Incubator could close without state support

PBN PHOTO/ MICHAEL SALERNO PERSEVERANCE: Urban Ventures Executive Director Jr Neville Songwe, second from left, meets with staff and microbusiness owners. The public incubator, which continues to operate, is at risk of closing due to loss of funds.

PBN PHOTO/ MICHAEL SALERNO PERSEVERANCE: Urban Ventures Executive Director Jr Neville Songwe, second from left, meets with staff and microbusiness owners. The public incubator, which continues to operate, is at risk of closing due to loss of funds.

By Eli Sherman | Sherman@PBN.com

2/23/17

A business incubator created by state law is at risk of shuttering due to a lack of support from the legislature that fashioned it.

Urban Ventures, a legislatively created incubator based in Providence, was originally formed to support companies predominately owned by racial minorities in urban areas. The incubator, however, has morphed over the years, and now supports Rhode Island's smallest businesses – or "microbusinesses" – throughout the state.

"The distinction between ‘urban' and ‘not urban' is not so clear, so when Urban Ventures started receiving folks from all 39 cities and towns, it was hard to say, ‘We cannot help you,' " said Jr Neville Songwe, executive director.

Urban Ventures, however, ran into a funding problem beginning last legislative session when the General Assembly slashed its budget.

The incubator, created under the arm of R.I. Commerce Corp., was previously funded with a $140,000 community grant. But the grant program came under heavy fire last year when it was discovered that former House Finance Chairman Rep. Raymond Gallison, D-Bristol, was associated with one of the organizations receiving money.

Gallison, it turned out, was involved in other nefarious activities, and in January pleaded guilty to nine criminal charges related to theft from a dead man's estate and theft from a special-needs trust.

The former lawmaker's illicit behavior, however, contributed to Urban Ventures losing its yearly budget, leaving the incubator with zero funding. The group is using what little reserves it has to keep the lights on and provide continued services, while scrambling to find a solution.

"Worst-case scenario is simply Urban Ventures will no longer be able to serve," Songwe said. "The community would lose a resource that has taken the time to understand it."

Urban Ventures was formed in 1999 as part of an urban-economic initiative. The state initially funded the incubator with $250,000 each year. To date, Urban Ventures has helped 500 businesses throughout Rhode Island with development assistance, education, training and consultation, according to its annual report.

Today, the organization focuses on microbusiness – which it defines as a company with five or fewer employees, small enough to require initial capital of $30,000 or less. Urban Ventures has 169 clients in its portfolio right now, and 21 new clients joined in 2016.

"If you did an economic-benefit study, looking at the budget of Urban Ventures, the number of clients they deal with … it has the best value of any economic-development program provided in the state," said Edward M. Mazze, Michael A. Duane endowed chair in business innovation at the University of Rhode Island.

Mazze, who is also an Urban Ventures board member, says he's tried to make this point to every new governor and lawmaker who has taken a position of leadership since Urban Ventures started, swearing by the organization's low-cost, high-impact nature.

But his words always fall "on deaf ears," he said.

"Entrepreneurs are coming from areas that in the past you didn't see. It's women, Hispanic and Latinos, African-Americans, Asian-Americans and East Indians," Mazze said. "In Rhode Island, that's where the action is, and if you look at the legislature and executive branch, you don't see many individuals in those groups."

Songwe says Urban Ventures will now work with anyone from "any walk of life," because he sees it as a public program designed to serve all Rhode Islanders. Nonetheless, the individuals seeking help from Urban Ventures are still mostly racial minorities. Sixty percent of Urban Ventures' portfolio is Hispanic or African-American.

Mazze says it is these types of minority-owned microbusinesses that truly need state support.

"I'm delighted that General Electric [Co.] is here. I'm delighted we're attracting and keeping big businesses. But they can fend for themselves," Mazze said. "What are we doing for the one-person, or two-person businesses, which are the hallmark of Rhode Island?"

Songwe is actively lobbying state lawmakers to take another look at Urban Ventures, to consider reinstating its budget. He's also using an $8,000 legislative grant received last year to host the first-ever Microbusiness Summit this spring. He's hopeful the event will draw attention to the importance of supporting the state's smallest businesses.

