Room to grow: Business incubator space organizers discuss challenges, successes

MOSES LAKE — Incubator spaces are programs that reduce the overhead required for a start-up business and help those businesses run their operations, with the question arising of whether these spaces succeed in helping these businesses reach a stable, profitable state. 

One such business incubator space in Eastern Washington is SP3NW, a Spokane agency run by Washington State University, according to SP3NW Associate Director Michaele Armstrong.

“(We) currently have a membership of 16 companies in our incubator with about 10 on a waitlist,” Armstrong said. “We work with very early-stage companies; typically they’re pre-revenue and developing their prototypes and we look at graduation as when they are profitable companies or significantly generating revenue where they can cover their own expenses.”

SP3NW measures its success in a variety of ways, she said. 

“Since we launched in 2020, we have assisted more than 70 companies, and those companies have raised more than $3.13 million,” she said. “Just for 2023, we hosted over 40 events and in those 40 events we had over 400 different events attendees, and then with our program itself, between grants and membership fees and sponsorships –  the grant funds are not the matching funds from our university, but the funds we’ve received from the granting institutions themselves. We’ve had $200,000 worth of program revenue, and that was just in 2023.”

Other groups such as the Port of Othello also operate business incubator spaces. The port rents out four spaces in the city at a low rate to help new businesses reduce their overhead expenses. 

“I believe it’s been successful; I mean, it’s helped numerous people over the years,” Port Executive Director Chris Faix said. “It’s supposed to provide jobs; it seems like the ones we get in there don’t provide as many jobs as we’d like to see happen in there, but the overall concept is working.”

Despite not producing hoped for jobs, Faix said the incubator spaces do provide services and products the community wants and needs.

“Maybe the next one or two we get in there will be the right ones that we would like to see in there,” Faix said. “We would love to get a few more on the list here because we are going to have a couple people moving out in a year or two.”

SP3NW has also been successful, Armstrong said. 

“We have been very fortunate to have available space and and grants – not only grants, but also philanthropic funds from like Bank of America – to support us. So those have been a huge benefit to helping us set up our program,” she said. “And while I’m sure there’s challenges to come, we’ve been very fortunate, not only with the businesses we’ve been able to support but also the support that we get from the community.”

SP3NW was originally built for life sciences start-ups, but has since expanded to include other start-ups as well, Armstrong said.

“Most of our companies are scalable companies, which means they start out with research and development, and it can easily take our companies five to ten years before they reach market,” she said.

Armstrong outlined some specific organizations that were successful in their time with SP3NW.

“One of our earliest success stories is a company named HaRT3S,” she said. “That was founded by a faculty member, Susan Collins, out of WSU, along with her co-founder Seema Clifasefi out of (the Unversity of Washington) and they were revenue generating within six months.”

HaRT3S, which stands for Harm Reduction Treatment, Training and Technical Solutions, was created to provide information and training systems to service providers, according to the organization’s website.

Armstrong said some groups use SP3NW to secure more funding.

“There’s a quasi-governmental group in Spokane County called (Health Sciences and Services Authority), and they offer matching grants and grant writing grants to companies that are headquartered in Spokane County,” Armstrong said. “We have companies that actually locate their headquarters in our incubator in order to get that grant match.”

Some companies utilize SP3NW as simply a subsidized workspace, much like the Port of Othello’s spaces, but SP3NW also has more in-depth programming.

“There are requirements to be in the incubator as far as program engagement,” Armstrong said. “That includes monthly coaching with the staff, attendance at CEO luncheon and going through the I-Corp program.”

Along with SP3NW’s other programming, I-Corp is a program that trains businesses on discovering customers and developing early pitches for their businesses.

“The majority of the companies and founders that join the incubator are technical experts that really don’t have a background in business,” she said. “I would say that that’s 90% of our companies, that they are looking at a scalable technology and they’re really not sure what their next steps are. So we walk with them through the process of incorporation, and that’s before they can become a member. Once they become a member, we talk about market discovery, customer discovery, manufacturing, sales, marketing and branding and all of those aspects that are so important to an early-stage business.”

Armstrong elaborated on the purpose behind SP3NW.

“For folks who wanted to spin out a company, there really wasn’t a place in Eastern Washington for them to do that,” she said. “Looking at UW’s CoMotion model, where there is a vibrant incubator, that was something that we wanted to replicate in order to, partly, just (foster) community impact. Washington State University is a land-grant institution, so we’re supposed to see things, and especially innovations, that come out of the walls of the university and impact our communities.”

Incubators are primarily to benefit the economic development of a specific area, after all.

“I think that there are a lot of great examples of how incubators support the economic health of a community,” Armstrong said.

However, incubators are not self-sustaining, Armstrong said, and require someone to fund the process. Start-ups need to be scalable and able to grow, especially in smaller markets like those in Eastern Washington, she said. 

“We know that talent is equally distributed, but opportunity is not. So I think incubators definitely give more opportunity,” she said. “We would love to expand. We are currently evaluating what happens in the next chapter for us.”

Gabriel Davis may be reached by email at gdavis@columbiabasinherald.com.