RESEARCH TRIANGLE PARK - The First Flight Venture Center has battled back from a financial scandal that dried up its state funding and pushed it into bankruptcy.

The nonprofit group, previously known as the N.C. Technological Development Authority, operates a business incubator on Davis Drive in RTP that nurtures startup ventures. Since emerging from bankruptcy in November 2004, First Flight has managed to survive without state funding -- although it's not for lack of trying. This year when it goes to the legislature, it can boast several accomplishments, including:

* revenue that exceeded expenses over the last 18 months.

* A roster of 30 businesses last year that raised at least $7 million from investors, according to John Draper, First Flight's president and sole full-time employee.

* an international award for best science-based incubator, presented this month by the Netherlands-based Science Alliance.

"There is no question it's a complete turnaround," said Fred Hutchison, a Raleigh attorney who is First Flight's chairman.

The turnaround didn't come without pain. The staff was cut from 13 to one full-time and one part-time staffer. It ended programs such as investing in young companies and supporting a statewide network of incubators. Today it runs just one incubator, not the three it once operated.

The cuts became necessary when the state pulled the plug on its financial support after a 2001 state auditor's report. The report highlighted lavish spending on lobbying, entertainment, travel, salaries and bonuses. Since then First Flight, which over the years had received $19 million in state tax dollars, hasn't gotten any more state money. "Once you lose your reputation, it's hard to rebuild," Hutchison said.

Hoping to restore its reputation, First Flight installed a new board of directors and management. The incubator also shed the TDA name, although it's still in the process of legally changing it.

Incubators such as First Flight offer guidance to entrepreneurs, access to conference rooms and basic office equipment and flexible leases at low rates. First Flight charges $13 to $14 per square foot, compared with the average price of $15.58 for Class-B office rents in the RTP market, according to Raleigh brokerage Grubb & Ellis/Thomas Linderman Graham.

The 27,000-square-foot, 1960s vintage building will never make the cover of an RTP promotional brochure. The dominant decor is vinyl floor tile and cement-block walls. "It's sort of genteel beat up," Draper said.

Tenants, however, are willing to overlook the aesthetics.

"For a startup, this is exactly what you need: an address and no frills," said Paul Rasmussen, co-founder and CEO of IntraFlex, a First Flight tenant gearing up to sell software-as-a-service to the packaging industry.

"With a startup, you can't commit to long-term leases," he said. "Here it is month-to-month."

Tenants can terminate leases with 30 days' notice.

Rasmussen, former CEO of MicroMass Communications and Beame & Whiteside Software, both of Raleigh, said he acts as an informal adviser to other tenants.

Terry Kane, CEO of RadarFind, another First Flight tenant, was initially unsure of the space.

"It's not a gothic cathedral," said Kane, who was named CEO late last year. The company, which has raised about $3 million from investors, has developed a system that uses hardware and software to track and monitor hospital patients and equipment.

But Kane said he was won over by First Flight's flexibility, which enabled his company to expand its space as needed. The camaraderie among the businesses is a plus."It is really a neat, eclectic group of people here," said Kane, who was CEO of Intecardia until the 125-employee Chapel Hill company, which managed cardiology practices, was sold in 2001. "We're all trying to build a business."

So if tenants are satisfied and First Flight's operations are generating cash flow, why is state funding needed? Draper said First Flight isn't tackling big-ticket items, such as replacing energy-leaking windows and modernizing laboratory space. Although First Flight's space is 95 percent full, he said, it can't count on always having that level of occupancy. "Things go in cycles, which means we are at risk," Draper said.

The center has won the support of legislators who represent the Triangle. Last year, Raleigh Democrats Sen. Janet Cowell and Rep. Jennifer Weiss sponsored bills seeking $100,000 in funding.

Cowell, who anticipates sponsoring another funding bill this year, said First Flight suffers because it isn't an organization that benefits the entire state. "It's frustrating," Cowell said. "I really do believe in what they are doing."

The state is more willing to spend money on attracting companies such as Google, she said. "Our system is set up for the buffalo hunt, not for the small ventures," she said.

The state does have a vested interest in First Flight: It gave the incubator building to First Flight in 1991. The deed calls for ownership to revert to the state if it isn't being used as an incubator.