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Business Incubator Series: Diane Dimeff, eSpace: The Center for Space Entrepreneurship, Boulder, Colorado (Part 6)

Posted on Friday, Jul 8th 2011

By guest authors Irina Patterson and Vandana Upadhyay

Irina: Do you take equity in the companies that you incubate?

Diane: We do. Because we are nonprofit we can’t technically enter into financial contracts with our companies. But we can enter into what’s called a pledge agreement.

We’d talk to them, and the template for us is something like this: We’ll have a pledge of 5% equity in the company and then 2% or 3% of revenue for two or three years.

But each of the companies is different, and when we negotiate, those three figures depend on the circumstances of the company.

For example, if a company is a true startup and has not been in operations at all, it’s much easier to talk with them about equity than it is with a company that has been in existence for a while because the way we measure our contribution is how much value have we added to the company.

Irina: Does the incubator generate any revenue?

Diane: It does. We’ve got a little bit of funding from the companies already. But not nearly enough of what we need. And we also have a couple of other initiatives that we are starting that will likely be generating other types of revenues that are not related to the companies.

I can talk about one of them. We have a proposal into NASA. One of the issues with NASA, AFRL, and many of the other agencies is that very small percentage of the SBIR Phase I’s ever get to phase II and many fewer of those ever get to Phase III, the commercialization piece of it.

S0, we put  a proposal in front of NASA that would help them be a pilot program by taking a subset of the Colorado SBIR Phase I awards and incubating those companies in an attempt to build a model that would help them increase that conversion rate from Phase I to commercialization. And we would be doing the same thing with AFRL.

So, we are hopeful that that will be the process that would both help NASA and the original intent of the SBIR program that Congress started, which is to help small businesses, and also help eSpace to continue to develop revenue streams.

Irina: What are your daily challenges?

Diane: The aerospace industry certainly has a lot of bottlenecks, like ITAR [International Traffic in Arms Regulations] which restricts employment capabilities and a number of other things.

But because we are working with small companies, our major challenge at this point in our evolution is finding the funding we need to continue our work.

Irina: Thank you, Diane.

This segment is part 6 in the series : Business Incubator Series: Diane Dimeff, eSpace: The Center for Space Entrepreneurship, Boulder, Colorado
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