New York’s ACRE Incubator is Churning Out Cleantech Startups, and Helping Build a New Engine for the City’s Economy

4/20/11Follow @arleneweintraub

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sped six products to market, Kotch says. “These are metrics we can point to and say, ‘Yes, Mayor Bloomberg, we’re doing it,’” Kotch says.

For some cleantech entrepreneurs, ACRE has meant the difference between staying in New York and leaving for cheaper environs. Brian King, chief operating officer of Ecological—a services company that specializes in sustainability consulting—says he was looking out of state for office space when he heard Bloomberg talking about ACRE on the radio. Ecological applied to the incubator and was chosen to be one of its anchor tenants.

“We’ve benefitted in a number of ways from being here,” King says. “This space was co-funded by NYSERDA, which is part of our business plan. We provide services to companies that get subsidies from NYSERDA.” And the economic benefits can’t be overstated. “I wasn’t even looking for office space in New York City because we couldn’t afford to pay $80 to $90 a square foot. Here it’s $8 a square foot,” he says. “We were able to take that capital and invest in our people, rather than put money into a landlord’s pocket.”

On May 1, Ecological will join the rapidly growing ranks of ACRE graduates by moving into a downtown office. The company can afford to stay in NYC, thanks to the $3 million in funding it has raised, and to the client list its founders have cultivated during their time in the incubator.

Another ACRE graduate, Wind Products, found the incubator an ideal place to overhaul its business model. The company was founded in 2007 as a wind turbine manufacturer. The management team designed software to identify optimal locations for its turbines—and quickly realized there was more of a market for the software than for the turbines. “We had to become more of a software company,” says CEO Russell Tencer. During their time at ACRE, “We were introduced to potential investors and employees on a daily basis,” he says. “It helped us get from zero to 60 quickly.” The company, now located in Brooklyn, started selling its software in February and expects to be cash-flow positive shortly, Tencer says.

Some cleantech entrepreneurs appreciate ACRE’s flexibility. ThinkEco joined the incubator in late 2009 as a “virtual tenant.” The company was developing a “modlet”—a wireless device that people could plug into any outlet and then use to monitor and control their electricity consumption. ThinkEco couldn’t make the device at ACRE, because the incubator is a sprawling, open space, where entrepreneurs sit back-to-back in cubicles. “The layout wasn’t conducive to us soldering and hammering all day,” says Mei Shibata, chief business officer at ThinkEco.

So ThinkEco stayed headquartered offsite, and its founders used the ACRE’s meeting rooms, consulted its advisors, and attended its networking events. Shibata says the incubator also brought her company closer to NYSERDA, which has since awarded ThinkEco three grants totaling more than $1 million. The company is now selling its modlet to companies and is working on a strategy for marketing it directly to consumers.

In many ways, New York is the ideal place to nurture cleantech startups, Kotch says. NYC is the second windiest city after Boston, he points out, with the city’s best wind resources centered about 20 miles from the Statue of Liberty. (Contrary to popular belief, Chicago does not top the list of windy cities.) It’s also home to one of the country’s largest public utilities, Con Edison, which has provided advice and other support to ACRE’s entrepreneurs.

But cleantech startups haven’t garnered as much support from venture capitalists as Internet and apps developers have. “The Internet presents no barriers to distribution,” Kotch says. “You can have two guys in a room writing code, and that makes the capital to scale is very low and the margins very high.” Cleantech, on the other hand, presents significant up-front commercialization costs, Kotch says, especially when utility companies present barriers to distribution.

Still, the venture community is starting to get excited about NYC’s emerging cleantech sector, Kotch says. Supporters include SJF Ventures and Braemar Energy Ventures, both of which are represented on ACRE’s advisory committee.

ACRE’s next challenge is to draw up a plan for sustaining the incubator itself, Kotch says. Its funding will last through 2013, but Kotch is confident that the city will keep the incubator alive. “In this city there are 12 [industry clusters] that employ 100,000 people. Cleantech is not one of those sectors,” he says. “Our cathedral vision is that we will build one of those clusters here.”

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  • Bobbi

    Several factual mistakes in the article. ACRE is the NYU-Poly incubator from what I understand. The university will have to decide what to do with the incubator not Kotch!

  • Ari G.

