and propulsion, instrumentation controls and electronics, and advanced materials.
YBI addressed this challenge by not only aligning its focus to one of the core competencies but to also analyze the incubation model, as a whole, and to develop a model that created an innovative, robust environment for technology-based entrepreneurs.
This extensive study and research yielded several conclusions about the incubation of technology-based businesses in the Mahoning Valley. Those conclusions were:
- The traditional models of incubation would not work.
- Given limited resources and funding availability, it would be difficult and cost-prohibitive for YBI to successfully incubate a wide range of technologies.
- Startup funding for technology-based businesses is limited, leaving many promising technologies and companies without funding.
- The quality and the quantity of local deal flow is insufficient to make YBI a success.
Concurrently, YBI surveyed its immediate environment including educational, industrial and economic development resources, as well as those of surrounding communities and incubators. Based upon the following conclusions, it was determined that YBI should commit itself to information technology, and more specifically, business to business (B2B) software development:
- Information technology, specifically software development, has a relatively low barrier to entry.
- Significant development opportunities existed as many DOS-based applications were primed for transition to Windows-based solutions, providing verticals that were under-served or not served.
- A focus on B2B, rather than B2C (business to consumer), further reduced the start-up costs and allowed for strategic utilization of resources.
- B2B software companies are generally""fast to market."
- The capitalization requirements are comparatively lower for B2B.
- The institutions of higher learning in the immediate vicinity provided an appropriate talent pool and workforce.
- The facility and limited financial resources of YBI could reasonably support and nurture the core competency of information technology.
- The concentration of basic manufacturing in the Mahoning Valley provided an opportunity to integrate software applications to improve operating efficiencies and pursue new markets.
To address the challenges and capitalize on the strengths described above, YBI developed the following goals for its incubation model:
- Deliver a hybrid model of incubation that weds the best practices of traditional non-profit and for-profit incubation models, specifically addressing the unique challenges of incubating technology based businesses in the Mahoning Valley.
- Focus incubation services on one technology that can be best supported by the resources available in the Mahoning Valley.
- Deliver incubation services that allow promising new technologies and companies to internally or self fund by eliminating, minimizing or deferring operational startup expenses.
- Deliver business development services for startup companies and entrepreneurs that are unrivaled by any other incubation program in the Cleveland to Pittsburgh corridor.
In January 2000, YBI adopted a new mission statement that focused the organization on accelerating the formation, growth and success rates of scalable, technology based businesses within the Mahoning Valley.
Information technology is enabling technology which has application in all industries. YBI's portfolio companies have developed applications for audience response in educational, government, entertainment and business settings, retail point of sale inventory management, commercial landscaping, health care and charge capture, advanced manufacturing, data security, environmental/alternative energy and biomedical.
By focusing on one technology, YBI has been able to invest in creating and maintaining a robust, resource rich environment for software companies and entrepreneurs. This has allowed YBI to market its resources to a specific market and create deal flow. The facility began accepting qualified tenants in 2000 and since then has achieved notable success with several portfolio companies. In turn, these successes have raised the visibility of YBI, and enhanced its deal flow and created other opportunities for collaboration.