"If we do our jobs well, we should be able to build a good pipeline, and be the first in the nation to have a microbusiness arm that gives employers the resources and assets they need to grow into small businesses," Songwe said. •

Teaching ‘the ABCs of business'

SUSTAINING POTENTIAL: Jr Neville Songwe, executive director of Urban Ventures, a state-funded nonprofit providing entrepreneurship assistance to small businesses, says higher education offers the greatest potential for innovation growth in R.I., but there needs to be a stronger effort to retain these "phenomenal minds." PBN PHOTO/RUPERT WHITELEY

By Paul E. Kandarian | Contributing Writer

12/29/16

Jr Neville Songwe, principal of Joneso Design, is also executive director of Urban Ventures Inc., a state-funded, nonprofit organization providing entrepreneurship assistance to the general public and small businesses through education, training and consultation. Its mission is to work with businesses with fewer than 50 employees, and was founded by the state legislature under the Rhode Island Economic Initiative in 1999. Since that time, Urban Ventures has assisted approximately 500 small community businesses in the state in accessing services, from microbusiness boot camps, to incubators, to microbusiness coaching and startups. Urban Ventures' future is uncertain; the state has eliminated its budget, Songwe said.

What are the biggest hurdles to starting a business in Rhode Island?

The way resources are allocated, it's literally skewed against microbusinesses, in things [such as] simply trying to access a contract. The state and feds are some of the biggest buyers of small to micro to medium products or services. But the way the contracts are tailored, it's painstaking for microbusinesses with low capacity or who have been in business less than two years to get a contract. The modality is presenting three years of tax returns; so if you open a business, you have to find a way to stay alive for three years. The fact is, 90 percent of small businesses fail, and the question I always ask is, if the system fails 90 percent of the people, what's wrong with the system? People aren't stupid; they're not lazy or poor. It's the system.My contention is there needs to be a distinction between microbusiness and small business. From the Urban Ventures standpoint, the board, staff and I strongly research and advocate the business continuum. When you start as a microbusiness, there are specific places you can go, and can attain a level of being a small business and access SBA [U.S. Small Business Administration] resources, networks, contracts, and move into becoming medium and large businesses.

Does Rhode Island have the resources to help companies develop innovative products and services?

Rhode Island has the pride of having phenomenal institutions [such as] the Rhode Island School of Design, of which I am a product. It's where I got my master's in industrial design in 2005. We're producing the best minds in the world of innovation, we have schools of engineering at Brown University, the University of Rhode Island. We have an intellectual capacity rivaled by the folks in Massachusetts, but few in the United States and the world can compete in terms of brainpower that Rhode Island provides. The question is, can we retain and sustain an environment to keep these phenomenal minds here to mentor and educate? Innovation means being able to sustain intellectual minds. If I can't find a way to do things here, as soon as I move out, I've taken intellectual capacity away from the state.

What industry offers the greatest potential for growth through innovation in Rhode Island and why?

If I had to pick one, I'd say higher education. We know the best innovation is higher education, it's still producing great minds. But we're not seeing direct return on the dollars there; it's tough to tell if that impact vibrates throughout the economy as it should. Rhode Island has to decide what we want to boast of, what we want to be when we grow up. Product development of anything touches research, it touches uses, graphic design, website design, manufacturing … up and down the economic-development checklist.

How can the state help microbusiness?

We worked with state Sen. Juan Pichardo and state Rep. Jean Philippe Barros [and] saw Rhode Island become the first state to pass a resolution recognizing microbusiness as a separate category. We're very proud of that work. Not that this is a slap on the SBA, but we need to have a diversity of resources to target the continuum of business. The SBA is not equipped to deal with microbusiness issues, and I'll debate anyone who thinks otherwise. We define microbusiness as those with less than nine employees and with a half-million dollars or less in assets, and that's 80-plus percent of business in Rhode Island. … We feel presenting more debt for microbusinesses should not be encouraged.

The state has eliminated your $140,000 annual budget, so what will you do?

The board and I are working hard to change that reality, and it's a lingering distraction from what we need to do. We'll write grants, unless the legislature reconsiders. It's like asking the worth of investing in pre-kindergarten education, and that's what Urban Ventures is to the business world – we teach the ABCs of business. •

Urban Ventures Micro Event

English

Senator Juan Pichardo Rolls Out Micro Business Legislation At Urban Ventures Micro Business Event - The First of its kind Business Initiative in the Country

PROVIDENCE, RI (May 29, 2016) - At the Urban Ventures Micro Business event, business-owners and entrepreneurs looking to start and grow businesses listened to Senator Pichardo (Chairman of the Senate Housing & Municipal Government Committee) role out “Micro Business” legislation, the first of its kind in the U.S., official recognizing Micro-Business as a separate category from Small Business in the State of Rhode Island.

This legislation would recognize that all Small Businesses with 10 or fewer persons working in it and having $500,000 or less in assets, would be defined as a Micro-Business in addition to being identified as a Small Business. The “Micro Business” legislation was crafted by Senator Juan Pichardo, with the assistance and research of Mr. Jr Neville Songwe, Executive Director of Urban Ventures and Mr. Ron Crosson. Representative Jean Phillipe Barros is the sponsor of the legislation in the House.

