By Tom Gresham
From the July/August 2022 Issue
Innovation hubs play a vital role in the economic landscape of the United States today, creating hospitable climates throughout the country where startups can find their footing and established companies can take ambitious steps forward.
Every innovation hub is different, but they share many key core characteristics. In particular, each innovation hub is a geographic area that brings together institutions with a heavy research and development component, such as high-tech companies, universities, and medical facilities, with capital, incubators, and startups.
“Innovation hubs promote dynamic, supportive, and exciting environments for entrepreneurs and businesses,” said Mandi Mitchell, President and CEO of the Lafayette Economic Development Authority in Lafayette, LA.
The result is that tech giants and emerging businesses find themselves working side by side in fast-paced environments, said Carol Stewart, Vice President with Tech Parks Arizona at the University of Arizona in Tucson. A range of businesses and other organizations can thrive in these resulting “communities of innovation” that are rich with resources, expertise, networking, and support, she added.
Roland Peña, the Senior Vice President of global technology and innovation with the Greater Austin Chamber of Commerce and Opportunity Austin in Austin, TX, said creating and fostering an innovation hub helps unleash a region’s creativity and realize its potential for job creation and economic development.
“What can happen when you have this kind of dynamic—and what I’ve seen firsthand in Austin—is that you have entrepreneurs and investors and creators and other talent that come from all over the world,”
— Roland Peña, Greater Austin Chamber of Commerce / Opportunity Austin
“What can happen when you have this kind of dynamic—and what I’ve seen firsthand in Austin—is that you have entrepreneurs and investors and creators and other talent that come from all over the world,” Peña said. “And it begins to create a new dynamic in your community in terms of economic vitality, economic development, and innovation.”
The Power Of Talent And Ideas
Higher education institutions are a powerful source of the kind of both talent and ideas that can drive a region forward, and they often occupy a central role in innovation hubs. In Peña’s region, for instance, the University of Texas ranks among the top schools in the country for new patents each year, he said.
Peña said powerful partnerships that include colleges and universities can lead to academic programs adjusting their training and curriculum to meet evolving industry needs.
“In our case, I think that helps to attract talent to us from all over the world, and that is critical to having companies thrive in your region,” Peña said.
Perhaps nowhere is higher ed’s influence more apparent than in the Research Triangle area, which boasts three Tier 1 research universities—Duke University, North Carolina State University, and the University of North Carolina—within 25 miles of each other. That’s part of an overall total of 12 colleges and universities and eight community colleges in the area, resulting in more than 174,000 active students in the region and 65,000 new graduates annually.
Michael Haley, Executive Director of Wake County Economic Development, noted that the Research Triangle region has a long history of innovation in part due to the presence of tech pioneers IBM and Cisco in Research Triangle Park. Founded in 1959, this is the largest research park in North America and has served as a model for communities across the country, Haley said.
Haley points to the strength of the collaboration in the Research Triangle region as being one of its differentiators, particularly related to the partnership between higher education and industry.
“Our region has a deep history rooted in collaboration that continues to foster an innovative spirit today,” Haley said. “The collaborative spirit of the Research Triangle is tightly woven into our identity. Those who have found success here are inspired to look back and help those next in line.”
Research Triangle startup success stories include SAS, the largest privately held software company in the world, as well as companies such as Red Hat, Epic Games, and Bandwidth.
“One of our more recent stars is the software company Pendo,” Haley said. “Pendo was founded in 2013 in Raleigh by alumni from Google, Cisco, and Red Hat. In the following decade, they raised more than $350 million and grew to 900-plus employees across eight global offices. They now occupy one of the newest towers in downtown Raleigh as their headquarters.”
Innovative Resources beyond bricks and mortar
Tucson’s innovation often has roots at a university.
“The crown jewel of Tucson is the University of Arizona, a tier one research university that produces a robust talent pipeline,” Stewart said. “The world-class research and innovation spurred from the university is a magnet for businesses and has ignited a bustling startup scene.”
“The crown jewel of Tucson is the University of Arizona, a tier one research university that produces a robust talent pipeline.”
— Carol Stewart, Tech Parks Arizona at the University of Arizona
Stewart said innovation hubs such as Tech Parks Arizona, which is a university-connected research park with approximately 100-plus tenant companies employing more than 6,000 knowledgeable workers, and the University of Arizona Center for Innovation, which is a business incubator network that has supported 255 startups since 2003, offer resources “beyond brick-and-mortar boundaries to provide customized business development support and a great workplace culture.”
