NYU-Poly Varick Street Incubator Taps Into Student Talent and Helps Startups Grow Up
While working in technology transfer and in the Brooklyn-based incubator at the Polytechnic Institute of New York University, Bruce Niswander says he saw a disconnect between the “high supply of talented, energetic students,” and hiring struggles at startup companies.
“One of biggest challenges for a small business is identifying talent that’s affordable and available,” says Niswander, who now runs the NYU-Poly Varick Street Incubator in SoHo.
The school created a technology consultancy, where tenant companies described what they needed for employees, and the school found them among the student population, hired them directly, and billed startups for their hours. Tenant companies flocked to the consultancy and incubator program, which was quickly confronted with the lack of physical space, he says. This hit just around recession time in 2009, when New York City Mayor Michael Bloomberg, “wanted the city to grow through an enhancement of entrepreneurship,” Niswander says.
So the city administration helped NYU-Poly secure a 16,500-square foot incubator space at 160 Varick Street in SoHo, provided by Trinity Real Estate, and a new incubator program launched there in July 2009. Since then, Varick Street companies have raised more than $20 million in funding, created more than 300 jobs, and generated about $14 million in salaries per year between the entrepreneurs and the students they contract to, Niswander says. The incubator currently houses about 40 tenant companies. Many of the original companies have begun to move out for bigger offices, he says.
“In the end it’s a great group of entrepreneurs,” says Niswander. “It’s kind of like soldiers in a foxhole. Everybody roots for everybody’s success.” The incubator continues to contract student employees from NYU-Poly and is also expanding its involvement with NYU’s business school, The Stern School, he says.
One of Varick Street’s success stories is Pixable, an online photo management startup that just last week raised $3.6 million in Series B funding from Menlo Ventures and Highland Capital Partners.
Also located under the Varick Street roof is the cleantech incubator ACRE (Accelerator for a Clean & Renewable Economy), which is powered by a $1.5 million grant from the New York State Energy Research and Development Authority. Xconomy New York editor Arlene Weintraub profiled ACRE in a story last week that generated a stream of user comments, both positive and negative, regarding the operations director Micah Kotch, the program itself, and its relationship to the university.
“They’ve been working within the confines of that grant to deliver that ACRE environment; Micah is 90-plus percent of that,” says Niswander in response. “His performance has been so good and so creative and so positive that that’s probably what makes the negative comments sting more than they might.”
Kotch works “in collaboration” with NYU-Poly in its cleantech efforts, Niswander says. “They’re a monster in the environmental sustainability footprint,” he says.
Niswander is focused on creating a collaborative environment where startups can get products to market, rather than just a space for co-working. “I was never a big fan of incubators; I never really felt that a business didn’t succeed because they didn’t have good real estate,” he says. “They usually didn’t have good commercial plan. They really need to go after sales.”
Part of fostering successful commercial environments involves housing companies and services that benefit entrepreneurs, Niswander says. There’s the startup venture data service CB Insights (an Xconomy partner) and NYC Seed, a seed-stage technology fund backed by a crop of city organizations.
Prospective Varick Street tenants can apply for a spot at online. The incubator requires applicants to describe their product, growth and commercialization plans, and month-by-month predictions of their cash flow requirements.
“We’re objective when we review,” Niswander says. “We look at the status of the product. How close is it to being commercially viable? Will you benefit from the services we offer here? How many jobs might you add when you get going? We err on the side of increasing employment. So far it’s worked out pretty decent. The results are what we want them to be.”
The result is a mix of companies in the financial services, IT, fashion, film, food, social media, and cleantech spaces. “We’ve tried to replicated the NYC commercial scene,” says Niswander. “We tried to model it after where are the big businesses in NYC, and get startup companies.”
Tenants sign six-month leases initially, and then review where they are against their initial goals, Niswander says. The incubator rents closed-door offices to companies for $1200 per month, or $300 per chair in an open working space. Once a startup has hit four chairs, they can cram as many as they want into a cubicle while still only paying for the first four chairs at $300 apiece. (Talk to CB Insights about how to optimize that one. I counted about seven chairs in their space, and I’m told they’ll be lofting it soon to add more. Kidding. Sort of.)