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RESEARCH TRIANGLE … The once troubled North Carolina Technological Development Authority (NCTDA) and its First Flight Venture Center could use a little help but has largely “solved its problems,” says John Draper, director of operations.
Draper, a lawyer and serial entrepreneur who was brought in to clean up the First Flight Center’s financially battered runway for start-up companies following a special report by the state auditor in 2001, tells Local Tech Wire, “We’re running near break-even.”
The First Flight Venture Center on Davis Drive is nearly full with 21 companies that range from five-year resident Mi-Co to recent start-ups Radarfind, Copper Road, and Modular Networks, and Affinergy. Former tenants have included FullSeven and Overture Networks, which grew from two people to 26 when it left last January.
A state department of commerce study showed NCTDA helped create 12,000 jobs since its inception in 1991 as a state-supported non-profit, Draper says. But following a state auditor’s report in 2001 that castigated the center for spending and compensation plans, the NCTDA board was a bit balky and less cooperative than it could have been in responding to its problems, Draper admits.
Draper, also chief financial officer, trimmed staff at the NCTDA to two and eliminated educational programs for entrepreneurs in rural NC. “We don’t have the skill sets to do that,” he notes. “We’ve really done a chainsaw reduction of expenses. When I came here, it was consuming a lot of cash.”
Although the state owns the First Flight building, it did not allocate the modest $200,000 in operating funds Draper proposed informally for this year’s budget. “It was probably premature,” he says. “My plan and hope is that by next winter’s session of the legislature, we’ll be in a better position and get some real support. We don’t need millions of dollars.” If it doesn’t happen, Draper says he’s prepared to seek support from private corporations.
The money would be helpful to shore up the infrastructure in the building such as aging lighting fixtures, Draper says. “We’re running really thin and do need support.” He says he would also like to offer First Flight offices and resources to venture capitalists visiting the Triangle from outside the area, “but it’s difficult to offer services for free.”
Following the flap after the state auditor’s report, the NCTDA signed a profit-sharing agreement and actually returned 100,000 shares of a now publicly traded company to the state, Draper says. “The board didn’t do it gracefully or happily and I’m not sure I understand why,” he adds. “Everything was done more painfully than necessary. They got defensive with the press and the state.”
Now, however, Draper says the First Flight Center is back on track and could do more with a little public or private support, both of which Draper is exploring. The Center itself is still a good deal for its start-up clients, he says.
Clients rent space for $15 a square foot at First Flight, about half of the going rate for office or lab space elsewhere in Research Triangle Park. First Flight also provides built in infrastructure such as a phone system and broadband Internet service from MCNC, Draper points out. Companies pay for the services but they do not have to install them.
“It’s a turn-key operation,” Draper says. “Some companies come in here in the morning and they’re up and running by afternoon.” The Center has space for about two more start-ups at present, he says.
Meanwhile, Draper says, he continues to talk with legislators and business leaders, pointing out the changes at NCTDA. “No one leaves here without having a positive impression of what we’re doing and how we’re accomplishing it,” he says.
Jim Clary, 62, co-founder and president of Mi-Co, which has been in the Center for five years, tells LTW, “We’re one of the oldest rats in the barn.” Mi-Co, which sells wireless devices for completing electronic versions of government, healthcare and other forms, has had offices in First Flight for five years, both before and after Draper’s tenure.
Clary spent 23 years at Research Triangle Institute, but started a new company only days after he left five years ago. “My wife says I flunked retirement,” Clary says. His son Greg, also formed a similar company at the same time and they merged the two start-ups to form Mi-Co.
Clary says 17-employee Mi-Co just turned profitable in the fourth quarter last year. He says one of the benefits of renting from the First Flight Center is that “You sign a 30-day lease. If we had a sudden need to move because we were acquired or had to grow quickly, we could get out in 30 days. That’s very attractive, although I don’t think we’ll be leaving anytime soon.”
Clary says that the incubator suffered during the economic downturn. “It wasn’t until John took over that it started growing again.” He adds that Draper’s business acumen, which is particularly strong in accounting and legal issues, provides guidance to many of the Center’s fledgling companies. “He’s a successful former business person who understands things from an entrepreneur’s perspective and that’s been a real asset.”
“He’s also brought in MBA students at no charge to the companies or the Center. Clary says the collegial atmosphere in the Center is good for business.
“He’s doing a good management job,” says Clary. He comments that he heard Draper talking to a heating and air conditioning repairman. “His instructions impressed me,” says Clary. “He wanted it fixed to last, not a band-aid.”