State plans to change Edison Incubator program

By Jamison Cocklin


A plan to change the way Ohio administers its 27-year-old Edison Incubator program and what it means for funding allocations and the criteria for receiving state dollars has the Youngstown Business Incubator focused on its fundraising campaign.

The YBI announced in February it would begin raising $2.5 million as a hedge against the prospect of shrinking state funds. The incubator, which receives about half of its annual $1 million budget from the state, is zeroing in on ways to change its revenue model to expand the entrepreneurial services and economic growth it provides throughout the region.

After a meeting Wednesday, the state’s Third Frontier Commission put a call into the YBI. It’s scheduled to reach out to the other 10 incubators across Ohio to update them about a change to the Edison Technology Incubator Program and what it might mean for their operations.

Currently, the program is overseen by the Industrial Technology and Enterprise Advisory Council under the Ohio Development Services Agency.

Katie Sabatino, a spokeswoman with ODSA, said the new plan calls for switching the Edison Incubators into its Ohio Third Frontier program, a multibillion-dollar initiative aimed at technology-based economic development. Sabatino said the proposal will help the agency streamline its operations and move the incubators into a better technology- driven program focused on the future of the state’s economy.

But a large part of the shift, Sabatino added, will be to focus on new funding metrics geared toward graduating more startups from their incubators, helping to use state funds by pushing more entrepreneurship and job growth.

Third Frontier is financed by the state’s general- revenue fund, which would differ from the way the Edison Incubators have received state dollars to date. Under the current program, about $4.5 million is set aside for the incubators, paid for with state bonds approved by voters.

Sabatino said funding levels are not likely to change, with between $350,000 and $500,000 distributed to each incubator depending on their size and success rates each year. Still, the specifics of the plan and how a transition might affect funding temporarily still are being discussed.

At the Youngstown Business Incubator, which retains its portfolio companies in a kind of managed support network after graduation in addition to its growing economic activities that don’t always align with the state’s funding criteria, the proposed shift is creating uncertainty.

“The state isn’t going to look at us differently because our companies graduate and stay housed with us,” said Barb Ewing, chief operating officer at the YBI. “They’re still generating rent, and we receive other support from them. The issue in-house is not the question — continuous progress is the issue.”

Considered among the top incubators in both the state and the country, YBI is host to a number of software startups. Increasingly, though, it is looking to enter new opportunities that can generate more revenue and help the region’s economy, such as advanced manufacturing or health care information technology.

“Our working presumption is that as the state changes and evolves, it will want to add more incubators into the system. State funding comes from a finite pool of dollars,” Ewing said.

Though it does not anticipate a decrease in state funding given its track record, Ewing said the fundraising campaign is aimed at growing its organization and protecting against any vulnerability that may arise from a change in state funding levels.

Already, the YBI has raised $1.15 million, largely from a pool of donors in the Mahoning Valley. Most of that money, Ewing said, will be set aside with a strong focus on reinvesting it in the incubator’s mission.

A portion of the money is being put to use on renovating part of the first floor at the organization’s building on West Federal Street. Eventually, when the grants and remaining funds are secured, the entire first floor will be renovated.

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