City Asks Tech Incubator For More Accountability

Evanston aldermen voted Monday to withdraw future city funding from Evanston’s Technology Innovation Center (TIC) if the nonprofit does not meet certain benchmarks.

In the past, whether the 25-year-old tech incubator was worthy of city tax dollars. as a joint venture of the city of Evanston and , the TIC's mission is to provide an affordable workspace and marketing, networking and guidance to startup technology companies. 

“Where I think a technology incubator in the city is a great idea, I just don’t see where our return on investment is,” said Ald. Coleen Burrus (8th Ward). “I just don’t think we’re actually running an incubator that’s bringing business into the community.” 

Aldermen voted 7-1, with Burrus in opposition, to grant another $25,000 to the TIC now and $50,000 in July, assuming the organization meets a list of requirements, including seeking new funds from Northwestern University.

Both Northwestern and the city stopped funding the incubator in 2004 at the level of $76,000 per year each, according to board chair Charles Happ. In 2009, the TIC approached the city again for funding, and between 2009 and 2010, the city has granted the organization $175,000 to help with staffing and programming costs.

Ald. Ann Rainey (8th Ward) raised the question of why Northwestern is no longer funding the incubator. 

“What has been done to communicate with the university, to get funding from the university?” Rainey said. “Isn’t this just such a typical resource for the university to fund?” 

Mayor Elizabeth Tisdahl said she had raised the issue to university president Morton Schapiro twice when he was relatively new to the office, but would bring it up again. 

“I think this will be the last time I support this until they get other funding,” Rainey said.

Beyond seeking money from Northwestern, the TIC must meet nine other city objectives before aldermen will considering granting the nonprofit a second sum of $50,000 in July. Those objectives include hosting a major business plan/pitch day competition in downtown Evanston, defining a meeting schedule for the board of directors, building a marketing program to attract startups to Evanston, and creating an online survey system for attendees of TIC seminars.

One of the criticisms Burrus and Ald. Jane Grover (7th Ward) made of the TIC when the council considered the $25,000 grant in February was that too many businesses were leaving Evanston. According to the TIC website, the nonprofit has worked with more than 300 startup companies, 23 of which had remained in Evanston as of July 2010. The group lost one of its most notable startups, the online grocery delivery service Peapod, Inc., to Skokie, while , a 100-employee digital direct marketing firm, remains in Evanston. 

Board chair Charles Happ told the council in February that keeping businesses in Evanston was not necessarily the group’s primary goal. 

“We try to keep them in Evanston if we can but it’s certainly not our primary obligation,” he said. “We’re in the state where we get them from their garage or from their basement, and they are burning through their in-law’s money, and we set them up with the tools and advice and the introductions in order to help their businesses grow and survive.”

At least two of the conditions for future funding, however, attempt to address that criticism. The TIC must develop a protocol to alert city economic development staff when a firm is seeking to expand, and the TIC must meet weekly with city staff. 

The issue of benchmarks was first raised at a city council meeting in February, when aldermen voted 7-1 to grant the TIC $25,000 for first quarter staff and programming costs.

“I believe we need to monitor TIC more closely and set benchmarks that are more stringent to make sure that we’re not just giving money to have a landlord give inexpensive space to small businesses,” said Ald. Burrus, who opposed the grant at that meeting as well. 

Happ, however, that he believes the city is the TIC’s biggest beneficiary, through tax revenues and new jobs created by those businesses that have stayed.

“Fifteen of our startups hired 23 new people in the last half of last year,” he said. “That is what we are most proud of, helping these companies with the tools and networks they need to grow and expand. We now have seven companies doing over $1 million in sales.”