HomeMy WebLinkAboutCreative Technology Feasability Study
Contacts
Maureen Collins-Williams
Director, UNI Regional Business Center
University of Northern Iowa
Business & Community Service Building 13
Cedar Falls, IA 50614-0031
(319) 273-4327
Maureen.Collins-Williams@uni.edu
Alli Born Ingman
Grants & Communications Specialist
UNI Business & Community Services
University of Northern Iowa
113 Business & Community Services Building
Cedar Falls, IA 50614-0186
(319) 273-7317
Allison.Born@uni.edu
Ron Padavich
Director, Strategic Marketing Services
University of Northern Iowa
Business and Community Services Building, Suite 32
Cedar Falls, IA 50614-0120
(319) 273-6942
ronald.padavich@uni.edu
A special thank you to Megan E. Horn for her professional editing assistance and creative
design on this project.
Table of Contents
Executive Summary
Section 1: Overview of Business Incubation ......................................................................1
Section 2: Entrepreneurship Activity in the Iowa City Region .......................................2
Startup Activity ..............................................................................................................3
Table A: Ten-Year Business Startup Activity 1997-2007 ...................................3
Table B: Five-Year Business Startup Activity, Iowa City 2002-2007 ................3
Table C: Business Startup Activity, Iowa City MSA 2002-2004 ........................4
Table D: Detail of Business Startup Activity, Iowa City MSA 2005-2007.........4
Business and Entrepreneur Employment .......................................................................5
Table E: Job Creation/Loss, Iowa City MSA 2002-2007 ....................................5
Table F: Employment by Industry Sector 2007 ...................................................6
Table G: Retail/ Manufacturing Job Comparison 2007 .......................................6
Business Size ..................................................................................................................7
Table H: Stage of Iowa City MSA Businesses 2002-2007 ..................................7
Table I: Number of Stage Two Companies .........................................................8
Comparison of IC Entrepreneurial Activity with Select Cities .................................... 8
Boulder, Colorado .............................................................................................. .9
Table J: Percentage of Residents Engaged in Entrepreneurship .................. .9
Madison, Wisconsin ........................................................................................... 10
Austin, Texas ..................................................................................................... 11
Santa Fe, New Mexico ....................................................................................... 11
Bloomington, Indiana ........................................................................................ 11
Summary of Entrepreneurial Activity in the Iowa City Region ................................... 12
Section 3: The New Economy............................................................................................ 15
New Economy Assets: State of Iowa and Iowa City .................................................... 15
Table K: State Ranking in New Economy Index ............................................... 16
Existing Industry Analysis ........................................................................................... 18
Table L: Iowa City MSA Existing Industry 2007 .............................................. 18
Table M: Business Startup Activity by Industry 2005-2007 ............................. 19
Emerging New Economy Industries ............................................................................. 19
Information Technology .................................................................................... 19
Creative Technology .......................................................................................... 20
Eco-preneurship ................................................................................................. 20
Bio-Technology and Life Science ..................................................................... 20
Social Entrepreneurship ..................................................................................... 20
The New Economy Culture .......................................................................................... 21
Table N: IC Ability to Capture the Creative Class ............................................ 22
Summary of New Economy Assets: Recommendations for Industry Focus ............... 24
Section 4: Entrepreneur and Business Professional Interviews .................................... 25
Survey of Downtown Business and Property Owners ................................................. 25
Summary of Interviews and Survey: Recommendations for Services ......................... 26
Section 5: Iowa City Organizational Stakeholders ......................................................... 28
Stakeholder Roundtables .............................................................................................. 28
Individual Stakeholder Interviews ................................................................................ 30
Private Sector Professional Interviews ......................................................................... 31
Receptivity Among Existing Business Owners Downtown ......................................... 32
Summary of Organizational Stakeholders: Recommendations for Management ........ 33
Section 6: Business Incubation Model.............................................................................. 35
Section 7: Summary of Findings ....................................................................................... 37
Section 8: Recommendations ............................................................................................ 39
Recommendations ........................................................................................................ 39
Financial Pro Forma ..................................................................................................... 40
Location Analysis ......................................................................................................... 42
Location Summary and Recommendations ....................................................... 43
Table O: Renovation Costs .......................................................................... 44
Section 9: Marketing Strategies ........................................................................................ 45
References ........................................................................................................................... 46
Appendix ............................................................................................................................. 48
Appendix A: Entrepreneur and Business Professional Interviews ............................... 49
Appendix B: Downtown Iowa City Property & Business Owner Survey ................... 51
Appendix B: Site Evaluations ...................................................................................... 67
Executive Summary
Downtown Iowa City is a vibrant, historic commercial business district which has long been a
hub for the community‘s diverse academic, ethnic, cultural and complex socioeconomic groups.
Over 500 small firms operate within the downtown district, largely a mixture of student-centered
entertainment including bars and restaurants, art venues, eclectic retail, and downtown housing.
In the aftermath of the floods of 2008, a shared vision emerged from community leadership to
capitalize upon the unique vibrancy of the central business district. This core group of
stakeholders developed a vision for a downtown business incubator as a means to foster 21st
century entrepreneurial development, particularly among creative technology entrepreneurs.
The purpose of this study is 1) to assist the City of Iowa City in understanding the current
entrepreneurial climate in the region; 2) identify and survey key stakeholders who might
participate in the creation and management of an incubator; 3) select an incubation model and
target audience of entrepreneurs most likely to participate in incubation services; and 4) to
develop a time line for the creation of such an incubation program downtown.
Entrepreneurial Trends in the Iowa City Region
Startup activity and job creation in Iowa City over the past decade has mirrored nationwide
trends. A record number of new business startups were recorded in 2000 during the height of the
dot-com boom, and a high rate of business closures ensued in 2002-2004 during the dot-com
bust. Outside of those highlights, Iowa City has consistently attracted an average of 760 new
entrepreneurial ventures into the business community each year. During the five years
immediately before the 2008 floods (data prior to the 2008 floods is used to mitigate the negative
impact of these natural disasters upon business statistics), most business startup activity in Iowa
City came from self-employed and early stage employer firms. During that period, there were
high levels of business churn, much of which is attributable to the dot-com bust.
Five Year Business Startup Activity, Iowa City MSA 2002-2007
Establishments Opened Closed Net Opened
Total 3,600 2,661 939
Self employed (1) 1,385 785 600
Stage 1 (2-9) 1,771 1,192 579
Stage 2 (10-99) 113 178 -65
Stage 3 (100-499) 4 8 -4
Stage 4 (500+) 0 2 -2
Nearly 75% of all net new job growth in Iowa City came from self-employed and small firms
with fewer than 10 employees in the five years before the flood. Collectively, large companies
with more than 99 employees shed more than 7,000 jobs, while small companies created more
than 2,000 jobs during the same time period. This is a national trend and is expected to continue
well into the next decade, making it important to ensure that self-employed and small employer
firms have the services and resources they need to thrive and create jobs.
Job Creation/Loss, Iowa City MSA 2002-2007
Jobs 2002 2007 Change %
Total 100,171 93,103 -7,068 -7.1%
Self employed (1) 2,365 2,901 536 22.7%
Stage 1 (2-9) 12,813 13,911 1,098 8.6%
Stage 2 (10-99) 19,665 20,105 440 2.2%
Stage 3 (100-499) 7,331 6,398 -933 -12.7%
Stage 4 (500+) 13,119 5,836 -7,283 -55.5%
Eleven percent of Iowa City‘s aggregate population is engaged in entrepreneurial activity, which
is higher than the state of Iowa as a whole and nearly on par with the rest of the country.
Statewide, 8 percent of Iowa‘s overall population is engaged in entrepreneurial activity in
contrast to 11.6 percent nationwide. Overall, Iowa City is doing well but has the demographics
and culture to do much better in terms of fostering new venture creation.
Residents Engaged in Entrepreneurial Activity: Comparison of Select Cities 2007
Iowa City has fewer numbers of small, early stage businesses than comparable communities
elsewhere in the country. Lower numbers of practitioners in any segment of the entrepreneur
community slows innovation and business development, but Self-Employed and Stage One
entrepreneurs are pivotal to long term economic growth. Nationally, all new, net job creation is
being generated by startups and firms less than five years old.1 These firms create more net new
jobs than their older counterparts, as well as a higher average number of jobs per firm. Iowa City
needs a stronger pipeline of these small companies to create jobs and from which to identify and
grow larger, locally-owned firms. Iowa City‘s proposed incubator should focus upon these early
stage Self Employed and Stage One companies.
Industry Focus
An analysis of the Iowa City economy by industry suggests there is marked business startup
activity among New Economy industry entrepreneurs and many cultural and physical assets
already in place to support them. The proposed Iowa City business incubator should bring
together these resources and services in such a way as to improve entrepreneur access to these
resources and to one another. Given the wide range of creative industries emerging in Iowa City,
the possibilities for resulting innovation across industry through an incubation program is
extensive. Authors and software engineers, musicians and game designers, composers and social
media consultants, sculptors and industrial designers are only a few of the creative class
1 Stangler, Dane and Robert E. Litan. (November 2009). Kauffman Foundation Research Series: Firm Formation
and Economic Growth , ―Where Will The Jobs Come From?‖
Iowa City Boulder Santa Fe Bloomington
2007 City Population 67,831 94,268 67,999 72,254
Total # of City Businesses 7,466 21,631 9,875 7,666
Self Employed and Stage One
Companies (1-9 employees) 9% 20% 13% 9%
Total 11% 23% 15% 11%
entrepreneurs who could be networked through incubation, resulting in accelerated business
development and cross pollination of creative technology business solutions.
Small and early stage entrepreneurs therefore represent the areas of greatest potential economic
return in entrepreneurial development in Iowa City given current business and job trends,
particularly among those engaged in New Economy industries. In 2007, there were 2,901 Self-
Employed and 4,381 Stage One (firms with 1-9 employees) in the Iowa City MSA. As the use of
technology and increased access to broadband spurs more innovation, the number of Self
Employed will continue to grow, many in New Economy industries. Stage One firms are already
emerging in important growth industries in Iowa City as evidenced by the 752 Stage One firms
that opened in 2005-07, many in service, technology, green and bio-related industries. Predicting
which of these growing numbers of early stage entrepreneurs have the capacity to grow into
strong employer firms is nearly impossible, but attracting these innovators into a community of
their peers and networking them early in their business life with the providers of services and
capital will result in accelerated business growth, reduced business risk and ultimately create a
stronger entrepreneurial climate in Iowa City.
