Tim Keller started in the basement. His startup, VinPerfect, won the UC Davis Big Bang! Business Competition in 2008. But he had nowhere to work, so his employer, Sierra Energy, let him use a room below their offices in Davis.
Alone in that cramped space, the UC Davis alumnus had to develop a prototype for his invention, the SmartCap, which delivers precise oxygen to wine bottles. He could’ve paid thousands of dollars to get the prototype made, but he didn’t have that kind of cash. What he had was access to YouTube. He bought a computer numerical control (CNC) milling machine to make it on his own, using online instructional videos to make his own cap. It was hard, there were mistakes, but he made it. And, in four years, he raised $2.5 million from 70 different angel investors.
Borne out of his experience comes Area 52, a technology business incubator launching soon in Davis where entrepreneurs can rent office space and have access to a full-fledged machine shop to turn their ideas into products. Expected to open this fall after a remodel, the 38,000-square-foot space on Research Park Drive will be shared between entrepreneurs in fields that include medical devices, agricultural technology, alternative energy, robotics and aerospace.
Think of Area 52 like a coworking space for industrial startups. Hacker Lab for industrial startups. Whereas software companies can develop apps with nothing but a computer, Keller knows firsthand that if you’re turning an idea into a product, you have to build credibility through proof of concept before investors take you seriously.
“With startups, it takes money to build a prototype and you don’t have it,” Keller says, “but most people don’t want to invest until they see the prototype.”
Another entrepreneur who knows this reality is Mike Hart, CEO of Sierra Energy, the waste gasification and renewable energy company that gifted space to Keller. He has launched more than a dozen corporations over the years, and has seen countless ideas from UC Davis graduates fail because they didn’t have business support.
“If you take a look at the thousands of patents that come out of the university, only a tiny percent will ever see the light of day,” Hart says. “The problem is the lack of a mechanism to take ideas and bring them out into the world of business.”
Hart also knows about the value of space. For the past decade, Sierra Energy has been operating out of an old frat house in downtown Davis. The company hit max capacity in the 4,000-square-foot space with over 30 employees and needed somewhere to grow. When the building once home to Moller International — creators of the Flying Car — became available last spring, Hart bought the 30,000-square-foot property.
Hart then reached out to Keller with the idea to create a business incubator. Given their history — Keller worked for Hart; Hart invested in VinPerfect — the collaboration was inevitable. Area 52 will be a separate nonprofit, a tenant of the Sierra Energy research park.
“There’s so many ideas flowing right now in the Davis community and the Sacramento region at large,” Hart says, “but finding a place where people can bring those ideas to reality is essential.”
Of course, a key element to developing a product is the financial piece. Enter Venture Catalyst, a 3-year-old program out of the university’s Office of Research. UC Davis files about 100 patents a year. Last fiscal year, the university hit a record $786 million for external research funding.
Venture Catalyst aims to help fledgling entrepreneurs find capital by making sure they have sound business plans and investment strategies. This includes connecting them with law firms that help startups properly set up their corporate and legal structures.
Last year, Venture Catalyst helped local startups raise more than $11 million, according to Zane Starkewolfe, the program’s associate director. He believes the partnership with Area 52 will continue to help translate great ideas into commercial potential for public benefit.
The baseline membership to Area 52 of $750 a month will cover a private office big enough for two people, access to the machine shop, meeting rooms, as well as a fitness center and a racquetball court. Members without an office will pay $125 a month to use the machine shop under the supervision of highly trained independent machinists and technicians. The leases will be month-to-month, as Keller wants as many companies as possible to only use the space until they are ready to move into the real world.
“Having been through starting a company in the basement all by myself, it’s going to be the kind of place I wish I had,” Keller says. “If I had Area 52 to go to, not only would I not have been alone in a basement, quietly suffering, but I would’ve been with a lot of entrepreneurs and machinists. I wouldn’t have had to do everything myself.”