This “Micro Business” legislation will help the vast majority of businesses in Rhode Island be recognized, and receive the right business assistance. Furthermore, micro business data would be collected, reported and analyzed for better appropriation of cities, towns and State resources, thus creating a friendlier and sustainable business environment for all stages of businesses in Rhode Island. “Micro-Businesses, are a subset of Small Businesses, make up more than 75% of all existing businesses, yet the actual resources that are set aside to assist them, are dwarfed by the resources received by the larger Small Businesses, Mid-sized and Large Businesses” said Jr Neville Songwe, Executive Director of Urban Ventures and co-author of Senator Pichardo’s legislation.

Businesses in attendance at the event quickly began understanding that while they may call themselves “Small Businesses” they are in reality “Micro Businesses”. According to current SBA guidelines, depending on the business industry or category, a business can have hundreds and in some cases thousands of people working in the company and still qualify as a Small Business. These larger size businesses have greater capacity and leverage in lobbying for assistance, resources and accommodations than Micro businesses.

”The reality is, a very small portion of the money and resources allocated for help Small Businesses, actually reach these Micro-Businesses, which is makes little sense, given that Micro businesses make up more than 3 out of every 4 businesses in the state of Rhode Island.

“If you’re a business on Main Street in Providence or in East Greenwich, you know that resources and capital are so difficult and at times nearly impossible to access. Meanwhile, if you ask if the State of Rhode Island helps Small Businesses, you are told yes. There is a disconnect that everyone in business, whether you are a Dry Cleaner in East Greenwich or a Corner Store in Providence, clearly understands.”

 Sen. Pichardo and his colleagues in the State House, working with Urban Ventures, hope to achieve with this legislation is to have the State of Rhode Island recognize Micro-Businesses. These are businesses with 10 or fewer persons working in the business and that have $500,000 or less in assets. In this way, we set aside money and resources specifically targeted to help businesses, both existing and start-ups, like your businesses, which represent at least 75% of all businesses and are the drivers of our economy.

Senator Pichardo was joined on a panel of speakers by Mr. Jaime Aguayo, President of UV Board; Ms. Cheryl Burrell, Associate Director RI Office of Diversity Equity and Opportunity (ODEO); and Ms. Liz Tanner, Executive Vice President of Client Services Commerce RI.

 # # #

Urban Ventures Inc. a non-profit organization, founded by the Rhode Island legislation in 1999, is focused to help micro businesses become small businesses. Urban Venture’s mission is to provide the general public and micro businesses, with business development assistance, through education, training and consultation. Urban Venture Micro Business event is free and open to the public.

 

SPANISH

URBAN VENTURES CONJUNTO CON EL SENADOR JUAN PICHARDO PRESENTAN LA PRIMERA LEGISLACIÓN PARA MICRO EMPRESA, LA CUAL PODRÍA SER LA PRIMERA INICIATIVA DE SU TIPO A NIVEL NACIONAL

PROVIDENCE, RI (29 de Mayo, 2016) En un evento patrocinado por Urban Ventures Inc., asistierondueños de negocios y empresarios que desean abrir sus negocios, quienes estuvieron enfocados escuchando al senador Pichardo al respecto de lo que podría ser la primera legislación de este tipo en los Estados Unidos, creando reconocimiento a las Micro Empresas en el estado de Rhode Island.

Más del 75% de negocios en Rhode Island, independientemente de la ciudad o pueblo, son muy pequeños – micro – en tamaño, teniendo 10 o menos empleados trabajando para ellos. Pero a pesar de que existente muchas Micro Empresas, sus necesidades únicas frecuentemente se pierden cuando se hablan al respecto de pequeñas empresas, debido a que las pequeñas empresas reciben más atención que las Micro Empresas. Esta legislación ayudará a la mayoría de negocios en nuestro estado, sus ciudades y pueblos, ayudando en verdad a comprender el nivel de apoyo que damos a las Micro Empresas. La legislación ha sido creada por el Senador Juan Pichardo, con la asistencia e investigación de Jr Neville Songwe Director Executivo de Urban Ventures y Ron Crosson, así como también con el apoyo del Representante Jean Phillipe Barros quien es el patrocinador de la legislación en el Senado.

