Sunday, March 18, 2001

Warm welcomes remain for startups


Over-the-Rhine incubator expands number of free services

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        Free.

        That's the offer Main Street Ventures, the Over-the-Rhine technology incubator, is making to startup companies.

        Less than 2 years old, the nonprofit incubator has had to grow up fast. It began by offering technology startups six months of free office space and telephones until the venture capital money rolled in.

[photo] George Molinsky (left) Cincinnati lawyer and chairman of Main Street Ventures, and Dave Noonan, co-executive director of MSV, use their powerbooks during a luncheon meeting and brainstorming session for the heads of companies belonging to MSV.
(Steven M. Herppich photo)
| ZOOM |
        But tech company stocks crashed, and venture capital dried up. The six-months-to-funding timetable is extinct.

        “The exuberance has been stripped away,” MSV chairman George Molinsky said. As an incubator, MSV needed to accommodate companies longer, and more broadly.

        This week, MSV will announce that it has cut deals with companies to expand the number of free services it offers technology startups — from Web hosting to office furniture.

        There's also free pizza. Monday, for the first time, MSV brought the heads of its 20-odd member companies together for lunch. It's one move the group is making to get its companies to act more as a community — interacting and exchanging ideas.

        And, despite the crash of technology companies nationwide, the Main Street community is growing. Mr. Molinsky, a lawyer for Taft Stettinius & Hollister, said that in December 1999 there was a handful of companies there with 25 employees in all.

        Today, Over-the-Rhine tech companies employ about 300 and have landed $55 million in venture funding, he said. MSV accounts for about two-thirds of that, Mr. Molinsky said. Original tech residents such as Eviciti and Digital Bang have grown. The rest come from companies such as BlueSpring Software and Empower MediaMarketing that have moved to Over-the-Rhine to be part of the scene.

MAIN STREET SUPPORT
    Main Street Ventures, a nonprofit technology company incubator in Over-the-Rhine, gets support from a range of companies:
    • The bulk of its $250,000 annual budget comes from primary supporters accounting firm Deloitte & Touche, law firm Taft Stettinius & Hollister, the Greater Cincinnati Chamber of Commerce and the state of Ohio's Technology Action Fund. Secondary supporters are Fifth Third Bank, Procter & Gamble Co., software maker Oracle Corp., accountants Grant Thornton, and Fort Washington Capital Partners.
    • E-mail and domain hosting: Compaq Computer Corp. and Microsoft Corp.
    • Wired/wireless Internet connectivity: Lucent and Broadwing companies Cincinnati Bell and Zoomtown.
    • Web hosting: Oracle, EMC Corp., Compaq and Intrieve Inc., as well as a fifth, yet-unnamed company.
    • Technology consulting: Cap Gemini Ernst & Young.
    • Other sponsors: accounting firm Cooney Faulkner & Stevens, technology consultants MarchFirst, Eviciti and Digital Bang.
    Source: Main Street Ventures.
        “I get asked, "Are things worse than a year ago?'” Mr. Molinsky said. “Well, we've got 1,000 percent growth. ...”

Comings and goings

        Companies are coming and going. Graduates include PlanetFeedback.com and Clerity Knowledge Exchanges, which raised venture money and moved out. Four others — RM2M, iParthenon, HardHat Exchange and Returnables.com — grew out of their MSV space and moved to larger offices. Atomic Dog Publishing, with 36 employees, has also raised money, but prefers to stay on Main Street, so it's paying rent to MSV.

        Two new residents at MSV are MemberMap, with software aimed at credit unions, and Plussize.com, a Web site with clothes for plus-size women. Another startup, Bray Marketing, is renting an office in Over-the-Rhine but will use MSV's services to start an online marketing venture.

        Member companies can occupy offices rent free for as long as 12 months, up from six, but Mr. Molinsky said that hasn't been a problem. “To date it's been a self-selecting process,” he said. Companies move out when they need more space, “and we had a couple of situations where the businesses weren't progressing.” Two companies, bSurplus.com and Eppointments, vacated their MSV space and are essentially in hibernation.