    This article must have the folks over at NYU-Poly embarrassed and angry! Isn’t this their intiative and incubator? What an opportunity lost for some good press for the university.

  • http://www.xconomy.com/author/aweintraub/ Arlene Weintraub

    Bobbi/Ari, I appreciate your comment. But please provide details about the mistakes you see, so I can investigate. As you may have noticed, I said in the first paragraph that ACRE is part of NYU-Poly. Thanks for your interest in Xconomy New York!

  • Andrew Bauer
  • Lakshmi Narayanan

    Sounds interesting but I wonder what NYU’s involvement is in this initiative? What is in it for the students or faculty of the institution? None of the companies highlighted seem to be faculty driven. Seems like PR fluff to me.

  • Naomi

    I’m an NYU-Poly student and current intern working with Synthezyme, an NYC ACRE tenant company that is a university spin-out (and has received a Phase 2 NSF SBIR). Creating faculty and student spin-outs takes time, and the University is actively building a culture to support more tech commercialization. A number of my fellow students, as well as students from NYU, Columbia, Pratt, and CUNY have worked as paid interns for ACRE tenant companies. Faculty members have also served as paid consultants and in some cases, mentors for these companies. Despite the negative comments, this initiative has been really valuable for me as a university student to experience what it’s like working for a cleantech startup. And FYI NYU-Poly is a listed member of the UTIC program, so please before you condemn ACRE, do a little research.

  • Orin

    As a college professor myself, I have to agree with some of the comments above. I wonder how much of the margin the university gets for the “graduating” companies? Why is this part of NYU if there no educational programs highlighted? More importantly, will anyone care about this guy if he was not employed by the university?

  • Ben Puddle

    Is this NYU’s incubator or the citys? If it is NYU’s, why are there no NYU faculty or student companies listed? Great that private companies can now use cheap space meant to encourage students! I think this is an interesting initiative but why is NYSERDA funding this an University grant?

  • J. Yang

    I’m also a University Prof. with some tech. I’m trying to bring to market. My understanding is at this point, the university does not get any “margin” for graduating companies.
    While NYU-Poly is also a founding partner of NYC SEED, they do not hold any debt or equity positions in ACRE tenant companies; their ‘upside’ is in having this space as a resource for faculty and students, and a connection to the public and private sector. NYU tags itself as a “private university in the service of the public”, and this seems like something a global 21st century University should be doing for an organization like NYSERDA in a City like NY. Experiential learning and industry relationships are being demanded by my students. If they’re creating jobs for today’s students and providing material support for entrepreneurial-minded faculty like me, I’m for it.”

  • David

    Helps cleantech startups get going. Creates jobs in NY. Helps build a cleantech cluster in NY. Helps the environment. What is not to like? Sound like Kotch and ACRE are doing a great job to me.

  • NYVC

    Why is everyone so parochial about who gets credit, who gets margin etc… this attitude is why Silicon Valley runs laps around NY in startups? Too much petty bickering and negativity and not enough energy spend on positive outcomes like building businesses.

  • http://www.Sollega.com Joe O’Connor

    I just want to chime in about my experience with NYC ACRE. I am a founding partner of Sollega and we are tenants of ACRE. It is true that originally we had no affiliation with NYU Poly when we were first accepted. Although, since we have been working in the incubator, we have received a lot of support from Poly faculty for testing our equipment with the Civil and Electrical department at NYU Poly. Also, I recently began my Masters Degree at NYU Poly in Manufacturing Engineering. Since we joined the incubator, I have become heavily interconnected with NYU Poly and I have had a great experience all the way through.

  • Ben Puddle

    I agree with you on the need for such academic initiatives. But unlike incubators such as Green Spaces which are private and self funded, ACRE is funded and supported by NYU-Poly ( in other words, No NYU-Poly grant no ACRE) so it seemed like an odd mix of companies to highlight. Why would you focus on an an operations person to talk about in the article instead of a faculty member from NYU?

  • Billy Gordon

    OK, I won’t talk about credits etc but OMG, http://www.nycacre.com has to be one of the worst designed website ever!! Is this really affiliated with New York University?? This is a joke, right?