“Si usted tiene una tintorería en East Greenwich y no emplea más de 8 personas, usted es una Micro Empresa. Si usted tiene un restaurante en Charlestown, usted es una Micro Empresa. Si usted tiene una bodega en Broad Street con 7 empleados o una pizzería sobre Hope Street en Providence, usted es Micro empresa. Una sastrería con dos empleados en Pawtucket es una Micro empresa, Boutique de 6 personas en Newport es una Micro empresas.” dijo el Senador Pichardo, Presidente del Comité de Gobierno Municipal de Vivienda y Senado. “Esta legislación requiere que el estado de Rhode Island reconozca, rastree y reporte los recursos del Senado que se han apartado y en verdad encuentren su camino a manos de nuestras Micro Empresas, las cuales son el motor de nuestra economía.” Estas son empresas con 10 o menos personas que trabajan en el negocio y tienen $500,000 o menos en activos.

"Si fuese aprobada, esta sería la primera de su tipo en el país, el reconocimiento oficial del estado de un subconjunto importante de pequeñas empresas, que estamos llamando Micro. La mayoría de países industrializados alrededor del mundo, comprenden y reconocen el sector Micro-empresarial, dijo Jr Neville Songwe, Director Ejecutivo de Urban Ventures y coautor de la legislación del senador Pichardo. "Micro-empresas, que son un subconjunto de las pequeñas empresas, conforman más del 75% de todas las empresas existentes, sin embargo, los recursos reales que se reservan para ayudarles a crecer son muy pocas a comparación de los recursos que reciben las pequeñas, medianas y grandes empresas."

Al evento asisitieron como panelistas el senador Juan Pichardo, Jaime Aguayo, Presidente de la Junta Directiva de la Urban Ventures; JR Neville Songwe, Director Ejecutivo de Urban Ventures; La Sra. Cheryl Burrell, Directora asociada de la oficina de diversidad equidad y oportunidad de RI (ODEO) por sus siglas en inglés; y la Sra. Liz Tanner, Vicepresidente Ejecutiva de Servicio al cliente de la Cámara de Comercio de RI.

 

 

Edward M. Mazze: How to boost business in R.I.’s cities

By Edward M. Mazze

Much of the discussion about the Rhode Island economy revolves around attracting and retaining new businesses and creating jobs. With all the programs, events and financial assistance to turn the economy around initiated by local and state government agencies, nonprofit organizations, foundations and chambers of commerce, Rhode Island continues to have one the highest unemployment and underemployment rates in the country and the highest in the New England states.

These efforts should be applauded for trying, but the results have not been as good as desired. Many of these organizations know how to communicate with medium and large businesses but do not understand the obstacles faced by individuals who want to start or grow a small business in urban areas. In Rhode Island, these are the underserved individuals and businesses. And, there is the continuing perception that urban area businesses generate little in terms of jobs and dollars and that individuals in these communities are unable to start and grow businesses.

Urban Ventures Inc., started by a legislative grant in 1999, was formed to work with this underserved market. The objective of the organization is to support community small businesses, increase the business knowledge and skills of individuals in the community interested in going into business and increase their chances of getting financing to start or grow a business.

Since its beginnings, Urban Ventures has had a small full-time staff because of funding. Currently, there is only one professional staff member assisted by a nine-member board of directors. In the last 14 years, the organization has worked with hundreds of different clients in 10 urban areas and 13 industries.

In the urban communities, many people want to work for themselves rather than work for someone else so that they can build a business for their families and have control over their destiny. Some of these people are not employable by larger businesses because they do not have the skills to work for them nor the transportation to get to the job.

In fiscal year 2013, Urban Ventures had 43 clients, which included Hispanics, Caucasians, African-Americans, American Indians and other ethnic groups. Forty percent of the clients were female. Many of these businesses were home-based or home-headquartered.

If a cost-benefit analysis were done by the General Assembly, Urban Ventures would be found to be a great investment in turning Rhode Island’s urban areas economy around. This year’s budget was $73,000. Imagine how many more clients could be served if the new budget allowed for hiring one additional professional staff member — how many new businesses would be created, and how many new jobs would come to the urban areas.

Urban Ventures has been successful in the urban community because the organization recognizes the importance of small and minority owned businesses in their communities and for the Rhode Island economy. The organization listens first to what the community needs and then builds a program to meet these needs. Some examples of their new programs include the Certified Bankability, Certified Investability and Adopt a Rhode Island Small Business program. In addition, Urban Ventures has offered training programs for specific skills and industries. Working together, these programs are directed at eliminating many of the barriers that prevent individuals from establishing small businesses in the urban areas.

It is important to recognize that the changing demographics in Rhode Island have created new business communities in the urban areas that need the support of Urban Ventures. The urban areas in Rhode Island are not going to slip away. While these businesses may not generate as much money and create as many jobs as large businesses, they are a critical component of the community. Over time, some of these small businesses may become large corporations.

