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Archive for Sunday, May 26, 2002

to Lawrence development

May 26, 2002

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To Don Johnston, the sign at 1617 St. Andrews Drive doesn't just say Kansas Innovation Corp. It also says something about the state of the nonprofit business development organization.

"We need to improve our visibility and our image," said Johnston, who serves as chairman of the KIC board. "You don't have to do much more than drive by our facility on St. Andrews and look at the sign. It is dusty and a little faded. That may say something about us right now."

Johnston and other board members are banking on new leadership for the organization to brighten its future. Last week the KIC board announced Matthew McClorey, former vice president of business development and portfolio management at Kansas Technology Enterprise Corp., would become the group's new president. He'll assume his new position June 3.

The group's mission since it was formed eight years ago has been to stimulate the growth and creation of high-tech companies in the Lawrence area. It offers businesses low-cost help with items such as strategic planning, business plan writing and financial planning. It has placed particular emphasis on helping companies that develop out of research conducted at Kansas University.

Area economic development leaders say improving upon KIC's success rate will be critical to Lawrence's success in becoming a center for the development and growth of high-tech businesses and the high-paying jobs they create.

"When you look at all the innovation and research that goes on at KU and in the community in general, there is lots of potential for business," said Bill Sepic, Lawrence Chamber of Commerce president and KIC board member. "But that research and those ideas really need some place to develop into a business. That type of help is what KIC aims to provide.

"Keeping those type of companies in town is very important to our future. I don't know how you overestimate the importance of it because you never know what those companies are going to grow into."

In search of Â

McClorey is convinced Lawrence has great potential to become a high-tech center in the region.

"I think Lawrence has better raw technology and research than anyone in the state," McClorey said. "There's great potential for something like KIC to come to town and work with people who have great research and pair them with talented business people to create a company. All that potential is one of the major reasons I wanted this job."

McClorey should know what he's talking about. His main job at KTEC, a statewide business development organization, was to look for "cutting-edge stuff," and then evaluate its business potential to see if it was worthy of KTEC assistance.

He said there was plenty of worthy ideas in Lawrence. But for Lawrence to really start growing its high-tech economy, he said he'd be searching for more than ideas. He'll be in search of two things  teamwork and money.

"I think the key to making KIC work and ultimately creating the type of high-tech, high-wage growth the community wants, is getting everyone in as a partner," McClorey said. "You have to have the county, the city, the university, KTEC, and KIC all working together to make it happen."

Johnston said someone who recognized the need for teamwork was high on the list of qualifications board members sought in someone to replace Jeff Alholm, the former president who left more than two months ago to take a job in the private sector.

"I don't know for sure, but maybe we weren't all together on the same page before and we need a good enthusiastic leader to get us there," Johnston said. "And now we have one. I think the groundwork is there and the enthusiasm is there among all the parties. I see a new beginning here."

McClorey said it also would take money. He said his biggest challenge at KTEC was finding adequate venture capital for companies with good ideas who wanted to stay in the state.

A new program approved by the legislature this year to raise $40 million in venture capital during the next 10 years is a great start, but McClorey said Lawrence won't be able to rely solely on the state program.

"Lawrence needs to be aggressive in exploring ways to put together groups of angel investors, and of venture capital investors," McClorey said. "We have the research here, and we have the quality people here, but if we don't get the capital here, it will never happen."

The organization isn't entirely without money though. KIC in the mid-'90s received from both the city and county more than $200,000 to fund the startup of a business incubator site, which would be a facility that would provide startup companies low-cost office, lab and research space.

But the incubator center never materialized. Instead, the money has sat in an account managed by the chamber of commerce. The account has grown to more than $500,000 because of interest payments.

The Manhattan project

The failure to get an incubator center started in Lawrence has been one of the most frequent criticisms of the organization, especially because a similar group in Manhattan has had a successful incubator up and running since the mid-1990s.

"I think the organization has failed to meet its potential for a number of years, and it is high time we change that. But the important thing is I think we have found the person to do that," said Bob LaGarde, president of a Lawrence computer software firm and board member of the Lawrence Technology Assn.

The group that is creating success in Manhattan is the Mid-America Commercialization Corp., which essentially is Manhattan's version of KIC. It operates a 20,000-square-foot incubator site that is located in a building owned by the city of Manhattan and leased back to the organization at below-market rates.

Gary Rabold, vice president for the corporation, said the organization got the city's help because MACC pledged to start companies that would create high-paying jobs for the city. So far, it has. The incubator supports eight to 10 companies at any one time, and recently one of the incubator companies, Nanoscale Materials Inc., moved out of the facility and became the anchor tenant of a new 10-acre research park in the city.

McClorey said the center had worked with companies that had created about 100 jobs at wages well above the Manhattan average. Rabold said a recent study showed the average wage figure for the newly created jobs was about $37,000.

KIC board members and McClorey are seeking a location in Lawrence to start an incubator facility, using the $500,000 that has been set aside for the project. The group hopes to have a site selected later this summer. McClorey said he thought Lawrence could have as much success as Manhattan has.

"I really do think Lawrence has great potential to create high-paying jobs," McClorey said.

"Lawrence is trending towards becoming more and more of a bedroom community. I think we have a great opportunity to create a base of high-paying, high-tech jobs to help turn that trend around."

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