  • SS

    Although the contents of the article seems to suggest yet another reason to support “small” economic development in a very promising industry sector, the comments seem totally disconnected from any form of real world reality. Just yesterday Crains profiled Brooklyn’s failure to lure Panasonic’s headquarters due to its inability to match New Jersey’s $102 million subsidy package. ACRE seems to be an excellent example of meaningful collaboration between academia, government entities and the commercial markets to encourage the successful creation of modern jobs and exciting new education opportunities.

    It is my understanding that a large number of the identified companies aggressively hire NYU Poly student interns to help satisfy their technical needs at a time when their budgets can not support higher priced professionals. Communities like NYC had better learn very quickly how to collaborate on critical projects like jobs or their chronic unemployment and underemployment will only become more painful.

  • Ed Brunzo

    What educational opportunities? This guy Kotch is an unknown with no respect in the entrepreneurial or academic community and is known to be brash and rude. To profile someone like this at NYU is a slap in the face of the faculty and students. I am surprised that NYU is allowing such intiatives to blindly go on. There is no substance.

  • Mike S

    I think this makes NYU and NYU-Poly sound like leaders in the cleantech entrepreneurial space, so I can’t see why anyone affiliated with those august institutions should complain. I think the bickering should be put aside, and we should be celebrating the likes of Ecological, Think Eco, and Wind Products. We should also be finding ways to get good deals to the SJFs and Braemars in NYC.

  • http://www.wind-products.com Russell Tencer

    I run Wind Products which was based at the ACRE incubator for the past 1.5 years. The incubator was well run, and it helped us get to the point where we are becoming a market leader in our field. We collaborated with NYU-Poly, NYC EDC, and NYSERDA throughout our time there to the shared benefit of all.
    It’s a model of success that i hope is studied and replicated.

  • http://www.rentricity.com Frank Zammataro

    Since joining the Incubator, Rentricity’s revenues have quadrupled! In addition, the Incubator has introduced the Company to both City and State entities that are supporting its growth. The NYU-Poly Tech students have been wonderful to work with and we recently made our first hire of a past student intern.

  • James Vasserman

    All good points. Having had some interaction in this space myself, my challenge to Kotch would be to go out there, raise money himself as other entrepreneurs do and then launch his own incubator. Then lets see if it will succeed. Why wait for an institution to raise money and then hope to get a job as operations director? For now, we should replace ACRE with NYU because NYU is paying the check of these people at ACRE.

  • http://www.sollega.com John H

    One of the benefits of an incubator for the city is that they help small businesses start which leads to more tax revenue for the city. The value for the universities is that it gets real world experience for their students which gives them an enormous edge when they go looking for jobs. Benefits for the tenants include exposure, networking, being around other successful companies, and sharing resources.

    It is a win win and a great deal all around. Starting an incubator as a for profit business wouldn’t make sense because it is a long term investment. New York has a lot of catching up to do in the clean tech economy and this is a big step towards that. NYC investors tend to know very little about renewable energy and focus only on software and financial services, while NJ has a thriving solar economy.

    Micah Kotch is a great advocate for the clean tech community in new york and kudos should go to NYU-Poly, NYCEDC, NYSERDA, the Mayor, and everyone else who is involved. (This is hardly an NYU initiative, even though NYU owns Poly)

    (I love reading the comments on the interwebs and seeing the posts that the trolls bring to the dialogue. It’s mesmerizing… kind of like watching subway rats :)

  • Ashley

    Sounds like sour grapes in the big apple. There’s clearly not a whole lot of clean energy innovation coming out NYC’s universities- Micah as the director and powerhouse of the initiative, was chosen by the author to represent the NYU-Poly incubator NYC ACRE. He has helped grow this sector in a collaborative and inclusive way, and the results speak for themselves. Industry execs and VC’s I meet at networking events are thrilled with ACRE’s progress and have only good things to say about the initiative and Kotch, himself.

    Mary Boeve from 350.org put it best, “We need leaders. Our generation faces a particularly daunting set of challenges, catastrophic climate change foremost among them. A nascent movement confronts this challenge; we strive to organize not only against our opposition—polluting industries and the politicians who support them—but also in support of solutions.”

  • Ronald D.

    John, I agree on some levels. But having just taken a closer look, ACRE hardly looks like an NYU/Poly initiative. But it IS!