Urban businesses also provide tax revenue to support government services. Locally owned businesses in urban areas build a strong economic and social base for the city and keep money in the community. Local businesses that are successful generate opportunities for other businesses and more opportunities for people to start a business in the community. Urban Ventures is the “sparkplug” to make this happen.

For more information about Urban Ventures, go to www. urbanventuresri.org.

Edward M. Mazze is a professor business administration at the University of Rhode Island and a member of the board of directors of Urban Ventures Inc.

Urban Ventures garners attention of lawmakers in mission to bridge gap for small businesses

STATE HOUSE – Starting any business can be a difficult feat, and the staff of Urban Ventures knows this all too well. What they also know is that while lawmakers are looking for every way possible to slice through red tape for business owners, entrepreneurs in urban centers still face numerous challenges outside of the more obvious obstacles.

Today, lawmakers listened to staff, clients and officials involved in Urban Ventures, a General Assembly-generated nonprofit with a mission to provide the public and small businesses with development assistance through education, training and consultation.

Entitled “Generating Jobs and Helping the Urban Economy,” Urban Ventures Executive Director Jr Neville Songwe gave lawmakers a brief overview of how the organization has worked to provide direct support to small businesses as part of the 1999 Rhode Island Economic Initiative. Since its inception, the nonprofit has serviced more than 600 clients in Rhode Island’s urban communities, providing customized business development support for entrepreneurs and small business owners who need help enduring the trials of running a company or a start-up.

The group presented at the invitation of Sen. Juan M. Pichardo (D-Dist. 2, Providence) and Rep. Agostinho F. Silva (D-Dist. 56, Central Falls), who said they are committed to expanding the nonprofit’s reach during this vulnerable time in Rhode Island’s small business economy.

“Here is an example of a resource-heavy organization created through legislative action that has made a real difference in our neediest communities,” Senator Pichardo said. “I want to thank Mr. Songwe and the board for sharing success stories from their clientele, their process and their hopes for the future of our state. It is only through innovation and perseverance that we will learn from our past mistakes and come out better on the other side of all this. As we heard from one of the organization’s board members, this is a useful tool that is ‘already on our doorstep.’ I hope to see them reach out to more businesses and nurture some unique ideas from our most vibrant, eclectic communities.”

Senator Pichardo introduced a resolution (2014-S 2742) in March calling for a $140,000 appropriation to Urban Ventures through the Rhode Island Commerce Corporation. The money would be used to expand the nonprofit’s reach and resources.

“A lot of people are unaware that a force set in motion way back in 1999 has been quietly developing the groundwork for small businesses to achieve success across the state,” Representative Silva said. “It’s very difficult to start a business or keep a business going in this economy, but this organization works to at least guide business owners around common pitfalls and missteps. They’re essentially on the front lines. I wanted my colleagues and members of the public to not only see there are resources out there for people who are looking for assistance in marketing what they have to offer in an efficient way.”

Songwe said he hopes the General Assembly will provide additional support to Urban Ventures so that it can continue coaching entrepreneurs and cultivating a landscape of unique, sustainable enterprises.

“We’re in the business of helping individuals realize their dreams and then helping them chase after them,” he said. “We’re on the ground doing the work and keeping businesses focused on what’s important. We’re also innovators; creativity is so essential to our process and we want to extend that notion to our clients. For years, we’ve been doing more with less and teaching others to emulate that model. With more funding, we could exponentially increase our outreach. Here’s why it’s important: from our vantage point, there are countless individuals who are so talented at what they do but experience frustration in how to build a business around their vision. We effectively bridge that gap with technology and education.”

Urban Ventures is more recently known for its partnership with the Rhode Island Economic Development Corporation, which resulted in a $4.5 million Broadband USA grant for the support and implementation of a “virtual incubator,” a program that supports development of micro-entrepreneurs. Currently, the nonprofit serves 125 clients in 18 cities and towns.

For more information, contact:
Brenna McCabe, Publicist
State House Room 20
Providence, RI 02903
(401) 222-2457

BroadbandUSA, Connecting America's Communities

NTIA, Ferderal Broadband website link

Rhode Island Economic Development Corporation

Designee for the State of Rhode Island

Project Components

State Broadband Capacity Building:

With this funding, the State of Rhode Island will create a state broadband office that will assess the barriers to broadband adoption and usage in the state. The office will benchmark the state’s progress over a four-year period; develop a plan to improve broadband availability and usage in the state, utilizing input gathered through a series of community meetings over the course of the project; and create partnerships with the private and public sectors to facilitate greater broadband deployment and adoption.

