The offices in the new high-tech incubator at 3 Davol Square are tiny – not much bigger than a walk-in closet in some cases. But hey, it’s better than the alternative.
"Some of these guys came out of the garage," said Thorne Sparkman, executive director of the Slater Center for Interactive Technologies, which created the incubator.
"But all they really need is a conference room and T-1 (Internet) line as cheap as they can get it, and we’re trying to make sure those resources exist for them," said Sparkman, who heads the state-supported, non-profit Slater fund that invests in nascent Rhode Island tech firms.
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Since its opening in late May, the incubator, called "Suite 100," has been filling up: Six of the 11 offices are now occupied by budding tech companies.
Tenants get cramped but attractive office space – with exposed brick and ductwork, big windows and wooden beamed ceilings – at a below-market rent of $16 per square foot. Tenants also have access to shared amenities, including a tidy conference room, photocopier, printer and a T-1 Internet line. Office sizes average about 350 square feet, and utilities are free.
But perhaps the biggest advantage is the flexible lease: tenants rent space on a month-to-month basis. Sparkman said avoiding a long-term lease is critical for nascent businesses that could be nonexistent in a matter of months.
"Normally to rent commercial space you’d have to sign a five-year lease, probably with some type of personal guarantee," Sparkman said. "What this gives them is flexibility. The startup is an odd beast – it doesn’t know where it will be in a year."
C-360 Inc., a startup that has developed an imaging technology for display advertisers, relocated its headquarters to Suite 100 from a messy, cramped office in Bristol last month. John Kilkelly, co-founder of C-360, said the company was looking for a more central location and a place that he wouldn’t be embarrassed to bring prospective clients and investors.
"For a small company like ours, that was a tall order, especially in Providence where expenses are relatively high," said Kilkelly, adding that the T-1 Internet line is a substantial perk. High-speed Internet access was not available at the Bristol office, which forced Kilkelly to shuffle back and forth between Bristol and a makeshift home office on the East Side.
Tenants that have received seed investment from the Slater fund – including WhyDataWorks, C-360 Inc. and AlgoMagic Technologies, set to move in next month – also get special terms on their rent, such as six months of deferred rent payments.
One intangible benefit of the incubator is what Sparkman calls "shared misery:" collaboration among startup tech companies that are confronted with like issues such as intellectual property or capitalization. And Sparkman said he plans to bring in experts to assist the tech companies with aspects of business planning.
The incubator is a way for the Slater fund to leverage its investment by "extending the runway" for fledgling tech firms, Sparkman said, helping them conserve what little cash they have been able to attract from investors.
"We’re investing a small amount of money (typically $100,000 per firm), and you want to get the most traction out of that as you can," Sparkman said. "What kills these startups are costs like rent, computers and Internet capabilities."
A former jewelry mart at Point and Eddy streets, 3 Davol Square also houses the Rhode Island Economic Policy Council, which funds Slater Center for Interactive Technology and other tech-focused Slater centers. Richard Jaffe, manager of 3 Davol Square, said the building has plenty of available space – it’s only 60 percent full – and he said the offices were a perfect fit for what Sparkman was looking to do.
"There’s no comfort with these type of tenants, but this is not a money-making proposition for us," Jaffe said. "Our goal is to give these budding companies a place to develop their business and grow into bigger companies, and then hopefully they’ll remain with us."
