The town-owned office space on the third floor of The Cary theater will soon be home to not one business, but many.
The Cary Town Council on Thursday approved a one-year contract with local entrepreneurs David Gardner, Alex Osadzinski and Whitney Rowe to run a business incubator for startups in the 1,730-square foot space.
The town spent $6 million to renovate The Cary theater and include two commercial spaces, one of which is rented by The Cary News and News & Observer. The third-floor space has been vacant since the building opened last February.
The contract between the town and the trio is not a lease but a license agreement, meaning no money will be exchanged between them.
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Instead, the group must host at least two events and provide consulting services to Cary town staff for at least eight hours each month.
The group will be required to consult at least 50 businesses by the end of the year and to give preferential treatment to Cary residents or business owners who hope to move to town.
“The town is getting significantly more in return for the value of the consulting services,” Ted Boyd, Cary’s downtown manager, told the Town Council.
Boyd estimated the market value of the space – which can fit 117 people – at $15,000 and the value of the consulting services and event organization at $250,000. The space should be ready for use in the next couple of months, he said.
The group plans to give startups free space and advice in exchange for a chance to work with the company before deciding whether or not to invest, said Gardner, 51, who works out of his Cary home.
“It’s like legal insider trading,” he said. “It’s a gladiatorial contest. You prove your business model or you get out.”
Councilwoman Lori Bush praised the arrangement and said incubator space needs to be affordable because startups don’t have much money.
“I think it’s gonna be a real shot in the arm for the area.” Bush said. “It really creates a sense of community and belonging to the area.”
Gardner, Osadzinski 57, and Rowe, 32, work independently of each other but are currently joint investors in a total of 19 projects – most of which are software companies, Osadzinski said. The name of the fund they share is called Cofounders Capital.
The group mostly works with business-to-business software companies. But Cary staff highlighted Filter Easy, Undercover Colors and Fortnight Brewery, which Gardner invested in, as examples of businesses that the three are investors or advisers.
Osadzinski described Gardner as the “most active angel investor in the Triangle,” and said the three entrepreneurs together work with 10 to 15 startups each week. Given time to spend with startups, Gardner has a knack for identifying which will succeed.
Many of the startups they advise have expressed interest in operating in Cary, Osadzinski said. The group considered office space in The Cary because of the town’s ongoing efforts to improve downtown Cary, Osadzinski said.
Gardner added that Cary was “falling behind its neighbors” in having incubators and accelerators. He said many of their clients work in other parts of the Triangle. Now they can work in The Cary alongside the new businesses they recruit.
“We’re on a mission to keep entrepreneurs here,” Gardner said.
“It seemed like a natural fit,” Osadzinski said. “At worst, we’ll have a bunch of businesses hanging out downtown. At best, we’ll start a bunch of successful businesses.”
The group will likely blow past Cary’s requirement that they work with at least 50 businesses, Osadzinski said.
“Between us, we do that in about two months,” he said.
This is the second major project announced for East Chatham Street in downtown Cary in the past few weeks. Northwoods Associates LP has submitted plans to the Town of Cary to spend an estimated $5 million renovating a shopping center and building a 25,000-square-foot office building down the street from The Cary theater. A brewery or brewpub would anchor the space.
Correction: A previous version of this story incorrectly said the name of the incubator is Cofounders Capital. The incubator doesn’t have a name yet. Cofounders Capital is the name of the fund shared by the three entrepreneurs who will run the incubator.