Technical Assistance:

The Rhode Island Economic Development Corporation (RIEDC), in partnership with Ocean State Libraries and the Rhode Island Office of Library and Information Services, will adopt a standardized digital literacy curriculum and provide relevant training to librarians and other staff across the state.

Application Usage and Development:

This investment will support two application development projects. In the first, RIEDC will support Rhode Island’s public safety community as it begins planning for a citizen-focused online notification system. This system will create a unified and transparent source of information for Rhode Island’s residents. The second project, a collaboration with the Rhode Island-based non-profit organization, Urban Ventures, will support and document the implementation of a “virtual incubator,” which supports the development of micro-entrepreneurs as they seek to incubate their businesses and access potential state resources.

Data Collection, Integration, and Validation:

This project was originally funded for broadband planning activities and two years of data collection. In September of 2010, this project was amended to extend data collection activities for an additional three years and to identify and implement best practices.

Address File Development:

The Office of Information Technology will collect and improve current county data and deploy a crowdsourcing tool to improve address file quality. OIT will conflate that information with data from the Rhode Island Department of Motor Vehicles and the Secretary of State’s Office. This project includes additional support to train emergency service personnel to collect and verify address location information.

Note: Project description is based on information supplied by the applicant. For more information, please visit State Broadband Data and Development Program

Original Award: 

$1,542,660

Supplemental Funding: 

$3,002,127

Total Award: 

$4,544,787

Can startup incubators give R.I. an economic jolt?

Providence Business News

By Eli Sherman | Sherman@PBN.com

Without the opportunity to lure funding presented by Providence-based Betaspring, a nationally recognized business accelerator, Jon Bittner and his partners never would have brought their startup, Splitwise Inc., to the Ocean State. Nor would they have decided to stay, without a $50,000 investment from Providence in exchange for basing the company in the city for a year.

"During our initial fundraising, that size investment was enough to change our conversation from, ‘Why stay?' to ‘Why leave?' " said Bittner, who was living in Cambridge, Mass., before joining a Betaspring cohort in 2012. "We are no longer bound to stay in Providence but we have chosen to. We enjoy Providence's location, access to top universities, low cost, livability and vibrant arts and culture."

Bittner, the president and CEO, expects the company, a Web-based mobile-app platform that helps people fairly split up expenses, to grow from four employees to six or seven by year's end.

The company's success is what fledgling businesses tapping Rhode Island's growing community of startup-boosting incubators and accelerators all hope to aspire to. The odds, however, are especially long against them doing it and staying in Rhode Island.

Most successful startups will eventually relocate elsewhere when it's time to scale up, says M. Cary Collins, the Michael A. Ruane endowed chair in business innovation at Providence College. That's because most new businesses follow the investment funding as they grow, and that often places Rhode Island at a decided disadvantage, he says.

"An accelerator is a great place for hatching an idea that might take root, but the question is whether the soil here in Rhode Island is fertile enough for it to thrive," Collins said. "You can take it as a blessing or a bane, but we're situated between two major hubs in New York and Boston that do have the fertile soil."

The number of businesses incorporating in Rhode Island is growing, as 2,077 new companies registered with the state in this year's first quarter, representing a 4.4 percent increase compared with the same period last year, according to the R.I. secretary of state's office.

Startup activity in the Providence, New Bedford and Fall River, Mass., metro region has improved slightly in the past year, according to the Kauffman Index, which ranks the area No. 34 (out of 40) in the nation on its 2015 Metropolitan Area Rankings for Startup Activity. Last year, the index ranked the area No. 38. It's the only New England metropolitan area in the ranking after Boston, Cambridge and Quincy, Mass., which ranked No. 22, compared with No. 31 in 2014.

The metropolitan area of Austin, Round Rock and San Marcos, Texas, ranked No. 1 in the nation for 2015.

Increasingly, many businesses are utilizing nonprofit and for-profit accelerators, incubators and co-working organizations setting up in Rhode Island. The concepts are not brand new, but in just the last few years several have opened, including the Hatch Entrepreneurial Center LLC in Providence, The Hive RI in North Kingstown, Hope & Main in Warren, KLR Emerging Business Center in Providence, WorkDigz LLC in Warwick, and the Founders League, a joint venture of Betaspring, Brown University, the Greater Providence Chamber of Commerce and the University of Rhode Island, in Providence.

It's difficult to gauge just how sustainable these startup boosters will be, but Anthony R. Wheeler, Spachman professor of human resource management at the URI, says it's creating an opportunity for the state to capitalize on some of these fledgling companies.