Incubation Services Needed
Current public policy suggests that entrepreneurs need several key services and resources to be
successful, including technical assistance and training, capital, networks and supportive
community infrastructure and culture. Based upon primary research conducted in the spring of
2010, it is clear that many of these services are in place and working well in Iowa City.
Between January and April 2010, 50 entrepreneurs and business professionals—including
business owners in business less than five years-- accountants, attorneys, bankers and credit
unions were contacted by phone; 31 were informally interviewed. A follow up mail survey of all
existing downtown business and property owners was completed in April of 2010
Technical Assistance: There is an abundance of public and private sector technical assistance
available to entrepreneurs in Iowa City. There appears to be widespread use of the Small
Business Development Center (SBDC) and John Pappajohn Entrepreneurial Center (JPEC).
Private sector providers of business services and capital are uniformly seeing entrepreneurs in
private practice. All but one of the business professionals interviewed expressed support for a
new incubation program; many would be willing to consider customized services or discounted
rates to incubation tenants. An incubator will encourage further customization of available
technical assistance services- and provide entrepreneurs with a hub facility where they can opt in
and out of those services as needed.
Capital: A majority of those contacted between January and April identified a need for more
capital to foster startup and expansion of small business. It is not clear from the limited number
of personal interviews conducted where the greatest capital gaps exist.
A business incubator will create informal and formal linkages with capital providers, but further
research is suggested to indentify specific gaps in capital availability in Iowa City that may be
precluding business growth.
Networking: The Iowa City Area Chamber of Commerce was widely credited by stakeholders
as the region‘s strongest networking organization. The Chamber has an active entrepreneur
committee charged with understanding and developing relationships with entrepreneurs. Given
the volume of business startups and the large number of small firms who are not members of the
Chamber, a business incubator offers an opportunity to leverage current Chamber efforts to
specifically serve Self-employed and Stage One entrepreneurs with networking and linkages
needed to connect them with one another and the broader business community.
Supportive Culture and Infrastructure: Existing entrepreneurs consistently cited the vibrant
community culture as an attraction to doing business in Iowa City. Nearly 83 percent of those
responding to the mail survey were supportive of a new incubator downtown; most believe
downtown has great potential and offers an eclectic and vibrant experience for business. Both
survey respondents and entrepreneur interviews however, indentified consistent and urgent
concern about the number of bars, the mix of retail operations, district crime, and spiraling costs
associated with doing business there. It appears that the district has over time, become
increasingly dominated by entertainment venues, changing the complexion and business
environment in ways that may negatively affect non-entertainment business development.
Without quality planning and balanced downtown policy to bridge public and private sector
interests, this trend will likely continue. Downtown incubation will be most successful if
combined with professional downtown management to address these issues.
The City should also consider a review of ordinances and regulations associated with business
development to insure compliance is as simple as possible and that current policy is in keeping
with business development trends (e.g. more home based business operations and signage,
parking, local financial incentive programs, etc.).
Business Incubation Model Recommendations
The Iowa City area has several established business incubators which serve varying segments of
the entrepreneurial community. Establishing another traditional business incubator in downtown
Iowa City could be duplicative with these established programs. A business incubator model
which offers services outside those regularly provided by the existing programs in the region is
the best option for downtown Iowa City. This study recommends the creation of a business
incubator focused upon attracting large numbers of early stage entrepreneurs into an entrepreneur
community- a hub- where business owners share communal space and partake in a well managed
array of social and business interactions. This model, called Cowork incubation, serves very
early stage entrepreneurs with mostly opt-in communal space rather than offices or labs, then
creates a cyclical flow of intimate and formal interaction between the community, entrepreneurs,
investors, talent, researchers, existing business and nascent innovators. Unlike traditional
business incubation, Cowork incubators can serve large numbers of entrepreneurs at any given
time and services are not formally assigned members; instead entrepreneurs are are engaged in
an ongoing calendar of formal and informal networking and learning opportunities both online
and in the facility. There are an estimated 100 Cowork spaces in operation today, located
primarily in urban, creative culture communities in the U.S. and overseas.
Cowork incubators are widely viewed as a means to increase and accelerate entrepreneurial
activity among young, New Economy entrepreneurs. Some potential cowork members in Iowa
City may already be engaged in business incubation services elsewhere in the community, yet
may still find benefit from the social networking and opt in resources of the Cowork community.
According to a 2010 Delaware press release announcing a new Cowork space in Wilmington,
functionally these incubators adopt the tenets of café culture, creating spaces where
―laptopreneurs‖ can lease a desk on an on-demand basis and serve as a gateway for community
entrepreneurs to access myraid of other services and networking opportunities. Orchestration of
these connections is the primary role of Cowork incubation.
Current Coworking entrepreneurs and their communities have realized substantial gains from
this new business incubation model. These independent entrepreneurs—many serving as top-
level executives of their own businesses—experience accelerated growth as a result of their
incubation community interactions; business solutions are accelerated through the application of
collective intelligence, strategic partnerships formed, talent shared among multiple companies
and more. It is reasonable to assume that a Self-Employed entrepreneur could move to a Stage
One entrepreneur, hire employees and generate greater sales because of consistent, ongoing
informal and formal interaction with peers and providers. In Iowa City, that entrepreneur would
‗graduate‘ to a larger space elsewhere in the district to build their own business culture with
employees, but continue to opt in to the community for inspiration and networking.
Recent Cowork blogs feature stories of older, larger businesses mentoring younger businesses,
shared business contracts among Cowork tenants and spontaneous problem solving among
groups of Cowork members. Cowork incubation has captured the attention of angel investors and
economic developers who suddenly have access to myriad entrepreneurs previously hidden from
view in home offices and at Barnes and Noble Wi-Fi hot spots. In Iowa City, the Cowork
community would offer a wealth of emerging business activity from which the Iowa Area
Development Group and others can identify clusters of entrepreneurs around which additional
customized services can be developed in coming years. This type of business incubation would
fill a gap for services among Self employed and young Stage One companies in Iowa City while
building an open and supportive culture for all entrepreneurs in the region.
Downtown Location
Six locations were reviewed for this study as potential Cowork incubation sites. The site selection
criteria were as follows: The site selected must be located downtown. The site should be open and
conducive to social interaction and reflect the unique vibrancy of the district through the architecture
or layout. There must broadband access, conference room(s), a minimum of four offices possible, a
kitchen or kitchenette, bathrooms, and accessibility by disabled entrepreneurs. Candidate sites were
evaluated for their fit with these performance criteria, and cost comparisons were made.
Of those studied, the property at 6 South Dubuque (above Deadwood Tavern) is the most suited
for a Cowork incubator. The Dubuque Street location is in the central core of the downtown
district and is highly visible in the streetscape. The available square footage is nearly 3,700 sf;
the space is largely open and the floor plan lends itself well to the needs of a Cowork
environment. Hardwood floors, natural light and exposed brick walls are possible components of
a site renovation. Of concern are accessibility and the renovation costs associated with bringing
this long vacant space up to code. Those issues are outside the scope of this project but should
be explored with the property owner and city to identify loan packages and tax incentives which
may prove favorable to the project and property owner to convert this vacant space to a vibrant
part of the streetscape.
Incubator Management
The market analysis demonstrated market potential for an incubator downtown and identified a
business model likely to attract Iowa City entrepreneurs, but unless there are organizational
champions ready to act and having the necessary capability to do so, an Iowa City business
incubator may still not be feasible. Between January and April of 2010, a series of small group
discussions and individual personal interviews were conducted with key stakeholders in the Iowa
City community. Two stakeholder roundtables were held in the spring of 2010 and individual
interviews were conducted with fifteen stakeholders representing key organizations and
institutions in Iowa City. Organizations included the City of Iowa City, the Iowa City
Downtown Association, the Iowa City Area Development Group, the Iowa City Area Chamber
of Commerce, The University of Iowa John Pappajohn Entrepreneurial Center, the University of
Iowa Small Business Development Center, the University of Iowa Office of Sustainability, the
Service Core Of Retired Executives and various individuals representing business and property
interests downtown.
Two primary findings emerged from these conversations: there is broad-based support among
public sector stakeholders in Iowa City for a downtown incubator, however no one organization
is able to champion this initiative short term. All stakeholders interviewed offer value to this
project and bring elements needed to create a sustainable incubation program. It is the
recommendation of this study then, that a new organization be developed, with representation
from all of the downtown stakeholders- including members of the entrepreneurial community- to
guide and fund this project. Such an organization would bring a fresh program to downtown
without any commonly held perceptions associated with other organizations, and offer an
opportunity to create a unique brand to attract and engage the entrepreneurial community with
services clearly exclusive of existing programs and services.
Initial funding for the incubator should be sought from anchor stakeholders and combined with
Cowork membership and corporate sponsorship to round out a budget employing full time
professional staff and support and operational expenses. This initiative should also incorporate
professional downtown management either within this project or in tandem with this project to
insure economic impact associated with this incubator will be felt downtown.
Summary of Findings
There is conditional feasibility for an incubator program in downtown Iowa City. This study
finds that there are many assets in place to support entrepreneurial activity and clear evidence
that generous numbers of entrepreneurs are organically emerging in key sectors associated with
21st century industries. Public and private stakeholders in Iowa City are supportive of the
concept and have offered a variety of programs and services to support those engaged in a new
incubation program. Feasibility for this initiative is conditional, however, upon securing financial
support from anchor stakeholders coupled with the successful creation of a new, organization to
implement and manage the incubator. Conversations between the Mayor of the City of Iowa
City and the President of the University of Iowa should be held to discuss joint support for this
project. This study also recommends professional downtown management of the district be
implemented either as part of the incubator or via another organization to insure downtown can
maintain a competitive business environment and sense of place for these emerging 21st century
entrepreneurs in coming years.
Proposed Timeline
Below is a listing of activities necessary for the development and launch of a Cowork business
incubator in downtown Iowa City. Timeframe is contingent upon work beginning immediately
following the completion of this feasibility study.
September - October 2010
Meetings between the City of Iowa City and the University of Iowa
Facilitated planning session to determine mission/vision of the new organization
Creation of an advisory board
Legal organization of new 501 (c)(3)
Initial talks with property owner
November - December 2010
Advisory Board sub-committees developed
Property Development
Organizational committee
Program Development
January - February - March 2011
Hiring of Staff
Property development work ensues
Incubation Model formalized
April - May 2011
Grand Opening of Incubator
1
Section 1: Overview of Business Incubation
The incubator concept is simple and appealing. An incubator is a business support program
providing affordable space, services and an environment that promotes the growth of early-stage
companies. Incubation tenants generally receive shared support services, access to specialized
equipment, broadband and an array of customized professional services, including assistance in
accessing capital and talent, debt and equity financing, government grant/loan assistance, and
connections to a network of talent and existing business leadership
Recipients of business incubation services boast high success rates and substantially contribute to
their local economies. According to the National Business Incubation Association (NBIA),
member incubators report that 87 percent of their graduates are still in business after five years,
in contrast to the 52 percent success rate among the general business population. NBIA research
has shown that for every $1 of estimated public operating subsidy provided, incubators generate
approximately $30 in local tax revenue. Most importantly, 84 percent of incubator graduates stay
within ten miles of where they received services.
