The Youngstown Business Incubator launched a five-year, $2.5 million fundraising campaign Thursday aimed at growing the organization and reducing its reliance on state dollars.
The effort is the YBI’s most ambitious financing goal since it was established in 1995, but more importantly, it will be a key component of its future work to help develop the Mahoning Valley’s economy as it seeks to transform its revenue model into one that no longer leans on dwindling allocations from state and local government, incubator officials said.
Currently, the incubator receives between 45 percent and 50 percent of its annual budget of $1 million from the state, said chief operating officer Barb Ewing. Most of the rest is generated from lease agreements with the incubator’s portfolio companies that operate at its campus on West Federal Street.
“The YBI is a relatively small organization with a modest budget,” she said. “If we want to continue with the economic impact we’ve had, we need the resources in place to do that.”
In order to achieve self-sufficiency, Jim Yukech, YBI fundraising chairman, said the incubator will begin to explore more economic opportunities for itself.
Among the options, he said, are entering new markets such as health-care information technology, continuing work in the additive manufacturing industry, and taking a closer look at the spinoff companies that could arise from Northeast Ohio’s oil and gas boom.
Overall, Yukech added YBI is interested in attracting more of these types of companies to its fold, which, at the moment, primarily includes only business-to-business software companies.
With a push into new industries, the incubator also might be able to capitalize financially on the products and services sold within them.
Chuck Stein, president of SDS Consulting in Columbus, who works closely with economic-development organizations around the world, said the $2.5 million raised over a five-year period will help the incubator “stay afloat” until the end of that period, which YBI officials believe will be enough time to create a new revenue model that generates about 80 percent of its own funding.
The strategy for raising the money, Stein added, will rely heavily on approaching companies and individuals that stand to benefit the most from the YBI’s work, such as those in manufacturing or health care that could use some of the technological developments and products the organization’s portfolio companies are known to focus on.
The timing of the launch comes just three weeks after YBI unveiled a new marketing and branding strategy geared toward attracting more donors and startup companies.
It also announced the results of a study conducted by Cleveland-based consulting firm Kleinhenz & Associates that found YBI companies have created or supported 610 jobs, generated outside sales of $76 million and provided wages of $23 million.
“We feel that we are well-positioned for growth, and we know that we can attain self-sufficiency,” Yukech said.
“The state is assessing its funding — and we’re a leader in Ohio — but we can no longer depend on it in the long run. We have to be proactive.”
Already, Stein said the organization has raised $750,000.
Bruce Beeghly, a campaign co-chairman, said the incubator’s impact is expected to grow in the coming years.
Last week, JumpStart Inc. announced that technology companies in Northeast Ohio attracted $201 million from investors in 2012.
YBI will be more aggressive in its business pursuits to bring more interstate commerce to the Valley and, with it, greater wealth, incubator officials added.