But he agrees with Collins that Rhode Island needs to become an easier place for startups to grow for that to happen.

Wheeler and some colleagues are wrapping up a study that examines what works and what doesn't when trying to grow startups, focusing specifically on the knowledge-innovation sector. He expects the report to become public sometime this summer.

"There needs to be a coherent stream from an incubator to an accelerator to scale," Wheeler said. "Why is Massachusetts having [a lot] of startup activity, but Rhode Island isn't having a similar kind of outcome? The state might really want to look at it in terms of how it can really allow companies to scale here."

STATE SUPPORT

The state in fact had a hand in the creation of Rhode Island's first official business incubator, when the General Assembly in 1998 passed a three-part urban-revitalization plan signed into law by then-Gov. Lincoln Almond. The bill allotted $500,000 over two years to set up a public business incubator in South Providence dubbed Urban Ventures.

From 2000 to 2004 the group's portfolio grew from seven companies with total revenue of $241,472 and 16 employees to 25 companies with total revenue of $8.54 million and 77 employees.

Today, Urban Ventures is a shadow of what it was in its heyday. Scant fiscal support has hamstrung its ability to hire more personnel or even rent out more space. But what the group lacks in funding, it tries to make up for in effort.

Jr Neville Songwe, Urban Ventures' executive director and sole employee, splits his time working with 120 clients from around the state on a yearly budget of $140,000.

Songwe says Urban Ventures, with programs and services that are completely free, now largely focuses on Rhode Island's micro-business community – comprising enterprises with fewer than five employees. The Urban Venture model is unique, as other publicly funded small-business resources, such as the Rhode Island district office of the U.S. Small Business Administration and the R.I. Small Business Development Center receive funding from sources other than the state.

Edward M. Mazze, distinguished professor of business administration at the University of Rhode Island, serves on Urban Venture's board and said the organization, even in its diminished state, remains "critical in the community.

"We don't charge, and we do not do anything in terms of fundraising," Mazze said. "We recommend sources, but we don't guarantee funding."

But Wheeler has something else in mind. He thinks the state should consider setting up a public-private business economic cluster with elements of incubators, accelerators and access to capital that creates a collaboration between the state, higher education institutions and the startup community. It's an idea, he says, that's already shown results in other states, including the Research Area, or "The Triangle" in the Raleigh-Durham-Chapel Hill area of North Carolina.

The Research Triangle Park, founded in 1960, is now home to more than 200 companies and more than 50,000 people. The different industries invest more than $296 million in research and development at the region's universities each year, according to the park, which doubles the national average for innovation clusters.

ACCELERATORS BLOSSOM

When Betaspring started in 2009 it was one of about 10 accelerators in the United States, according to Chief of Staff Melissa Withers.

Today, she says, there are about 150 business accelerators nationwide and nearly 1,000 in the world.

Splitwise, named a Top 50 App of 2013 by Time Magazine, is one of 89 companies to have participated in Betaspring's original program. Other portfolio members include Modelo, NuLabel Technologies, AstroPrint, CompNet and several more.

Betaspring's initial model comprised a 13-week entrepreneurial boot camp to help fledgling companies find initial rounds of funding and set up internal controls to become profitable, but last week – after a yearlong hiatus from accepting new companies – Betaspring made a major shift and launched RevUp by Betaspring, which focuses its efforts on more-mature companies that are already generating revenue.

Before, Betaspring took 6 percent of each company's common stock, but now – instead of equity – participating companies receive $75,000 in cash, much like an unsecured loan, which RevUp collects back, in addition to 4-8 percent of each company's monthly revenue for 36 months.

Betaspring lost an important source of public funding after the city discontinued the Innovation Investment Program, which provided $50,000 convertible notes to companies that stayed in Rhode Island for at least one year (Splitwise was one company to receive funding from this program).

Collins says Betaspring's new approach will be more attractive to investors and will likely produce "more doubles and fewer home runs." But he's unsure how the loss of Betaspring as an accelerator for startups will impact the local growth of those fledgling companies.

Withers thinks there are plenty of resources around the region and country for new companies and sees RevUp as filling an underserved category of maturing companies that might not want to give up equity.

Thorne Sparkman, managing director of the Slater Technology Fund, says Betaspring's evolution seems natural, though he sees its shift to a different section of the startup continuum leaving a gap in Rhode Island.

"Yeah, I think it will leave a hole. Six to eight consumer Web companies every six to eight months will be less served now," Sparkman said. "But I think Rhode Island especially is more about quality than quantity."