There are more than 1,200 incubators nationwide, more than half of which are mixed-use
incubators that serve a combination of industries.2 Roughly 40 percent serve technology
entrepreneurs while a small number of others are manufacturing or niche incubators (such as
commercial kitchens serving food-based entrepreneurs or virtual incubation programs).
Currently, there are only two incubators in the U.S. that openly promote services for retail
business startups. Many new incubation programs are ‗cause‘ or ‗solutions‘ driven in response to
the cycle of technology innovation that exists today. About 70 percent of all business incubators
require a subsidy to maintain operations, but there are many sustainable models, based upon
reasonable public and private funding sources.3
In recent years, new models of incubation have emerged -offering unique methods of supporting
entrepreneurs- including Cowork, Virtual and Lab/Life incubation. A 2009 publication of the
Institute for the Future suggests that these, ―pop-up labs, coworking hubs, mobile incubators and
disposable research parks will provide flexible physical spaces in the future...they will be neutral
places where networks of investors, entrepreneurs, hackers and customers converge for
collaborative knowledge creation and trust building, cementing relationships initiated and
cultivated online. Overlaid grids of social software will enhance serendipitous discovery inside
these spaces and knit them together in local, regional and global networks of collaboration.‖4
Business incubation is not a fast process. Like entrepreneurship itself, business incubation
requires patience and a long term view of success by community stakeholders. On average, a
business incubator will not generate measurable economic outcome for several years. It is
however, a strong component of a comprehensive entrepreneurship support system and a means
to create and encourage clusters of entrepreneurial businesses in targeted sectors
2 National Business Incubation Association. (February 2010). Business Incubation FAQ. Retrieved from
http://nbia.org/resource_library/faq/index.php 3 Stein, Charles. (April 2009). NBIA Conference Presentation. 4 Institute for the Future. (2009). ―Future Knowledge Ecosystems: The Next Twenty Years of Technology-Led
Economic Development.‖
2
Section 2: Entrepreneurial Activity in the Iowa City Region
A study of the existing Iowa City business
community–including business size, sectors and
industry clusters–coupled with an analysis of
historical trends in business starts, expansions
and closures can reveal a great deal about the
environment for entrepreneurs. That information
can be compared and contrasted with direct
survey data and local interviews to offer a well-
rounded representation of the entrepreneurial
experience and indicate what resources are
missing and/or what resources are likely to be
valued by entrepreneurs in an incubator program.
The following data sets and tables are from the Edward Lowe Foundation‘s YourEconomy
database. The foundation provides detailed information about the performance of businesses by
following individual establishments who have a Dunn & Bradstreet (DUNS) number. Unlike
many traditional data sets that rely on sampling, YourEconomy is an ongoing business census of
the United States. Dunn & Bradstreet make nearly one million phone calls to businesses
monthly, as compared to the Census Bureau‘s census of retail trade or economic census
conducted once every five years.
Most importantly, YourEconomy includes data from sole proprietorships, partnerships and
"cottage" establishments (small-scale business activity that may be conducted in homes). The
U.S. Census does not include such business activity in their business census data. Given that a
substantial amount of entrepreneurial activity is found in this self-employed sector, the Edward
Lowe Foundation database is generally acknowledged as one of the most useful in evaluating
entrepreneurial demographics.
Note: Most tables in this section reflect entrepreneurial activity from 2002-2007. This five year
period is the most recent data available which is not skewed by the natural disasters of 2008 and
the subsequent impact those events had upon the business
community. Therefore, these data sets most appropriately gauge
the normal context of entrepreneurial activity in Iowa City. It
would be advisable to resample these tables when the 2009-2010
tables are released to determine what effect the more recent
economic downturn has had on entrepreneurship activity.
Throughout this section, the term Iowa City refers to the Iowa
City Metropolitan Statistical Area (MSA) which includes Johnson
and Washington counties.
3
Startup Activity
In the decade between 1997 and 2007, the rate of business startups in the Iowa City area
fluctuated from a low of 547 in 2002 to a high of 1,287 in 2000. This tracks closely with national
business startup numbers over the same period. (Table A) On average, 767 new businesses have
started each year in the Iowa City area in the past decade.
Table A: Ten-Year Annual Business Start-up Activity
Year Iowa City Nationwide
1997-98 631 1,144,072
1998-99 598 988,935
1999-00 572 1,469,684
2000-01 1,287 2,415,135
2001-02 986 2,261,844
2002-03 547 1,286,594
2003-04 695 1,583,506
2004-05 958 2,321,142
2005-06 655 1,607,129
2006-07 745 2,083,274
In the more recent five-year period between 2002 and 2007, 3,600 companies were started and
2,661 companies closed in the Iowa City MSA, resulting in 939 net new firms (Table B). The
greatest number of business starts occurred among companies with two to nine employees,
followed by those who became self-employed (employing only themselves). Combined, these
firms made up 96 percent of all new business startups in the area.
Table B: Five-Year Business Startup Activity, Iowa City MSA 2002-2007
Establishments Opened Closed Net Opened
Total 3,600 2,661 939
Noncommercial 273 383 -110
Nonresident 54 113 -59
Resident 3,273 2,165 1,108
Self employed (1) 1,385 785 600
Stage 1 (2-9) 1,771 1,192 579
Stage 2 (10-99) 113 178 -65
Stage 3 (100-499) 4 8 -4
Stage 4 (500+) 0 2 -2
A substantial number of firms closed between 2002-2007. The comparison of starts to closures
reflects a churn rate of 1.33 to 1, meaning that for every 1.33 businesses opened, one business
closed. An optimal churn rate is hard to determine, given the unique industry risks and assets of
each community, but the business churn rate nationwide for the same period was 1.52 to 1.
4
High levels of business churn can be a measure of community creativity or cultural support for
innovators and risk. Self-employed entrepreneurs for example, go in and out of business on a
regular basis, in part because of the ease of entry and exit. In Iowa City, however, high business
churn was found among employer firms—particularly those with two to nine employees.
Table C: Business Startup Activity, Iowa City MSA 2002-2004
Establishments Opened Closed Net
Opened Expanded Contracted Net Move
In
Move
Out
Net
New
Total 1,242 1,170 72 431 374 57 66 61 77
Noncommercial 117 195 -78 67 46 21 2 5 -70
Nonresident 34 52 -18 39 23 16 0 1 -9
Resident 1,091 923 168 325 305 20 64 55 156
Self employed (1) 462 298 164 0 0 0 29 26 214
Stage 1 (2-9) 584 539 45 240 236 4 30 25 -33
Stage 2 (10-99) 44 81 -37 83 67 16 5 4 -20
Stage 3 (100-499) 1 5 -4 2 2 0 0 0 -6
Stage 4 (500+) 0 0 0 0 0 0 0 0 1
A more detailed look at only 2002-04 shows that much of the business churn occurred during
those two years (Table C). While 1,242 businesses started during this period, nearly that number
closed, resulting in a net of only 77 new businesses in two years. This is a very high business
closure rate, resulting in a churn of 1.06 to 1 for that two-year period. This means that for nearly
every business that opened during that period, a business closed. This is most likely due to the
closure of many young businesses launched in 2000 when Iowa City saw a record number of
business starts associated with the now famous dot.com boom. During 2000 and 2001, 2,223
businesses were started. The 1,170 closures in 2002-04 are likely from many of those firms who
grew quickly and hired employees but failed to survive the national dot-com bust.
Table D: Detail of Business Startup Activity, Iowa City MSA 2005-2007
Establishments Opened Closed Net
Opened Expanded Contracted Net
Expanded
Move
In
Move
Out
Net
New
Total 1,400 738 662 316 241 75 53 53 662
Noncommercial 87 111 -24 33 34 -1 1 3 -85
Nonresident 10 30 -20 21 17 4 2 3 -15
Resident 1,303 597 706 262 190 72 50 47 762
Self employed (1) 525 203 322 0 0 0 16 20 239
Stage 1 (2-9) 752 342 410 210 152 58 31 25 519
Stage 2 (10-99) 25 52 -27 48 35 13 3 1 1
Stage 3 (100-499) 1 0 1 4 1 3 0 1 3
Stage 4 (500+) 0 0 0 0 2 -2 0 0 0
Table D shows that the business churn rate improved considerably between 2005 and 2007. A
total of 1,400 new businesses opened and 738 closed, creating a net of 662 new firms; a 7.6
percent increase in overall business starts. The churn rate was 1.9 to 1, meaning that one business
5
closed for just under every two businesses opened. The national churn during the same two-year
period was 2.01 to 1, very close to that of Iowa City during this time.
An additional 316 existing businesses expanded during the same period and 241 contracted,
resulting in net expansions of 75 Iowa City firms. However, twice as many companies with 10 to
99 employees closed than opened, reflecting major business flux among mid-sized firms.
Business and Entrepreneur Employment
Across the country large firms are shedding jobs, primarily due to continued improvements in
productivity as a result of technology and off-shore outmigration of plants to other countries with
lower labor and operational costs. Iowa City is no exception to this ‗race to the bottom.‘
Between 2002 and 2007, large firms contracted dramatically, eliminating more than 7,000 jobs
(Table E). At the same time, new jobs were created by smaller firms, reflecting a fundamental
shift in where job growth is coming from here and nationwide. The number of jobs created by
Self-Employed and Stage 1 firms increased by 1,634 and even Stage 2 companies with the
highest rate of churn managed to create a net of 440 new jobs during the five-year period studied.
Table E: Job Creation/Loss, Iowa City MSA 2002-2007
Jobs 2002 2007 Change %
Total 100,171 93,103 -7,068 -7.1%
Noncommercial 32,038 32,479 441 1.4%
Nonresident 12,840 11,473 -1,367 -10.6%
Resident 55,293 49,151 -6,142 -11.1%
Self employed (1) 2,365 2,901 536 22.7%
Stage 1 (2-9) 12,813 13,911 1,098 8.6%
Stage 2 (10-99) 19,665 20,105 440 2.2%
Stage 3 (100-499) 7,331 6,398 -933 -12.7%
Stage 4 (500+) 13,119 5,836 -7,283 -55.5%
Jobs in Iowa City tend to be well distributed across industry sectors, after accounting for the
University of Iowa and the University of Iowa Hospitals and Clinics. In 2007, the region had
approximately 9,316 businesses and employed 93,103 workers in combined public and private
sector employment. The single greatest number of jobs in the region after Education and
Healthcare was found in retail trade. Retail employs nearly 10 percent of the workforce, split
unequally among the 1,092 retailers (both large and small) in the region (Table F).
