Innovation District Plots New Course

By Jim Martin Erie Times-News

WWR Article Summary (tl;dr) Jim Martin takes a look at the success of the "Erie Innovation District" and the $10 million Erie-specific fund created by CapZone Impact Investments.

Erie

There's usually room to argue about the relative success of anything. But there's little debate about this: Seven technology-focused startup companies are based in Erie today and more are likely to come, thanks to seed money provided by a $10 million Erie-specific fund created by CapZone Impact Investments.

It's unlikely any of that would have happened were it not for the creation, three years ago, of the Erie Innovation District.

But the EID, which has introduced 17 companies to Erie through the Secure Erie Accelerator program, is going through a reboot of sorts.

That reboot comes on the heels of a decision late last year by the EID's newly independent board not to renew the contract of Karl Sanchack, who was hired in September of 2017 to serve as the CEO of the newly formed organization, led initially by Mercyhurst University.

And now, about two months later, the Erie Innovation District's board is working on a plan to map out its future.

Change seems certain.

Jim Martin, regional president of Northwest Bank and chairman of the EID board, said he and Keith Kennedy, a vice president at Erie Insurance and a fellow board member, have spent a great deal of time talking to people who have a stake in Erie's business and growing technology community.

Martin said they've been met with broad agreement on one key point. "Almost everyone we have talked to hopes and thinks it should continue," Martin said of the Innovation District. "They think it has made a lot of progress. Nobody I have talked to said it should end."

But there is question of who picks up the bill.

In a December interview, Martin said, "One of the things we would like is for the EID to be self-sufficient and not have to rely on grants from funders. We would like this thing to stand on its own."

The group was launched with the backing of Mercyhurst University and a $4 million grant from the Erie Community Foundation, the Susan Hirt Hagen Fund for Transformational Philanthropy and the Erie County Gaming Revenue Authority.

For now, a few sources of income are apparent.

Both Mike Batchelor, president of the Erie Community Foundation, and Tim NeCastro, CEO of Erie Insurance, have said their organizations plan to help fund the Innovation District, at least through the end of the year.

"We need to help the Innovation District find out how it can best serve the community," NeCastro said in a recent interview with the Erie Times-News. "We are in a position to help fund that operation through 2020, along with the Erie Community Foundation."

But it seems as if Erie Insurance, a key source of funding, would like the organization, based in the Velocity Network building, to change course, at least slightly.

"I think it has to be more focused on business development activities," NeCastro said.

There seems to be general agreement that the accelerator programs, which brought new startups to Erie, are an example of what the EID did well.

"I think (those) are the things that have the most promise for this market," NeCastro said. "We would like to have the money to see that continue." The continuation of such programs is the closest thing to a certainty for the EID.

Martin said the board intends to move forward with at least one accelerator this year.

No date has been set yet and no focus for this year's accelerator has been selected, said Rebecca Styn, vice president of ventures for the EID. Among other subjects, she said the EID will be looking at the areas of focus that have been highlighted by the Erie Regional Chamber and Growth Partnership.

Meanwhile, Martin said the board will be meeting soon with CapZone to learn more about its plans for supporting startups in Erie.

"We don't know for sure how they plan to invest that money. It's not locked up," Martin said. "It's very possible it could be used to fund an accelerator. I will know more once we meet face-to-face with CapZone."

One thing seems clear.

In June, the Erie Innovation District announced it was working on a plan to relocate its office and offices for startup businesses to between 36,000 and 40,000 square feet of space in the Downtown YMCA building.

The EID planned to renovate the exterior of the seven-story building and renovate and occupy space on the fourth, fifth and sixth floors. The organization last year sought but was turned down for a $6.2 million request from the state Redevelopment Assistance Capital Program.

Sanchack had said the project could move forward without the grant money, but Martin said that's not going to happen anytime soon.

"There is not going to be a real estate play unless someone comes in and says they want to invest a significant amount of money," he said. "That was a nice idea Karl had, but it's not cheap."

In different communities, Innovation Districts play different roles.

In Erie, the role of so-called placemaking is being pursued by the Erie Downtown Development Corp. and other developers, NeCastro said.

Although the EID has a four-member board, which includes former Chairman Joe NeCastro as well as Sanchack, the former CEO, Martin said he and Kennedy have been taking the lead for now as they work to reinvent the organization.

He's hoping to reach some conclusions this spring.

Michael Victor, president of Mercyhurst University, which oversaw the Innovation District initially, is hoping the new model bears some resemblance to the old.

In a statement, the university touted the success of EID under Sanchack's direction.

"Under Mercyhurst University's leadership, the Erie Innovation District thrived, establishing productive partnerships, creating investment opportunities, bringing new businesses and "Secure Smart City" technology to Erie, while shaping an innovation ecosystem."

Victor believes the overall shape of the original model is worth preserving.

"Businesses from the West Coast have come to Erie and some have stayed," he said. "I think that was a good business model."

While bringing out-of-town businesses to Erie has been seen as a victory, Martin said the board is also looking for ways to involve local entrepreneurs.

"We would like to see job creation," he said. "If there is a way to involve local entrepreneurs we would be really excited about that."

Kennedy said he and Martin have come away from their talks with the community with a strong sense that the EID has done something good.

But neither he nor Martin is promising the new EID will look like the old one.

"I think we are still working through it," Kennedy said.

___ Distributed by Tribune Content Agency, LLC.

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