Created by the state in 1997, Slater is one of the few local resources for startups to access venture capital. That lack of local investment capital makes startups more reliant on seed funding provided by some accelerators.

The nonprofit Social Enterprise Greenhouse is another well-known Rhode Island accelerator. It focuses on socially conscious enterprises. The organization, headquartered at 10 Davol Square, Providence, has sustained growth in the last five years.

The group says it started in 2010 with 10 partners, two programs, a part-time employee and two funding sources totaling $50,000. In 2014, the group recorded 150 partners and mentors, 10 programs, seven full-time employees and more than 50 funding sources totaling about $440,000.

Neither Betaspring nor SE Greenhouse has been able to compete with the largest regional accelerator, Boston-based nonprofit MassChallege. The latter has "accelerated" 617 startups in the last five years with graduates' collective valuation totaling $2.5 billion, according to the organization.

The accelerator is showing no signs of slowing down and in May accepted 128 startups from 2,200 applicants to partake in this year's Boston program, which included five Rhode Island startups: Response Technologies LLC, XactSense Inc., QuitBit, Healthy Roots and Increment.

Wheeler and Collins both see the Rhode Island startup community as an offshoot of Boston's startup ecosystem, something Wheeler says is a strength rather than a weakness for local accelerators and incubators able to serve as alternatives to that busy market.

"Not every company will want to accelerate or startup in Boston," Wheeler said.

SPREADING OUT

While accelerators mark the most aggressive avenue to development for startups, business incubators and co-working facilities offer alternative paths across nearly all sectors of the local economy.

These incubators and co-working spaces provide shelter and support to fledgling businesses and roaming professionals who would otherwise be working out of coffee shops or from home. While many of them charge for space – either on a weekly or monthly basis – the majority don't ask for any equity in return, which sets them apart from accelerators.

"I tend to like accelerators because you either succeed or fail quickly," Collins said, when asked how the models are different.

"As for incubators, I love the fact that we're typically using space that would otherwise be dormant," he added.

One reason why these entities don't appear to be stepping on one another's toes – at least for now – is because they're spreading out both geographically and within different industries.

"I think all the spaces have their own identities. I welcome all entrepreneurial spaces," said Kevin Murphy, co-owner of the Hatch Entrepreneurial Center.

In Providence, the Founders League and Hatch offer co-working space and some private office space fitted out for a variety of different of industries. The Design Office, at 204 Westminster St., hosts architects and graphic designers while the famed A220 is a leader in the art industry.

South of Providence, The Hive RI in North Kingstown has created a hub within Lafayette Village on Ten Rod Road. The mill used to house Rodman Manufacturing Co., which at its peak employed more than 500 people. Co-founder Tuni Renaud Schartner sees The Hive RI as an opportunity to revitalize economic activity in the area.

"It's not apples to apples for any of us, because we're all offering something [different]," she said.

To the east, Todd Thomas is setting up the state's newest nonprofit business incubator Tinker|Bristol, picking his niche in the manufacturing industry. Thomas said the space will also be used as a "makerspace," where people can pay weekly or monthly to come in and use tools to "tinker around."

"We have a slogan: ‘Caution: Your business might start unexpectedly,' " Thomas said.

SUSTAINABLE GROWTH?

Withers says Rhode Island doesn't have pent-up demand for startup space or services like Boston and other top-tier markets do, so it takes more than just putting up a sign, opening the doors and letting in the flocking entrepreneurs.

She doesn't see competition as an issue right now, but does worry that without "flow engines" bringing people in and out locally, the demand could plateau.

"This has been a two- or three-year process and the [profit] margins are crazy," she said of the Founders League. "We don't get paid, we pay the rent."

Bristol-based Hope & Main stormed onto the incubator scene last year with a plan to grow the culinary industry. Founder Lisa J. Raiola says the interest level since conception has been at "quantum levels."

"We're organically attracting others like a center of gravity," Raiola said. "That's a good thing too because … we can create collaboration by bringing together people."

Federico Manaigo, a New York-based developer, is looking to set up a like-minded venture within the West Elmwood neighborhood of Providence. Pending a tax-stabilization agreement with the city, Manaigo plans to renovate a Cromwell Street mill and establish a mixed-use facility called "Rooms and Works," which would double as a culinary center and residential units. He hopes to start construction this summer.

Collins says incubators and accelerators have a place in the local economy. But he predicts that unless Rhode Island can find a way to retain the startups, it will continue lose maturing businesses to other markets.

"We're a great on-ramp, but we're just not a part of the highway," he said. "At the base of the on-ramp, we're helping people build airplanes, but then we're surprised when they fly off and land in Boston." •