The Oro Valley Business Accelerator

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Yesterday, in our posting "Oro Valley Seeks $38 Million in 2014 County Bond Funds", we reported that the town in seeking $15 million in 2014 Pima County bond funds for a "business accelerator" to be located in innovation park.

There is an "accelerator" located in southeast Tucson, located at the former IBM site. It houses xx businesses, all in some stage of start-up. Its a "long haul" to get there, even from mid-town Tucson.  So, an "accelerator", located in Oro Valley, makes logistical sense. One located in Innovation Park, makers logical sense.

What Is "Business Acclerator"
An accelerator is a physical building where business that are "growing up" work in separate spaces but share common services and facilities.  These businesses are past the pure start-up phase of growth. They are entering the "scale-up" phase.

For example, the proposed Oro Valley accelerator would be located on town land in innovation park. This was land that was discussed as a municipal operations center a few years ago.

The accelerator would "...make the following services and shared facilities available to startup companies: office space, lab space, shared access to reception, IT, bio-specimens collection and repository, conference rooms, video and teleconference facility, training suites, video production for investigator training and/or human subject enrollment, research site monitors, administrative support (book-keeping, payroll, HR), and consultation on regulatory strategy, market analysis and business planning."(Source-P41)

The Goal Of An Oro Valley "Accelerator"
The goal of the Oro Valley accelerator is to bring "...small bioscience and high-tech companies, that have made it through the start-up phase" to the town."   (Source-P41)

What An Accelerator Can Bring To Oro Valley

• Businesses that are in the early stage of development:  Typically, these are technology or biotech companies, exploring the commercialization of concepts developed in a lab, perhaps as the University.
• Innovating Ideas. Accelerator businesses usually are focused on commercializing innovative ideas; not on simply creating another "me-too" product for the marketplace.  Innovative thinking generally brings excitement and creativity to a community.
• Innovative people:  Innovative ideas come from innovative people.  Their arrival in Oro Valley will add to Oro Valley's talent pool.
• "Angel" investment funds:  Angel Investors are the second stage of financing a business. They invest after "friends and family" money has been invested and, generally, after the concept that is being developed has demonstrated some viability.  Generally, these businesses still represent significant investment risk: 19 of 20 fail.  
• Valuable jobs:  Angel investment funds are used to create a feasible, prototype product or service. Feasible means that it has been tested and that there is some indication that it will be commercially viable.  Producing this product or service required people.  Thus, jobs for Oro Valley.
• A few very successful, growing companies: Who knows, if 1 in 20 do succeed then, over time, there will be a few growing businesses who will move out of the accelerator into their own facility.  These successful companies will likely be financed by venture capital companies (Stage 3 financing).  This could bring further growth to Oro Valley.

What It Costs Oro Valley
The accelerator concept is in it's early stages of development.  "The Town’s Budget for 2013/14 includes a feasibility study for this project, " noted Town Manager Greg Caton in an email to us. "At this time, we do not anticipate that the Town would need to contribute financially to facility on an ongoing basis," Caton further noted.  "Companies utilizing the facility pay rent. We need to conduct fiscal analysis to determine potential lease rates and other opportunities for revenue. Additionally, we will need a comprehensive analysis of the anticipated expenditures...this is a capital project and that the project, or the entities involved, with cover the ongoing operations and maintenance."

Our Analysis:

According to Fernando Martinez, Director of the University of Arizona Bio5 Institute: "The Town of Oro Valley is central to the most significant bioscience cluster in Arizona. It is here where scientific collaboration, technological innovation and business opportunity thrives. As home to almost a dozen leading bioscience and hi-­‐tech companies, Oro Valley enjoys a diverse business environment."

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