Tucson’s support system for innovation and startups includes Arizona’s Angel Tax Credit program, which offers tax credits to investors who make investments in qualified small businesses and eliminates Arizona capital gains tax liabilities associated with the disposition of investments in those businesses. Other prominent resources include Desert Angels, a nonprofit organization of accredited angel investors who invest personal money in early-stage, scalable companies across multiple industries nationwide.
The environment for business innovation often is critical. Tech Parks Arizona develops purpose-built environments customized to support businesses of all sizes and facilitate university-industry interaction. Meanwhile, the tech park has laboratory offerings that include Biosafety level 2 (BSL-2) facilities, wet chemistry benches with fume hoods, dry lab facilities, and a prototyping center.
Tucson’s recent high-tech success stories include Dimensional Energy, a leader in fully integrated carbon dioxide utilization that recently celebrated the grand opening of its first-of-a-kind facility at the UA Tech Park where carbon dioxide will be transformed into fuels and products such as plastics and cosmetics. Another is Eurofins Donor Testing Services, which provides comprehensive laboratory services to meet the testing and processing needs of the transplant community and selected Tucson for its newest laboratory.
The Role Of Ingenuity And Creativity
In Louisiana, Mitchell said Lafayette Parish’s entrepreneurial spirit is driven by “Cajun and Creole ingenuity and creativity.” The region is known for its “wildcatter mentality,” she said, as in evidence by the creation of the nation’s first Masters of Science program in computer science at University of Louisiana at Lafayette in the 1960s, the launch of a municipally owned fiber network (LUS Fiber) in 2005, and technological innovations in the oil and gas and healthcare industries that were developed in Lafayette.
“The State of Louisiana offers a robust 25% tax credit to individual investors who invest in early-stage, wealth-creating businesses that seek startup and expansion capital through the Angel Investor Tax Credit.”
— Mandi Mitchell, Lafayette Economic Development Authority
Lafayette’s efforts today to foster an innovative community include the Opportunity Machine, a business incubator and accelerator that features an accelerator program called “The Builder Program,” education programming that includes the “DIY Marketing Series,” mentorship opportunities, and pitch competitions.
Capital is critical to an innovation hub, and Mitchell said the Opportunity Machine (OM) so far has connected dozens of businesses to local investors through Acadiana Angels and Acadiana Capital Ventures, as well as other Louisiana-based and national VC firms.
“OM plans to rapidly increase the number of capital investments made within the Lafayette startup community with additional capital resources and partnerships in the near future,” Mitchell said. “Additionally, the State of Louisiana offers a robust 25% tax credit to individual investors who invest in early-stage, wealth-creating businesses that seek startup and expansion capital through the Angel Investor Tax Credit.”
Mitchell said Lafayette’s success stories include Stuller, one of the world’s largest fine jewelry manufacturers; Hampr, an on-demand laundry service; Keepers, which provides automated short-term rental housekeeping; FlyGuys, which offers FAA-licensed drone services; Nestor, modern HER system for massage and physical therapists; and SafeBoard, an extremity stabilization device for neonates and pediatrics.
As Mitchell explains, Matt Stuller started his company, Stuller, from the trunk of his car in 1970, and it now has more than 1,000 employees that provide more than 200,000 products to customers.
“Matt exemplifies the can-do, entrepreneurial spirit that’s still a staple in Lafayette’s newest, fastest-growing businesses,” Mitchell said.
“The collaborative spirit of the Research Triangle is tightly woven into our identity. Those who have found success here are inspired to look back and help those next in line.”
— Michael Haley, Executive Director of Wake County Economic Development
Peña agreed that access to capital is an essential piece of an innovation hub, and the presence of venture capital firms, private equity firms, angel investors, private investors, and other funding strengths is one of Austin’s strengths. Also important is a pro-business environment, he said, which includes characteristics such as favorable tax policies and business-friendly regulations that help companies have low operating costs and low barriers to entry.
Austin’s successes include not just cultivating startups but attracting some of the world’s most successful companies to develop large, highly sophisticated facilities in the region. For instance, both Apple and Tesla have large expansions of their Austin campuses in the works, and BAE Systems opened a $150 million engineering and production facility last year.
Peña said an entrepreneurial culture and innovation go hand in hand. In Austin, this entrepreneurial spirit starts with an emphasis on collaboration.
“We exhibit this strong sense of community here among entrepreneurs and innovators, and we utilize networking events and meetups and industry-specific forums to foster connections and knowledge sharing between partnerships,” he says.
That sense of community helps explain why innovation hubs can have a far-reaching impact that goes well beyond the economy.
“It brings this kind of vibrancy to your community,” Peña said. “It’s just amazing to watch.”