A mix of twentysomethings in cargo shorts and businessmen in crisp button-ups came to the top floor of The Cary theater Monday evening to celebrate the opening of Cary Cofounders Lab, an incubator run by local entrepreneur David Gardner.
The Cary Town Council approved a license agreement with Gardner in February that allows him to use the 1,730-square-foot space – for free – to host and mentor startup companies. In return, he is required to consult town staff on economic matters at least eight hours per month.
Monday night, Gardner showed off the transformed office space on the third floor of the downtown theater on East Chatham Street. The space has an outdoor patio that overlooks the street.
Gardner raised $12 million in investments for a venture capital fund, known as Cofounders Capital, that will finance the early-stage software companies after they’ve proven their business models are viable.
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Ted Boyd, Cary’s downtown development manager, was one of several town employees to attend the open house. He said the incubator’s model will hopefully draw entrepreneurs to grow their businesses in Cary.
“This is a new way of thinking about things,” Boyd said. “You tend to try to stay close to your investors.”
Sean Peace is the founder of one of the startups working in the lab. Work Around Me, a social networking app that aims to connect employees within the same building, will launch within the next few weeks.
The app, which has been in the works for about two months, will capitalize on the idea that there isn’t an existing social network for workplaces. Users will be connected by the building they work in and will be able to suggest nearby businesses to each other or plan to meet for drinks after work.
Peace said he originally reached out to Gardner hoping to secure an angel investment and was invited to work in the lab. For Peace and his four employees, Gardner’s mentorship is invaluable.
“The experience he has is just phenomenal,” Peace said.
Gardner is widely considered one of the most active angel investors in the area. His biggest exit was $100 million in early 2010 for PeopleClick, a human resources software company. His latest venture sold for $12 million. Cofounders Lab will continue Gardner’s focus on business-to-business software companies, which he said don’t require a lot of capital to get off the ground.
Startups come to the Cofounders Lab, where Gardner mentors them and minimizes their risks. He calls the incubator space a “proving ground.” Companies are given the chance to prove their worth. By the time Gardner chooses to make an investment, he said, “Writing the check is almost an after-thought.”
Investors, entrepreneurs and Gardner agreed on what sets the incubator apart from similar models in the Triangle: Gardner is in the lab consistently, offering guidance to the startups in their early stages. An added perk is that the lab doesn’t charge its entrepreneurs to use the office space.
“The worst that will happen is that you’ll get some free help,” Gardner said. “The best thing that will happen is we’ll get to know each other and we’ll find out that this business really has legs, and I’ll end up being your financial backer as well.”
The Town of Cary recruited him to start the Cofounders Lab, Gardner said, because they want startups to grow in Cary. Gardner has lived in Cary for about 30 years and wants to see the downtown area built up.
“I don’t want this to become an old folks community,” Gardner said. “We need businesses here, and I’m not talking about hot dog shops.”
Peace, who lives in North Raleigh, hopes his company will stay in the lab for six months or less. He thinks the Town Council was wise to bring the incubator to downtown. By giving startups a taste of Cary, Peace said, owners will consider staying in the town permanently.
“Cary is trying to create that kind of ecosystem in saying that they’re a destination for entrepreneurs, because it certainly isn’t today,” Peace said.
Correction: In a previous version of this story, it incorrectly said that David Gardner has invested in Work Around Me. The company is working in the Cary Cofounders Lab, but has not received funding yet. Gardner has invested in Pack Purchase and Testive.