6
Table F: Employment by Industry Sector 2007
Rank NAICS Total
1 Educational Services 18,743
2 Health Care and Social Assistance 10,631
3 Retail Trade 9,064
4 Accommodation and Food Services 6,113
5 Manufacturing 5,710
6 Construction 3,966
7 Other Services (except Public Administration) 3,739
8 Administrative, Support, Services 3,310
9 Public Administration 3,253
10 Transportation and Warehousing 3,234
11 Wholesale Trade 2,573
12 Finance and Insurance 2,287
13 Real Estate and Rental and Leasing 2,039
14 Information 1,832
15 Agriculture, Forestry, Fishing and Hunting 1,580
16 Arts, Entertainment, and Recreation 1,299
17 Utilities 258
18 Mining, Quarrying, and Oil and Gas Extraction 91
19 Management of Companies and Enterprises 52
The number of retail jobs in the Iowa City MSA is proportionately much higher than other
traditional industry segments, such as manufacturing or construction. For every one job in
manufacturing, there are 1.5 jobs in retail. For every two jobs in construction, there are more
than three jobs in retail. According to the Coral Ridge Mall administrative staff, nearly 2,000 of
these retail jobs are associated with the Coralville mall and the surrounding venues. Yet, after
accounting for these positions, retail jobs were still found to provide a substantial proportion of
employment in the Iowa City region.
Table G: Comparison of Retail and Manufacturing Employment, Select Iowa Cities 2007
2007 Iowa City Retailing Jobs 9,064
Manufacturing Jobs 5,710
2007 Ames Retailing Jobs 4,928
Manufacturing Jobs 4,711
2007 Cedar Rapids Retailing Jobs 16,236
Manufacturing Jobs 26,192
7
Business Size
The Edward Lowe Foundation provides business demographics subdivided into different
stages—each stage reflecting operational and management issues that establishments face as they
grow from startups to mature companies. Stages provide a unique framework for understanding
the needs of businesses and supporting their startup and growth. Table H shows the percentages
of Iowa City MSA businesses in each stage defined as follows:
Self Employed (1 employee) — This includes small-scale business activity that can be conducted
in homes (cottage establishments) as well as sole proprietorships. These business owners do not
employ anyone beyond themselves and churn in and out of the marketplace on a regular basis.
Stage 1 (2-9 employees) — This includes partnerships and lifestyle businesses of all ages. This is
also where many early-stage, growth-oriented startup companies are found during their first few
years of operation.
Stage 2 (10-99 employees) — These companies tend to be slightly older, more established, have
a proven product, and survival is no longer a daily concern. They tend to be focused on growing
and solidifying market share.
Stage 3 (100-499 employees) — Expansion is a hallmark at this stage as a company broadens its
geographic reach, adds new products and pursues new markets.
Stage 4 (500 or more employees) — At this level of maturity, an organization dominates its
industry and is focused on maintaining and defending its market position.
Table H: Stage of Iowa City MSA Businesses Between 2002 and 2007
Establishments 2002 2007 Change
Total 8,378 9,316 938
Noncommercial 961 791 -170
Nonresident 393 353 -40
Resident 7,024 8,172 1,148
Self employed (1) 2,365 2,901 536
Stage 1 (2-9) 3,766 4,381 615
Stage 2 (10-99) 840 845 5
Stage 3 (100-499) 46 46 0
Stage 4 (500+) 7 6 -1
Like most communities across the country, the vast majority of businesses in Iowa City are small
(Self-Employed or Stage One) operations. Of the 9,316 businesses in Iowa City, 7,282 of them
have fewer than ten employees.
Iowa City has 845 Stage Two companies, yet it has the lowest percentage of Stage Two
companies of any metropolitan region in Iowa, as detailed below:
8
Table I: Number of Stage Two Companies (1-9 employees) as a Percentage of All
Companies in State MSAs
City % of Stage
Two
Companies
Ames 12.1
Sioux City 11.9
W‘Loo/Cedar Falls 11.5
Omaha 11.5
Dubuque 11.4
Davenport 11.3
Cedar Rapids 10.9
Des Moines 10.9
Iowa City 10.3
The business community in Iowa City is growing, led by small business startups. Large
corporations are shedding jobs, particularly in manufacturing. Iowa City does not rely upon
manufacturing to the extent that many other Iowa communities do but the shift in how jobs are
being created is evident here. As this trend continues, understanding the dynamics of how small
business grows will be critical to successful economic development and new job creation.
The low numbers of Stage Two companies in Iowa City suggest the region is not starting enough
new firms to fill the pipeline of growing companies as compared to other communities.
To further assess this, UNI conducted a comparison of Iowa City with other selected cities
outside of Iowa.
Comparison of Iowa City Entrepreneurial Activity with Selected Cities
The University of Northern Iowa (UNI) conducted an analysis comparing rates of aggregate
business activity as a percentage of the community population, with other communities sharing
similar cultural attributes (e.g. a strong creative class population). During interviews with local
stakeholders and entrepreneurs, interviewees were asked what other communities were culturally
similar to Iowa City. The resulting communities, scattered across five different states included
Boulder, Co.; Madison, Wi.; Austin, Tx.; Santa Fe, NM.; and Bloomington, In.
According to the Ewing Marion Kauffman Foundation GEM Survey, 11.6 percent of the
American population was engaged in entrepreneurship in 2005. Falling below the national per
capita number of entrepreneurs would indicate missing resources or services to support
entrepreneurs; climbing above the national average would indicate that entrepreneurship support
systems and New Economy assets are in place. The city of Iowa City falls slightly below the
national average with 11 percent of the population engaged in entrepreneurship (Table J).
9
For this analysis, aggregate numbers of businesses were compared to population data for each
community. This is not a scientifically accurate measure of entrepreneurial activity because non-
resident firms and corporations are included in the mix, but it does provide a method to compare
overall business activity on a per capita basis.
Boulder, Colorado
Iowa City is often compared to Boulder, Colorado. Boulder is similar in diversity and culture,
boasts a research university and the two downtown districts are very similar in form and design.
In Boulder, however, entrepreneurial activity is significantly higher. Twenty-three percent of
Boulder‘s population is engaged in entrepreneurship; 20 percent of businesses have fewer than
ten employees or are sole proprietors. In Iowa City, 11 percent of the population is engaged in
entrepreneurship and 10 percent have fewer than ten employees or are sole proprietors.
Table J: Percentage of Residents Engaged in Entrepreneurship Activity; Comparison of
Select Cities 2007*
Iowa City Boulder Madison Austin Santa Fe Bloomington
2007 City Population 67,831 94,268 231,916 743,074 67,999 72,254
Total # of City Businesses 7,466 21,631 31,775 57,966 9,875 7,666
< 9 Employees 9% 20% 11% 7% 13% 9%
10 to 99 Employees 1% 3% 2% 1% 1% 2%
> 100 Employees 1% n/a 1% n/a 1% n/a
Total 11% 23% 14% 8% 15% 11%
Source: DemographicsNow. Accessed 4/1/2010. http://www.demographicsnow.com/
Dun & Bradstreet, Inc. Million Dollar Database. Accessed 4/1/2010. http://www.selectory.com
* This table does not take into account the small percentage of firms owned by non-residents
There is more than one business for every four residents in Boulder, while there is one business
for every nine residents in Iowa City (Table J). The biggest difference in business activity can
be found among the smallest business sectors. Boulder has filled the pipeline with early-stage
and small firms. Like Iowa City, Boulder is also a tourist and visitor region so the development
of these small firms offers the added benefit of a colorful and evolving local economy. Boulder‘s
Pedestrian Mall, for example, is substantially larger than Iowa City‘s. It features approximately
twice the number of permanent and mobile retail business ventures.
Liz Hanson, the City of Boulder‘s Economic Vitality Coordinator, suggested in a recent UNI
interview that Boulder‘s creative culture is directly related to their level of entrepreneurial
activity. She points to a plethora of support services, including unique community mentoring
practices, an important virtual incubator and aggressive support from City government for
enterprise growth.
10
―Our business programs are
developed to be small-business
friendly; we have a strong network
of support services and thoughtful
public policy. Entrepreneurs will
set down roots wherever they find
themselves in Boulder,‖ she noted.
―We focus less on facilities and
more on linkages and
connections.‖ While Boulder is a
positive anomaly as compared to
most regions of the country, it
offers valuable best practices in community supported entrepreneurship development that Iowa
City can look to for guidance in how to develop effective programs and services.
Madison, Wisconsin
Iowa City is often compared positively to Madison, Wisconsin. Both communities have a similar
progressive culture, university presence and natural resources downtown. The percentage of
residents engaged in entrepreneurial development is 14 percent. In contrast to Boulder‘s virtual
incubation approach, Madison is home to seven traditional business incubators, two of which are
downtown that focus on non-profits, youth, manufacturing, technology and college students.
They include:
Metro Innovation Center - Provides space for University of Wisconsin-Madison
entrepreneurs in Downtown Madison. More than 6,000 square feet of space and fully
integrated into the downtown vibe. Serves technology startups.
Student Business Incubator – An incubator facility run by the Students in Free Enterprise
(SIFE) organization. Offers office space, technical assistance and mentoring to student
entrepreneurs.
Social Justice Center Non-Profit Incubator - An incubator facility for young non-profits,
provids shared equipment, resources and support staff.
Genesis Enterprise Center - A 69,000 square foot small manufacturing and processing
offering flexible, multi-use space for a wide range of business types.
MGE Innovation Center - Offers 113,000 square feet of laboratory and office space for
businesses to grow with easy access to University of Wisconsin research and business
expertise.
TEC - Technology Education and Commerce is a small business incubator offering
flexible, multi-use space for a wide range of business types near Dane County Regional
Airport and Madison Area Technical College.
Urban Tech Catalyst - A small business technology incubator that offers flexible, multi-
use space for a wide range of business types in Downtown Madison.
