March 30, 1998

GIVING BIRTH TO A WOMEN'S TECH INCUBATOR

If Silicon Valley is a worldwide mecca for entrepreneurs, why has the region produced so few women-owned or operated companies? That questions has long plagued Jim Robbins, a former trial attorney, Digital Equipment Corp. official, and now something of an entrepreneurial evangelist, having opened 10 "business clusters" -- or incubators -- throughout California. Along with Cisco Systems veteran Cate Muther, Robbins is currently putting together the first Women's Technology Cluster, a San Francisco-area incubator aimed exclusively at women-owned technology startups. The program, which will provide 25 selected companies with low-cost rent, meetings with venture capitalists, and what Robbins calls "access to the network" of Valley dealmakers, is scheduled for a summer debut.

Enterprise Online's Dennis Berman recently spoke to Robbins about the trials and rewards of fitting women into the Valley's entrepreneurial culture. Here are excerpts of their conversation:

Q: First, why a women-centered business incubator?

A: The thing we're focused on is access to venture capital. Women start up about half the companies in the U.S., and get less than 2% of venture dollars invested nationally. And when you look at how women finance their companies, less than 1% of various kinds of financing is through venture capital. They're not relying on mechanisms that -- at least in Silicon Valley -- are common.

Women's companies tend to grow slowly.... I think they find it somewhat harder to network in the Silicon Valley community, which was until recently very male-dominated.

Q: What exactly defines a "woman's" company?

A: We're focused on companies that have a woman as one the principals. That doesn't mean all-women owners, or all-women employees. Usually, it's one of the founders of the company -- one of the people who started it, is helping come up with the tehcnology or is the lead business person.

The focus here is not first and foremost women, it's software, the Internet, and networking, which is geared to the state of the industry in San Francisco. Once you create a technology focus, then the goal is to fill the cluster up with the widest dispersion possible. You don't want direct competitors in with each other.

Q: What are your criteria for bringing a company to the incubator?

A: Number one, we're focused on them having the technical skills. And they're required to have a business plan which really assesses the competition. We're also looking for potential growth and job creation. Granted, a two-person consulting firm doesn't have to grow to hundreds of people, but it should be able to move to 25 or 50 people.

The real issue for our incubator is whether we can add value to a company. Can we help them attract customers? Can we provide them coaches or mentors in areas where they need help?

Another requirement is a one-hour meeting in which all the principals attend. We sit down with these people and go through the interview process.

Q: Can you outline some of the program specifics?

A: We've talked to a number of venture capital firms that are interested in getting referrals from us. In the model I use, I'm careful to not create partnerships with individual VCs. In my experience, that makes others VCs lose interest. I do bring in a lot of VCs to talk at brown-bag lunches about how their firm makes decisions.

Q: A lot of your prior incubator projects have won the support of local and state governments. Why is this a good deal for them?

A: What we do with the cities is provide them with a calculation of return on investment. In San Jose, where we set up a software cluster that's been runnning for three years, we've shown them that for the investment they'll make in six years, it will be fully returned in five. That's directly in sales tax and other tax benefits, which doesn't calculate job creation. We're trying to show local governments how to get it back, and once they've got it back, it's pure profit for them.

Q: It seems every city claims to have a high-tech Silicon Alley, Silicon Bayou, or Silicon Prairie. Are cities pinning too much of their day-to-day economic hopes on a digital savior?

A: I only feel real comfortable with California, and it's clear that there are about six areas here where everyone agrees the strongest economic growth is going to come from. Five of them are related to technology: Agriculture, communications technology, the software and Internet space, health-industry technology, the environmental arena, and the sixth, which is somewhat specific to California, advanced transportation.

I feel comfortable saying about cities here in California that aren't rural, that focusing on one of these areas puts you in a growth industry or one that's already strong. Does that work in Arkansas or North Dakota? I don't know. I think you need to have the economic data to show your community.

Q: What's been the initial response for the women's cluster?

A: I've gotten at least 25 to 40 calls. In the beginning, we're only bringing in two or three companies a month over a nine-month period.

Actually, I think we're doing our best to discourage people from getting excited about applying. In my experience, it's frustrating for the entrepreneurs to be waiting around, and they can't wait for a long time before they have to start making decisions. The only thing I tell them is to contact me via E-mail, (jarobbins@aol.com), and I'll contact them when we've got a site and are 60 days away from opening.