        To expand the community, MSV will also help companies that need services but not office space. The first is Bray Marketing, which is renting an office in Over-the-Rhine but will use MSV's hosting services to start an online marketing venture.

Difficult times

        Even with help like this, it's a tough time to be a startup. It's difficult to raise capital, and with tech companies crashing and the economy slowing, it's difficult to make sales, said Walter Solomon, MSV's president and CEO of ConnectMail, a video e-mail startup that's part of the incubator.

        Up till now, MSV has meant office space and advice over java at Kaldi's, a Main Street restaurant/bar/coffeehouse. “We'd still be in attic space if it weren't for Main Street Ventures,” said Mike Wilson, co-founder of games maker No.2 Games.

        If MSV wants to continue to be a low-cost asset to startups, Mr. Solomon said, “We need to evolve what we're doing to lower the bar. ... ”

        “Even further,” Mr. Molinsky cut in.

        “... for startup companies,” Mr. Solomon finished. “We want to make it almost cost-free to start up a company in Cincinnati.”

        MSV is adding new services, the biggest of which might be free hosting for Web sites.

        “That's a huge win,” said Steve Wolf, co-founder of Adternity. “It could save us $10,000 a month.”

        The hosting will be provided by several companies: Compaq Computer Corp. will provide the Internet servers; EMC Corp. the data storage; Oracle Corp. the database services; and Intrieve Inc. the Internet connection, support, security and monitoring.

        MSV companies will get six months of free hosting, enough time to get their Web sites up, running and debugged. Plussize.com, which moved into an MSV office a month ago, has its site hosted in Texas “because it's cheap,” said co-founder Jeff Recker. Hosting it in Cincinnati will be more convenient, he said, and free is better. “That's an expense that could increase substantially” as the business grows, he said.

        Also, technology consultant Cap Gemini Ernst & Young will provide free consulting services — something several companies have already used. Computer games maker No.2 Games was storing key files on “my dad's old Pentium,” co-founder Mike Wilson said. He took advantage of the free consulting to get a file server back in operation. “We kept it insanely cheap,” he said.

        Compaq is also providing an e-mail server, with Microsoft donating the software, so startups can have unique e-mail addresses. Loth MBI put office furniture into MSV's offices at 1201 Main.

Networking goes on

        MSV continues to hold its monthly networking events at Westminster's Billiard Club — the next one is 5:30 p.m. Tuesday — which draw 200 people. The monthly breakfast forums it co-sponsors with The Circuit, a local information technology association, regularly sell out.

        The group is also trying to improve the coaching it gives companies. “We've got to focus more on the substance of what it takes” to be successful, Mr. Solomon said.

        Until now, MSV's entrepreneurs learned mainly from their own mistakes. “It was more "you've got to learn by doing,'” said Jay Woffington, co-founder of Main Street startup Adternity. As neighboring companies such as Atomic Dog mature, they become resources for the other startups, he said.

        The efforts to beef up the community and the services are welcome. “I think we're starting to see them (MSV) see the needs of startup companies,” Adternity's Mr. Wolf said.

        Mr. Molinsky said MSV continues to see a flow of startups — less than the surge that came a year ago, but enough to keep the office space fully occupied. Mr. Solomon said he has talked to several people over the last two weeks who have heard rumors of impending layoffs at their companies, and are looking at starting their own companies.

        What those entrepreneurs will find on Main Street, Mr. Molinsky said, are resources not available in Columbus, Cleveland, Indianapolis or any other city in the region.

        “We think Cincinnati has all the tools to be a serious player in the New Economy,” he said. “We want to do what we can, do our part to increase the chance of success.”

        E-mail John Byczkowski at johnb@enquirer.com or call 768-8377. Find a list of local New Economy companies at http://enquirer.com/neweconomy/
       

       



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