    I feel sorry for the poly administration because articles like this could potentially be good press for them. That horrific NYC ACRE logo has no sign of NYU or Poly on it! Great business sense NYU!

    We have a lot of advocates for clean tech already and we all know what incubators provide. Advocates should go start their own initiatives and prove themselves.

    As far as I know, Micah guy has an awful rep in the community and is a wannabe NYSERDA person.

  • David S

    The incubator is extremely well-run by Kotch and his team. They are highly professional, efficient, and business-oriented. Kotch has a great network of business contacts and makes introductions to the start-up tenants needing access to banking, legal, venture capital and other resources. There is a constant buzz of activity in the incubator, mirroring the vibrant city where it is based. It is great to see this kind of institution in NYC, and I applaud NYU-Poly for administering the incubator, and NYSERDA for funding it.

  • Zack D

    As as an undergrad attending NYU’s Washington Square campus I have seen ACRE contribute to the city’s cleantech community and NYU’s academic communities. Through networking events, internships, industry panels, and involvement in NYU’s Sustainability Task Force, Micah and his team embrace ACRE as a driving force in NYC’s cleantech economy.

    The buzz of the incubator space is intoxicating and inspiring to undergraduates shaping their educations and career paths.

  • http://www.thinkeco.com Jennifer P.

    As a member of the ThinkEco team, I would like to express how important NYC ACRE has been, and will continue to be, in our company’s development. By introducing us to other players in the field, while also helping build our relationship with NYSERDA, ACRE and Micah have helped bring our company to a point where we are selling modlets to businesses and planning a consumer launch. Having recently graduated from the incubator, it is clear that ACRE has played a role in our success and will continue to help clean-tech start-ups develop and bring more revenue and jobs to NYC. Helping this city go green while allowing its community to find employment is clearly a positive addition. Thanks for all the great work!

  • Dan Ellis

    Seems like an interesting initiative but I am not sure of the mission and best practices adopted. Is this worth it? Can I see a website?

  • http://www.cleanecnyc.org/ Max Joel

    Solar One has worked closely with ACRE and Micah Kotch on the Clean Energy Connections panel series. The incubator is a terrific partner and has helped make the series a great resource for professionals and students throughout NYC. David S. is right on about the value and atmosphere of the incubator- this is what we need to drive the green economy!

  • Dan Connors

    As a clean energy advocate and independent consultant, I have worked with the ACRE incubator and one of its clean energy companies, “Rentricity” for over a year. As the Rentricity founder states in the reader comments above, Rentricity’s revenues have grown 4x while at ACRE. The “win/win” partnership with the NYU/Poly students is an important part of this, as is the energy and leadership of Micah Kotch. In fact, it was only because of Kotch’s introduction to the incubator and Rentricity, that I had an opportunity to contribute to its success.
    ACRE, lead by Kotch and Niswander, is doing great things.

    Dan Connors
    Renewable Energy Strategies, LLC

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  • Miriam Evans

    Interesting article but I see the need or rather lack of entrepreneurial leaders who have actually done something in this space. Kotch has not started any cleantech ventures it seems and has no credibility. Dissapointing trend to me.

  • Mike S

    Lack of entrepreneurial leaders with cleantech experience is a definite issue stemming from the fact that it is a relatively new field with first-generation entrepreneurs. The next best thing is to transition serial entrepreneurs from other industries (e.g. IT, biotech, etc.) into cleantech by giving them a deep dive and connections. In my opinion NYC-ACRE did this successfully last year with its CleantechExecs program.

  • Mike Alan

    Looks like as predicted NYC ACRE could not be sustained at the 160 Varick incubator and had to move out. It was obvious to us all the way that it would not succeed. This guy needs to brush his teeth and comb his hair!

  • AG

    Mike Alan – your comment is ridiculous… do you not know why? The incubator already proved a success… not sure what ax to grind some of the ppl on here have. The former Brooklyn Polytech – now NYU Poly still is involved in the project.

    http://www.poly.edu/press-release/2012/01/31/clean-energy-connections-presents-no-money-no-problems-financing-cleantech-

  • J. Sabrin

    AG, but the guy does not comb his hair or brush his teeth. You really need to listen more the comments in the thread. Then decide for yourself!

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