Source: http://www.cityofmadison.com/Business/availableSites.cfm
Of particular interest is the Metro Innovation Center, opened in 2009 in 6,000 square feet of
historic downtown property. According to Research Park Director Mark Bugher, the new
11
incubator is fertile ground for nurturing companies in fields such as information technology,
engineering, medical devices and computer sciences. Metro Innovation Center‘s proximity to
UW-Madison talent, as well as its location in an ―edgy and vibrant‖ part of the city, makes it an
attractive opportunity for technology companies. The approach taken in Madison is very similar
to the goals outlined at the 2009 stakeholder meeting in Iowa City.
Austin, Texas
Austin, Texas is another community known to have a culture similar to that of Iowa City,
however the population the grown to nearly 1.7 million in the past decade. Because Austin is
home to many musicians and music venues, Austin‘s official slogan promotes the city as ―The
Live Music Capital of the World.‖ In recent years, select ―Austinites‖ have also adopted the
unofficial slogan ―Keep Austin Weird.‖ This refers in part to the eclectic lifestyle of many
creative Austin residents, but is also the slogan for a campaign to preserve small local businesses
and resist unnecessary commercialization. The level of entrepreneurship development in Austin
is only 8 percent. The most likely explanation for this low per capita rate of entrepreneurial
activity is Austin‘s rapid population growth. Entrepreneurship will not likely be seen among
Austin‘s newer residents for a few years; another look at Austin‘s per capita entrepreneurship
rates in a few years may reveal how well they‘ve recruited entrepreneurs to Texas.
Santa Fe, New Mexico
Santa Fe, New Mexico, with three federal labs, a bustling tourist trade and historic downtown
offers many similarities to Iowa City in terms of New Economy indicators. Like Iowa City,
Santa Fe has been voted in the top ten places to live by various media in the past decade. With a
population almost identical to Iowa City, Santa Fe has a 15 percent per capita rate of
entrepreneurship as compared to Iowa City‘s 11 percent. This is much higher than Iowa City, but
all of the difference is found within the Self-Employed and 2 to 9 Employee sectors. This would
suggest that Santa Fe does a better job of fostering startup business than Iowa City and is poised
to grow greater numbers of mid-sized firms from this pool of young and small companies.
Bloomington, Indiana
In 2007, Bloomington, Indiana reported similar rates of entrepreneurial development to Iowa
City across all sectors. UNI staff interviewed Doris Sims, Assistant Director of the Bloomington
Urban Enterprise Association (BUEA). While not widely known as a creative class community,
according to Sims, Bloomington‘s entrepreneurial activity is on the rise. The community has
made a number of advancements in small business development beginning in 2005 that she
believes has increased levels of entrepreneurship not reflected in the 2007 data. In 2008, a five
mile hiking, biking and arts trail was developed, running through the heart of the downtown
district connecting the neighborhoods, campus and downtown. A new entertainment and arts
downtown district was created in 2007, focusing on Bloomington‘s creative class residents ―...to
bring the business and creative sectors together to advance commerce and culture, build
community and spur economic development.‖ Today, Bloomington has a Main Street program,
an SBDC managed business incubator downtown and five grant and loan funds serving
community entrepreneurs. Sims noted that Bloomington ranked 21st in Entrepreneur Magazine‘s
Top 50 Hottest Small Cities for Entrepreneurs in 2006.5 Iowa City ranked 97th in the same year.
5 Hot Cities for Entrepreneurs. (April 2010). Entrepreneur Magazine. Retrieved from
www.entrepreneur.com/bestcities
12
Summary of Entrepreneurial Activity in the Iowa City Region
Startup activity and job creation in Iowa City over the past decade has mirrored nationwide
trends. A record number of new business startups were recorded in 2000 during the height of the
dot-com boom, and a high rate of business closures ensued in 2002-2004 during the dot-com
bust. Outside of those highlights, Iowa City has consistently attracted more than 760
entrepreneurs into the business community each year.
During the five years immediately before the 2008 floods, most business startup activity in Iowa
City came from self-employed and early stage employer firms. During that period, there were
high levels of business churn, much of which is attributable to the dot-com bust, yet these churn
levels remained high through 2007 among companies with small numbers of employees, which
suggests a gap for some critical services or resources such as capital, labor or technical
assistance.
Correspondingly, all new net job growth came from self-employed and small employer firms
with fewer than 100 employees in the five years before the flood. Collectively large companies
shed more than 7,000 jobs, while small companies created more than 2,000 during the same time
period. This is a national trend and is expected to continue well into the next decade, making it
important to ensure that self-employed and small employer firms have the services and resources
they need to thrive and create jobs.
The Iowa City region is doing well. It is attracting startup companies better than the state and
equally as well as the rest of the county. The city does, however lag behind other comparable
communities that share similar assets and culture. The gap in entrepreneurial development lies is
lower numbers of small early stage firms. Of the five cities compared to Iowa City, all had
similar percentages of Stage Two and Stage Three firms, but Iowa City has lower than average
percentages of entrepreneurs who are Self Employed or Stage One. This is an important finding.
Low numbers of practitioners in any segment of the entrepreneur community slows innovation
13
and business development, but Self-Employed and Stage One entrepreneurs are pivotal to long
term economic growth. Nationally, all new, net job creation is being generated by firms less than
five years old.6 These firms create more new net jobs than their older counterparts, as well as a
higher average number of jobs per firm.
Iowa City needs a strong pipeline of these small companies to create jobs and from which to
identify and grow larger, locally-owned firms. Without increasing the number of startups, it will
be difficult to generate long-term economic impact or jobs through entrepreneurship. The
following two segments represent the areas of greatest immediate need in entrepreneurship
development in Iowa City given the current entrepreneurial profile.
Self Employed
Home-based businesses, professional partnerships and cottage industries are part of a ‗silent
economy‘ generating interstate commerce under the radar in communities across the country. As
the use of technology spurs more innovation, these very small firms will play an important role
in new business creation. There are more than ten million Self-Employed business owners in the
United States and about 2 million new startups launched annually in the United States.7 Many of
these small firms operate initially in basements, garages, living rooms or online, but many more
can become employer firms if provided appropriate services and resources. The lower than
average number of Self-Employed individuals in Iowa City suggests there may be barriers to
starting home-based businesses; a lack of broadband capabilities, capital or technical assistance
may be reducing nascent entrepreneurship activity. Rigid planning and zoning, sign ordinances,
industry specific regulations and/or other public policy can stifle this kind of business
development as well. This should be a vibrant segment of the entrepreneurial community in Iowa
City with lots of churn and emerging growth in key New Economy industries.
Stage One Entrepreneurs
Stage One firms are often found in emerging growth industries. Iowa City is already attracting
some of this kind of business development organically, as evidenced by the 752 Stage One firms
that opened in 2005-07, nearly all in service, technology and related industries. Comparatively
speaking, those numbers are still low as opposed to similar communities and could be improved.
Attracting and serving Self-Employed and Stage One entrepreneurs will offer tangible short-term
benefits to downtown. Iowa City will see greater diversity of small firms in the district and new
demand for upper floor commercial space, particularly if the trend in service, information and
other non-retail startups continue. Long term, segments of the enhanced entrepreneurial
community can be clustered and served with targeted services and resources designed to foster
growth into Stage Two business development—particularly among those engaged in New
Economy or creative industries.
6 Stangler, Dane and Robert E. Litan. (November 2009). Kauffman Foundation Research Series: Firm Formation
and Economic Growth , ―Where Will The Jobs Come From?‖ 7 U.S Department of Commerce. Bureau of the Census. Business Dynamics Statistics. Retrieved from
www.ces.census.gov/index.php/bds
14
Section 3: The New Economy
Emerging models in business incubation suggest that 21st century incubators will look nothing
like the incubator programs of the past twenty years. This is because the underpinnings of the
U. S. economy have been fundamentally transformed into what is being coined ‗The New
Economy.‘ Businesses and jobs are being created very differently in the New Economy,
demanding novel approaches to business incubation.
According to Dr. Robert Atkinson of The Information Technology and Innovation Foundation,
the United States moved from an industrial economy to one driven by innovation in the space of
only a few years during the past decade.8 Driving the New Economy, according to Atkinson, are
individual entrepreneurs fueled by technology innovation. As a result, new business ventures are
entering the market place in unprecedented numbers—an average of 560,000 new U.S. firms was
created each month in 2009, as compared to 500,000 in 2002. This trend is expected to continue
along these lines well into the next decade.
The city of Iowa City‘s ability to flourish
in this New Economy is dependent, in
part, upon how well the community
promotes and protects the amenities,
culture and resources that attract these
innovators and the people they hire.
There has only been limited research and
little consensus about what kind of
community resources are needed to
support New Economy entrepreneurs.
Atkinson developed a New Economy
Index beginning in 2002, offering a
glimpse into what might be important,
and to track how states compare to one
another.
The State New Economy Index has 29 indicators to measure and rank states based upon
qualitative and quantitative factors such as the number of ‗knowledge workers‘ or people online,
population and business diversity, job churning and other non-traditional factors. Overall, this
index predicts how well a state is prepared to engage in New Economy entrepreneurial
development. It can also suggest the base assets around which a 21st century incubator program
might be developed.
8 Atkinson, Robert D. and Scott Andes. (November 2008). THE 2008 STATE NEW ECONOMY INDEX:
Benchmarking Economic Transformation in the States. The Information Technology and Innovation Foundation
15
Table K: State Ranking in the New Economy Index
Overall New Economy Ranking – Iowa 42
IT Professionals 26
Management/Professional/Technical Jobs 40
Workforce Education 29
Immigration of Knowledge Workers 22
Migration of U.S. Knowledge Workers 33
Manufacturing Value-Added 6
High-Wage Traded Services 19
Export Focus of Manufacturing and Services 41
Foreign Direct Investment 41
Gazelle Jobs 41
Job Churning 43
Fastest Growing Firms 38
IPO‘s 40
Entrepreneurial Activity 20
Inventor Patents 39
Online Population 18
Internet Domain Names 46
Technology in Schools 16
E-Government 46
Online Agriculture 20
Broadband Telecommunications 46
Health IT 39
High-Tech Jobs 32
Scientists and Engineers 36
Patents 31
Industry Investment into R & D 31
Non-Industry Investment into R & D 23
Movement Toward a Green Economy 43
Venture Capital 37
In the most recent New Economy Index, Iowa ranks 42nd out of the 50 U.S. states. Although this
is disappointing, there are some bright spots in the rankings. The state is 6th in Value-Added
Manufacturing, 16th in Technology in Schools, 18th in Online Population and 19th in High Wage
Traded Services. Ironically, Iowa ranks 20th in the nation in terms of Entrepreneurial Activity.
This tells us that while entrepreneurial activity in Iowa is ahead of most other states, as a whole
Iowa is not transitioning resources and assets very quickly to serve this emerging entrepreneurial
movement.
