Startups are welcome

RTP - Old building is the new incubator

RESEARCH TRIANGLE PARK -- Eric Buckland compiled an ambitious expansion checklist last year.

Bioptigen, his two-year-old startup that develops 3-D optical imaging technology, needed 2,500 square feet of labs and offices with an option to grow. He needed a short-term lease, in case the company really takes off, or worse, implodes. It had to be cheap. A coveted Research Triangle Park address wouldn't hurt, either.

Most landlords wished Buckland luck and showed him the door. The Research Triangle Foundation showed him Park Research Center, a 40-year-old cluster of bland brick buildings with small labs and offices. Sold.

"We couldn't ask for a better location ... without having to pay premium RTP prices," said Buckland, Bioptigen's CEO.

The foundation, which runs RTP, hopes to lure more companies such as Bioptigen to Park Research Center's dozen buildings. It is repositioning the 30-acre pocket of the park as a business incubator, targeting promising startups and offering flexible leases at low rates, access to equipment, and eventually, entrepreneurial guidance.

It's part of the foundation's goal to strengthen ties with universities and nurture companies that spin out of their campuses. Bioptigen came from Duke.

Park Research Center's 72,500-square-foot campus was once occupied by the National Institute of Environmental Health Sciences, and is equipped with the essentials for scientific research. The foundation plans to upgrade sinks, fume hoods and utilities, and add a coffee bar, conference room and communal office equipment. "They can come in, bring their research kits with them and begin," said Kevin Johnson, RTP's vice president of business development.

The move comes as venture capital for emerging technologies and demand for small offices and labs are rising after a slow spot following the tech bust.

Triangle companies raised $430 million in venture capital last year, up 82 percent from 2004, according to the Council for Entrepreneurial Development. Meanwhile, industrial space left by dot-bomb casualties, a common haven for startups, is shrinking, and rents are rising.

Startups are typically space-strapped because they try to spend every dollar on research. Private developers are reluctant to satisfy demand for labs and offices. Labs are expensive to build, and it's hard to profit from or even get financing for a project aimed at tiny, no-credit tenants.

There are exceptions: Scientific Properties is renovating Durham's Venable Tobacco warehouse with up to 50,000 square feet of labs. But that's suited to more stable startups.

Leases there run at least three years. The smallest labs are 2,500 square feet. And while office rent is below market rate, starting at $16.50 per square foot annually, the rate for labs could climb north of $30 per square foot.

Park Research Center's rates start at $15.95 per square foot for offices, $19.95 for lab space.

"When you have no money and no credibility and you're not credit-worthy, then going somewhere and signing a three-year lease is not practical," said Peyton Anderson, who started Cary-based SciQuest with three partners, working out of a basement in 1995.

That's where incubators come in. SciQuest turned to the First Flight Venture Center in RTP, an incubator that offered the space and guidance that helped SciQuest to go public in 1999.

Competition for incubators is tight. First Flight is full, as are labs at N.C. State University's Centennial Campus. A planned incubator in Chapel Hill is years away.

Park Research Center will help ease the crunch. RTP officials are in talks with First Flight to help make it a true incubator.

The partnership could be critical for many young companies, said Anderson, whose latest company, Affinergy, grew out of the BD BioVenture Center, another RTP incubator. "An incubator probably doubles your chances of building a successful company," he said. "Investors take you seriously, you can spend your money more efficiently, and you can use shared infrastructure that may get you an extra grant or an extra partnership."