16
Iowa City New Economy Assets
There are many places in the Index where the state of Iowa scored very
poorly, yet the City of Iowa City exhibits strength. This would indicate
that Iowa City is better positioned in some ways than the state as a whole
to attract New Economy entrepreneurs. The following are some
examples of where the City of Iowa City outperforms the state:
Workforce Education
Education is critical to fostering innovation in 21st century industry. Iowa ranked 29th in
workforce education, but the City of Iowa City boasts proportionately higher-educated residents
than the state. According to the 2009 Census projections, nearly 46 percent of Iowa City
residents have a bachelor‘s degree or higher, compared to 26 percent nationally and 24.5 percent
of residents in the state of Iowa.
Movement toward a Green Economy
At 43rd in the country, Iowa ranks near the bottom of the states in terms of adapting renewable
energy and reducing energy consumption. Iowa City however, has a dozen recent sustainability
initiatives and programs which reflect the community intent to be ‗green.‘ A new Energy Control
Center will open later this spring at the University of Iowa, and student Sustainable Learning
communities/certificates are now offered. The City of Iowa City was one of the first in the state
to hire a Sustainability Coordinator and is currently engaged in the development of a community-
wide sustainability plan.
Inventor Patents
While Iowa scored low in the average number of patents issued per 1,000 workers (0.31), the
collective communities of Iowa City and Cedar Rapids scored very well, with 6.9 and 8.3 patents
issued per 1,000 workers in their populations, respectively.9 Nationally, the state of Idaho ranked
number one in this indicator with 2.66; this ranking is attributed to the presence of Micron, a
semiconductor firm in Boise. Comparatively speaking, the community of Boise boasts 9.9
patents issued per 1,000 workers. These indicators suggest the entire region surrounding Iowa
City well outperforms most communities and states in terms of inventor patents.
Non-Industry Investment in R & D
Iowa currently ranks 21st in non-industry research and development, such as federal or state
sponsored research dollars. Yet nearly 65 percent of those funds statewide are generated by the
University of Iowa.10 This is an important measure of innovation; in 2006, 77 of the 88 U.S.
companies that produced award-winning innovations received federal funding.
An incubator program in Iowa City should build from these state and community assets as a
means to position the community appropriately for New Economy entrepreneurs.
9 U.S. Patent and Trademark Office 10 National Science Foundation
17
Existing Industry Analysis
As Iowa City enters the 21st century, identifying emerging growth sectors and attracting clusters
of innovators around those industries will help diversify the local economy and create jobs. In
2007, the existing mix of business and industry in Iowa City was largely clustered in retail,
services, construction, agriculture and health care. Professional services in areas such as real
estate, finance and insurance collectively made up another 944 companies (Table L).
Table L: Iowa City MSA Existing Industry 2007
Rank NAICS Total
1 44 Retail Trade 1,092
2 81 Other Services (except Public Administration) 1,077
3 23 Construction 965
4 56 Administrative, Support, Services 856
5 11 Agriculture, Forestry, Fishing and Hunting 805
6 62 Health Care and Social Assistance 753
7 53 Real Estate and Rental and Leasing 552
8 52 Finance and Insurance 392
9 72 Accommodation and Food Services 387
10 42 Wholesale Trade 355
11 31 Manufacturing 341
12 48 Transportation and Warehousing 219
13 61 Educational Services 214
14 71 Arts, Entertainment, and Recreation 201
15 51 Information 198
16 92 Public Administration 82
17 55 Management of Companies and Enterprises 26
Between 2005 and 2007, there was a subtle shift in business creation by industry. There were
more than 1,000 retail businesses in operation in Iowa City in 2007—more businesses, in fact,
than in any other sector—yet between 2005 and 2007, only 51 new retail startups were recorded
(Table M). Four of the top five areas of recent business creation were in industries with ties to
New Economy sectors. This trend suggests local entrepreneurs are emerging organically in
important sectors.
18
Leveraging these clusters of New Economy entrepreneurs is critical to
increasing business development in Iowa City. These innovators raise
awareness of entrepreneurship and attract nascent community
entrepreneurs by their very presence and local success. If networked,
they will collectively solve common business problems, accelerate
solution sharing, mentor others and often even fund newer business
ventures. Ultimately, these clusters of ‗early adopters‘ create the
foundation for a positive community culture supporting entrepreneurial
activity.
Table M: Business Start-up Activity by Industry 2005-2007
Rank NAICS Total
1 56 Administrative, Support, Services 177 177177
2 54 Professional, Scientific, and Technical Services 92
3 53 Real Estate and Rental and Leasing 84
4 23 Construction 67
5 62 Health Care and Social Assistance 67
6 52 Finance and Insurance 52
7 44 Retail Trade 51
8 51 Information 28
9 72 Accommodation and Food Services 27
10 42 Wholesale Trade 23
11 31 Manufacturing 20
12 48 Transportation and Warehousing 19
13 71 Arts, Entertainment, and Recreation 12
Emerging New Economy Industries
The following is a sample of emerging industry sectors and how early stage entrepreneurs in
these sectors are currently being served in Iowa City.
Information Technology Sector
In 2008, George Mason University ranked Iowa City eighth in the country for technology
innovators.11 According to the Technology Association of Iowa, the technology industry in Iowa
employs over 76,000 workers and accounts for $10.696 billion (8.8%) of the state‘s GDP.12
Major industry sectors such as finance, insurance and manufacturing will increasingly rely on
information technology to compete in today‘s global economy. Much of Iowa‘s technology
entrepreneurship is focused on information technology, particularly software development with
applications across existing industry. The Technology Innovation Center (TIC) at the University
of Iowa serves this segment of the entrepreneurial community with nearly 40 office suites at the
Oakdale campus. The TIC offers reasonable rental fees and shared conference rooms, reception
services, business equipment and kitchen facilities.
11 Pentland, William. (February 2008). Top 10 Up-And-Coming Tech Cities. Forbes. Retrieved from:
http://www.forbes.com/2008/03/10/columbus-milwaukee-houston-ent-tech-cx_wp_0310 smallbizoutlooktechcity_
slide_ 9.html?thisSpeed=undefined 12 Technology Association of Iowa. (March 2010). Retrieved from: www.technologyiowa.org/en/about_tai
19
Creative Technology Sector
The term creative technology generally refers to the application of technology solutions and
innovation within so-called creative industries, such as visual arts, theatre, gaming, music,
graphics and other similar fields. University of Iowa professor Dr. John Solow suggests that up
to 30 percent of Johnson County employment is within the creative technologies field. This area
of entrepreneurship development is rapidly growing as innovations in digital technology, 3-D
imaging, web design and virtual reality are developed. There are a number of colleges on the
University of Iowa campus where this kind of creative technology is being developed, including
Geoscience, Geography, Computer Science and Engineering. Downtown Iowa City is already
home to an emerging cluster of community entrepreneurs as evidenced by such companies as
BudCats, Cyber-Anatomy, Small Dot Studio and J & J Solutions and others. The Bedell
Learning Lab Incubator at the University of Iowa is host to a variety of student entrepreneurs in
this sector and the TIC at Oakdale is available to other non-student creative technology
innovators.
Environmental Sector
Also known as ―eco-preneurship,‖ this area of entrepreneurial development is defined by the
application of environmentally-friendly solutions to existing industry and the creation of new
products and services that are sustainable or environmentally friendly. The U.S. market for green
technology is expected to grow to $82 billion in 2010.13 This sector has attracted a small but
rapidly growing segment of the Iowa City entrepreneurial community, as evidenced by such
recent Iowa City startups as Bright Green Strategies and Blue Planet Green Living. Both of these
early-stage ventures are home-based Iowa City eco-preneurs. No specific services or programs
have been developed in Iowa City to serve this sector.
Bio-Technology and Life Science
Building upon the applied research at the University of Iowa, this
sector continues to represent a growth area in entrepreneurial
development within the Iowa City region. The recently completed
BioVentures Business Incubator at the University of Iowa Oakdale
campus features 35,000 sq.ft. of incubation space, including twenty
wet labs, conference facilities and office suites.
Social Entrepreneurship
Social entrepreneurship is a relatively new field of entrepreneurial
development based upon wrapping a for-profit business model
around a social cause. The Global Entrepreneurship Monitor
(GEM) indicates in their most recent report on social entrepreneurship that the most popular
sectors for social entrepreneurs are healthcare, education, urban development and the
environment.14 Largely driven by women, social entrepreneurs are often home-based or nomad
13 Energy Information Association. (2007). Annual Energy Review 2007. U.S. Department of Energy. Retrieved
from: eia.doe.gov/FTPROOT/multifuel/038407.pdf 14 Global Entrepreneurship Monitor. (2009). What Entrepreneurs Are Up To, 2008. National Assessment for the
United States of America.
20
entrepreneurs who frequent coffee shops and other wireless hot spots. No specific services or
programs have been developed in Iowa City to serve this emerging sector.
The New Economy Culture
Creative Class innovators represent the core of the entrepreneurial movement in the United
States. Understanding how well Iowa City stands up to various measures of creative class
definitions can forecast the level of entrepreneurial activity likely in the community. In the past
decade, Iowa City has distinguished itself in a variety of ways as a creative community. In
November of 2008, the United Nations Educational, Scientific and Cultural Organization
(UNESC) named Iowa City part of the global Creative Cities Network and the third City of
Literature in the world.15 One goal of the network is to ―... unlock the entrepreneurial and
creative potential of small enterprises, which play an important role in the new economy. To
underpin their development, small creative businesses also need innovative talent, and therefore
cities with strong contemporary art, fashion, craft, music and design schools are most likely to
flourish.‖
Recently, University of Iowa Economics Professor John Solow developed an Iowa Creativity
Index drawing upon the wealth of information generated over the last eight years associated with
the 2002 publication of Richard Florida‘s book The Rise of the Creative Class. Solow is the first
economist to apply a creative index to a state; his results, unpublished as of yet, provide
additional proof that creativity drives economic growth in the
modern economy.16 In Solow‘s Iowa Creativity Index, Johnson
County ranks first in the state.
In 2007, Marketek, Inc. performed an analysis of the retail,
housing, office and lodging markets that make up downtown
Iowa City as part of a market niche analysis. Similar to Dr.
Solow, Marketek offered a creative cluster analysis of the
community, based upon the work of Richard Florida. Marketek
too, concluded Iowa City has a vibrant creative class which
should be tapped into to enhance the health of the downtown
community.17 The Iowa City Market Niche Analysis outlined
three critical elements important to attracting creative culture
residents: jobs, livability and cultural capital.
15 Creative Cities Network. (September 2009). United Nations Educational, Scientific and Cultural Organization.
Retrieved from: http://unesdoc.unesco.org/images/0018/001829/182960e.pdf 16 Solow, John. (April 2010). Personal Communication [review of unpublished paper ―Creativity and Growth at the
Micro Level: Evidence from Iowa Counties‖ by John L. Solow and Lauren A. Klich, Department of Economics,
University of Iowa] 17 Marketek. (November 2007). Downtown Iowa City Market Niche Analysis
21
Table N: Exhibit C-1 from the 2007 Iowa City Market Niche Analysis
Critical Success Factors Rating What Iowa City Offers
Jobs
Employment growth S Iowa City/Johnson County have above average
employment and population growth. Corridor
employment projections estimate 3,538 new jobs/ year
through 2014.
Diverse base of creative sector opportunities S In Johnson County, an estimated 8,000 persons work for
365 enterprises in key creative services sector jobs tied
to Information, Science, R&D, Educational Services
and Arts and Entertainment. (County Business Patterns,
2005). This is a higher proportion (14.6% of all jobs)
than for the U.S. as a whole (12%).
Potential for professional growth S For its size, Iowa City is perceived to offer greater than
average opportunity, especially tied to university and
medical community. Fifth in U.S. among Best Small
Places for Business and Careers. As a small city, a wide
range of choices will be limited compared to a metro
area.
Livability
Vitality of downtown core S The overall health of downtown is strong and reflects
the community‘s value of the central city.
Center city housing options W Choices are limited; a definite market void.
Quality schools and universities S University of Iowa and I.C. schools overall are
recognized as first rate.
Availability of outdoor recreation
opportunities
N Quality parks; sailing and biking clubs, among others;
river activities—all somewhat ordinary. Hawkeye sports
offers spectator recreation opportunities.
Cost of living S Various indices rate Iowa City living as very affordable.
Diverse and tolerant population S Population is ethnically diverse by small town Midwest
standards. Several University-related social justice
groups exist. Viewed by many as the most liberal place
in Iowa.
Value on sustainable, green living. EX:
alternative transportation modes
N University attracts and promotes some green endeavors;
no critical mass in this category.
22
Source: 2007 Marketek, Downtown Iowa City Market Niche Analysis
There are multiple areas of overlap between Atkinson‘s New Economy Index, the Creative Class
indicators developed by Marktek in 2007 and Solow‘s Iowa Creativity Index. Missing from the
Marktek table however, is a ranking associated with the entrepreneurial culture of Iowa City, an
area where Atkinson (entrepreneurial activity indicator) and Solow (creative activity and
innovation indicator) respectively rank Iowa and Johnson County high. Drawing entrepreneurs
from this class of residents is optimal for venture creation in Iowa City.
Critical Success Factors Rating What Iowa City Offers
Cultural Capital
Availability of quality art and music venues S From the Center for New Music and multiple live
music venues to UI‘s International Writing Program
and Hancher Auditorium performances, Iowa City has
an abundance of offerings. The Cultural Corridor
Alliance also projects the area‘s strength with arts and
culture.
Art and music festivals S Arts Festival, Jazz Festival and Summer of the Arts
programs are a few of the many year-round events
related to arts and music.
Cultural diversity S Local market area is relatively diverse with over 16%
of population, nonwhite, compared to 7.6% statewide.
UI hosted a Cultural Diversity Festival (07).
Thriving food scene S Farmer‘s markets, quality bar/restaurant choices, CSAs
abound, Edible Iowa River Valley promotes local
connections.
Opportunities to Participate
Variety of groups S Several unique groups exist: BASE ‗Play with a
Purpose‘ young people‘s group; Creative Economy
Group, Jamestown Housing Group
Social capital N Universities have a somewhat transient population by
nature. Deep and lasting relations may be harder to
create.
Other
Positive Community Outlook &
Salesmanship
S Very strong sense of pride and positivism; strong
Chamber and visitor organization.
Government that works N The City is actively pursuing plans to strengthen the
downtown core, yet many business owners feel the City
could be more supportive.
23
Summary of New Economy Assets: Recommendations for Industry Focus
Many stakeholders and entrepreneurs interviewed or surveyed for this study expressed interest in
enhanced retail activity downtown. Retail business represents an important part of the
employment and business mix in Iowa City, and it plays a key role in the vitality of the
downtown district. The spark, personality and vibrancy of downtown are directly relational to the
mix and churn of these firms. Historically, retail anchored the downtown district in much the
same way a single big box store anchors a mall. The creation of a retail business incubator would
be beneficial to diversifying the downtown district; unfortunately, there are few best practices
associated with retail business incubation, in part because the retail business model is largely
incompatible with business incubation principles such as graduation and moving from a host
facility in a relatively short period of time. Even if retail incubation was a viable model to
pursue, it is not likely that downtown Iowa City can return to a district dominated by retail
business as it was during the 1960‘s and 1970‘s. The Coral Ridge Mall and surrounding retail
complex, the changing shopping habits of consumers and growing online commerce have
fundamentally altered downtown Iowa City‘s function and place in the community.
There is however, marked business startup activity among New Economy industry entrepreneurs
and cultural and physical assets already in place to support them. The proposed Iowa City
business incubator should therefore serve entrepreneurs in seemingly incongruent creative
industries as defined by Richard Florida and others. Given the wide range of emerging creative
cluster potential in Iowa City, the possibilities for innovation across industry is limitless: authors
and software engineers for example, musicians and game designers, composers and social media
consultants, sculptors and industrial designers are only a few of the creative class entrepreneurs
who could be networked through an incubator that embraces them all.
24
Section 4: Entrepreneur and Business Professional Interviews
Between January and April 2010, 50 entrepreneurs and business professionals—including
accountants, attorneys, bankers and credit unions—were contacted by phone; 31 were informally
interviewed. Each person was asked to broadly describe the kinds of services, resources and
assets needed to start or grow a business in Iowa City and to identify any perceived gaps in those
services that might affect an entrepreneur currently starting a business in Iowa City. While the
individuals interviewed would not necessarily be users of a downtown business incubator, their
experience in providing private sector services to startup entrepreneurs or going through the
startup experience themselves offers valuable insight into what entrepreneurs need during the
startup process and what might be missing.
In gaining insight from these individuals, we
focused on two questions:
1) What is here to support entrepreneurship?
2) What Might be Missing?
A full listing of these responses is contained in
Appendix A. In general, the entrepreneurs and
business professionals who were interviewed felt
that ample talent exists in the Iowa City area and
that the culture and ―vibe‖ of the area was a real
draw to those looking to start a business. The
Coworking concept was also favorably received
among this group. In terms of existing services
offered, many found traditional services providers
beneficial, while others capitalized upon
relationships with other business owners.
Capital and high operating expenses were both identified by this group as the biggest hurdle to
starting and operating a successful business. High rent / lease rates, particularly when competing
with entertainment venues dominated these responses. Availability of startup capital (including
grants, loans and loan guarantees) was commonly cited among this group as well. Respondents
also cited difficulty in navigating and complying with city ordinances.
Survey of Downtown Business and Property Owners
Strategic Marketing Services at the University of Northern
Iowa conducted a mail survey of downtown business and
property owners in April of 2010. Of the 760 surveys
mailed, a total of 72 surveys were returned for a response
rate of 9.5 percent. The purpose of the survey was to
identify business and property owners‘ perceptions about
doing business downtown and to determine their level of
support for a proposed business incubator.
25
The majority, 90 percent, of respondents had their business in downtown Iowa City for five years
or more, making the overall respondent group seasoned downtown businesses. Additionally,
most of the respondents plan to maintain their downtown location for at least the next 3-5 years,
making the future downtown businesses base fairly stable.
When asked to rate words/phrases from a provided list of options to describe downtown, the
highest rated descriptors were: Has high potential; Vibrant; Diverse; and Eclectic. The lowest
rated descriptors were: Retail mix is about right; Number of entertainment/bar venues is about
right; and Affordable.
When asked to rate ―downtown‖ as a good place to own property for a business, the highest rated
items from a provided list were central location and access to restaurants. The lowest rated items
were not enough places for people to live and not enough green space. Of the 13 options
provided, none rated a mean score of less than 3.05 on a 1-5 scale indicating that respondents
believe downtown is a good location for their business. However not all the news is positive.
When given an open-ended option to describe the greatest barrier(s) to downtown development,
respondents offered a long list of concerns. The greatest of which is concern over safety resulting
from bar activity followed by affordability and parking. About half of the respondents indicated
that they believe the changes that have occurred in downtown over the past five years have not
been positive and steps should be taken to improve the area. About 30 percent believe the
changes have been positive and that the area should continue on that path. The entire survey and
respondent comments can be found in Appendix B.
Summary of Interviews and Survey: Recommendations for Services
Current public policy suggests that entrepreneurs need four key services and resources to be
successful, including technical assistance and training, capital, networks and supportive
community infrastructure, and culture. Based upon the primary research, it is clear that many of
these services are in place and working well.
Iowa City entrepreneurs, for example, understand that the University of Iowa Small Business
Development Center provides technical assistance, and they appear to opt in and out of those
services at will. As expected, not everyone expressed satisfaction with the SBDC services, but no
one interviewed or surveyed expressed frustration at accessing public sector technical assistance
in Iowa City. Similarly, it appears that most private providers of business services are engaging
with entrepreneurs regularly; most practitioners interviewed see multiple small businesses each
month and see this as a growth area of their business.
26
There appears to be a gap in the capital stream for entrepreneurs in Iowa City, although it is not
clear exactly where the shortage of capital is. In a recent MyEntre.Net statewide survey of Iowa
small business owners, the University of Northern Iowa found that small business owners are
having difficulty acquiring commercial capital (operating lines and term debt), and many Iowa
City entrepreneurs echoed those concerns. Given the number of responses also citing a need for
grants and micro-loans, there may be demand in Iowa City for smaller amounts of capital than
banks can profitably administer. There was little information captured concerning equity options
available in Iowa City. An inventory of business capital in the Iowa City region should be
conducted and identified gaps should be filled with
appropriate new financial instruments.
There is a tremendous amount of formal and informal
networking happening downtown. Much of the
formal activity is offered by the Iowa City Area
Chamber of Commerce which provides members and
would-be members with multiple networking
opportunities on a regular basis.
Many entrepreneurs cited the importance of this kind
of networking. Other business owners identified their
peers as an important source of information, support
and referral. This should be exploited. Informal
networks, including social networks, have emerged as
powerful tools in business development.
There is a great deal of frustration among business owners who repeatedly cited a lack of support
by the City for small business in every forum provided for feedback. Much of this appears to be
tied to the ongoing debate surrounding the record number of bars downtown, and local business
acuity concerning how the city is handling the resulting changes in the district. Business owners
cited concerns about safety, escalating commercial property rental rates, violent crime among
students, and decreasing numbers of retailers downtown. This one issue has polarized many,
creating a rift that colors the perceptions about all city public policy associated with downtown
development. These negative undertones harm entrepreneur attraction efforts and will stifle the
growth of the innovative culture that could serve as part of the solution to this problem.
27
Section 5: Iowa City Organizational Stakeholders
This portion of the study gauges the extent of community support and longer term ownership of
the proposed incubator. There must be champions for the project and community-wide
awareness about incubation for a project to have long-term success. The market analysis has
demonstrated market potential, but unless there is community support, with champions ready to
rise to the challenge and having the necessary capability to do so, the business incubator may
still not be feasible. Between January and April of 2010, a series of small group discussions and
individual personal interviews were conducted with key stakeholders in the Iowa City
community.
Stakeholder Roundtables – 1
On January 4, 2010 a roundtable session was held with various Iowa City stakeholders to share
the collected secondary research and to assess stakeholder support for various incubation
approaches. The goal of this stakeholder roundtable was to build support and create a sense of
shared ownership among key community leaders and potential partners. City staff, key
stakeholders and community leaders were given a formal opportunity to respond to the direction
and focus of Phase 2-4 efforts. Attendees included:
On behalf of UNI:
Maureen Collins-Williams
Alli Born Ingman
Ron Padavich
Iowa City stakeholders:
Regina Bailey Iowa City City Council (Mayor of Iowa City, 2008-2009)
Jeff Davidson City of Iowa City
Wendy Ford City of Iowa City
Paul Heath University of Iowa Small Business Development Center
David Hensley University of Iowa John Pappajohn Entrepreneurial Center
Tracy Hightshoe City of Iowa City
Mark Nolte Iowa City Area Development Group
Nancy Quellhorst Iowa City Area Chamber of Commerce
Joe Raso Iowa City Area Development Group
At the roundtable, UNI staff proposed building an incubation program around a particular area of
focus. Based upon secondary research, UNI selected three focus areas: a Green Solutions
Incubator, a Social Solutions Incubator and a Creative Technologies Incubator. Each approach
offered various benefits associated with outside capital and operational funding, potential
entrepreneur attraction and long-term industry growth.
Active support for a downtown business incubation program was expressed by all stakeholders
present at the roundtable discussion. Various approaches were discussed among those in
attendance. There was some difference in vision about how to administer an incubation program
and much concern about duplication of services—particularly with the University of Iowa‘s
incubators. There was discussion concerning what kind of entrepreneurs the program should
28
serve, but no consensus concerning focal areas or management. Leadership from the Iowa City
Area Development Group (ICAD) outlined a preliminary, parallel vision for an entrepreneurial
epicenter downtown that would support Stage Two entrepreneurs (or Interstate Entrepreneurs) as
part of their broader mission that also includes workforce, policy and recruitment.
Summary: There is genuine support for a downtown incubator, but most expressed concern over
duplication of existing incubation programs at Oakdale and on campus. ICAD is a potential
champion.
Stakeholder Roundtables – 2
On April 7, 2010, a roundtable session was held with a second set of Iowa City stakeholders to
share the collected secondary research concerning environmentally focused incubation programs
and to engage the Iowa City Downtown Assocation (DTA) in the planning process. The goal of
this roundtable session was to assess the interest of key leadership from these programs
concerning management of a downtown business incubator.
On behalf of UNI:
Maureen Collins-Williams
Alli Born Ingman
Iowa City stakeholders:
Wendy Ford City of Iowa City
Liz Christiansen University of Iowa Sustainability Director
Cheryl Reardon University of Iowa, Assistant Vice President
Mark Moen Iowa Downtown Association Board Member
Nicholas Arnold Iowa Downtown Association Director
Leah Cohen Iowa Downtown Association Board Chair
Mark Ginsberg Ginsberg Jewelers, Iowa City
At this roundtable, UNI staff provided an update on the process since December and outlined the
need to identify champions willing to support the incubator administratively and/or financially.
The Sustainability Office and the Downtown Association each provided an overview of their
mission and work to date. The DTA is in the midst of a revitalized mission and has hired a new
director, Nicholas Arnold, at .75 FTE. Board members noted the organization has primarily
focused on promotion and advocacy but would welcome a larger role in business development.
The DTA suffers from a lack of funding to support such an expansion of services. The strengths
and weaknesses of a third attempt to create a Self Supporting Municipal Improvement District
(SSMID) downtown were discussed, as a means to resource the DTA to manage the proposed
incubator. The Sustainability Office at the University of Iowa is engaged in a host of projects and
programs, some of which already serve downtown business. There was some discussion
concerning creating a Sustainability Center, which could be sited downtown and include a
business incubator.
Summary: DTA sees entrepreneurship support as a core mission of the association, but lacks
funding. A SMMID could fund DTA‘s expanded role but there is concern about leveraging
support after two failed attempts to SMMID in recent years.
29
Individual Stakeholder Interviews
Between January and April, follow-up personal interviews were conducted with fifteen key
public sector stakeholders in the Iowa City region representing the City of Iowa City (Jeff
Davidson, Wendy Ford, Regina Bailey), the Iowa City Area Development Group (Joe Raso,
Mark Nolte), the U of Iowa Small Business Development Center (Paul Heath), the University of
Iowa John Pappajohn Entrepreneurship Center (Dr. David Hensley), the Greater Iowa City
Chamber of Commerce (Nancy Quellhorst), the U of Iowa Sustainability Office (Liz
Christiansen), and representatives of the Iowa City Downtown Association including Board
President Leah Cohen and board members Mark Moen, Mark Ginsberg, Edie Faucett-Weaver,
Tim Gholson and Jerry Waddilove. The purpose of these interviews was to assess public sector
support for the proposed incubator and identify the roles each organization might play in
financing or managing a proposed incubator program. Below is a summary of key findings from
those interviews.
o ICAD may be a champion, but implementation
may be 12-24 months away
o JPEC is interested in a leadership role in an
incubation program, particularly in policy and
student interaction.
o Collaborative leadership for this initiative must be
careful to avoid duplication
o Chamber is supportive of any program developed.
o A broader, formal support system would be ideal.
o SBDC will not take a proactive role, but will
support whatever is developed
o DTA sees a natural fit in downtown business
development for their organization, but does not
have financial capacity to manage.
o City of Iowa City cannot fund the project in its
entirety, but seeks options.
o Office of Sustainability is focused on campus
sustainability but has several student initiatives
which offer outreach into the downtown business
community.
Stakeholder Summary
There is broad-based support among public sector stakeholders in Iowa City for a downtown
incubator. The two greatest concerns voiced during roundtables and in individual interviews
were the potential for duplication of services and/or lack of capacity among critical stakeholders
to participate.
30
Private Sector Professional Interviews
Entrepreneurs have many well-defined needs, including technical assistance and training, capital,
broadband technology, and peer and professional networks. Fee-based private providers are
critical to incubation service delivery and subsequent business health among graduated
businesses.
Between January and April, interviews were held with individual private sector organizations
and professionals in the Iowa City area who provide key business services to learn if needed
technical assistance, training, capital and networking resources are available and if private
providers are willing to serve incubation tenants. There is substantial support from private sector
providers of business services and capital. All but one provider interviewed expressed interest in
serving entrepreneurs, many would be willing to consider customized services or discounted
rates to incubation tenants.
Source
Know
about
project?
Level of
Support Participate? Entrepreneur
Interaction # Monthly Industries
Accountant Yes 6 No Yes 1 to 2 N/A
Accountant No 10 Yes Yes 1 to 2 Medical
Retail
Restaurants
Accountant No 6 Yes Yes 2 to 3 Services
Retail
Attorney No 10 Yes Yes 5 to 7 Spin Offs
Retail
Restaurants
Attorney No 9 Yes No None Technology
Software
Real Estate
Banker No 10 Yes Yes 20-30 Retail
Restaurants
Professional
Services
Banker No 8 Yes Yes 1 to 2 Services
Accountant Yes 6 Yes Yes 3 to 4 Real estate
Medical-Pharm
Construction
Credit Union No 7 Yes Yes 15 to 20 Real Estate
Professional
Services
31
Receptivity Among Existing Business Owners Downtown
The downtown survey conducted in April reflected high levels of support for a downtown
business incubator to diversify the mix of business and industry downtown. Nearly 83 percent of
those responding were supportive of a new incubator downtown, although there was little
consensus concerning who should fund or manage it.
Although 90 percent of respondents were familiar with the Iowa City Downtown Business
Association, only one-third were members. Almost 83 percent of respondents were supportive of
creating a downtown business incubator, but there was little agreement on who should manage
such an incubator. Of the six options provided, a non-profit group, the Downtown Business
Association and the Iowa City Area Development Group received the highest number of
responses.
Other Comments
The most trustworthy, community conscious men and women.
Anyone with nothing to gain from it.
City of Iowa City and Downtown Business Association work jointly with a majority of
managerial duties falling to Downtown Business Association.
If focus is interstate commerce then it should be Iowa City Area Development,
Downtown Business Association and the City in a partnership.
Public/Private.
Anyone except the City of Iowa City.
Fold it into a City employee‘s job.
DTA: Need different/ more staff to do this well.
Nearly 27 percent of survey respondents are not in favor of funding an incubator; 73 percent
offer a variety of options for how to fund it. Of those who chose a funding option, 26 percent
selected City funds and 19 percent supported the establishment of a Self-Supporting Municipal
Improvement District.
Funding
City has mandated so many restrictions on commerce, bars and property they should bare
the financial burden.
All the options cost the taxpayers‘ money.
Annual membership fees and city funds. (2)
Annual membership fees and local option tax.
Federal funds.
Partnership of city funds and self-supporting municipal improvement district.
SSMID and local option tax; fed stimulus, state econ. dev. funding. Should/ might be
multiple funding efforts - there are various things a SSMID is needed for.
32
Summary of Organizational Stakeholders: Recommendations for Management
The Iowa City Area Development Group (ICAD) is the most likely champion for a downtown
incubator among existing organizations in Iowa City. In 2009, ICAD crafted a white paper
outlining a proposed entrepreneurial epicenter similar to many of the incubation concepts being
explored for downtown Iowa City. Unlike typical Cowork incubation however, ICAD proposes
to surround regional entrepreneurs with additional, highly customized resources and services in
addition to shared space and networking. A multi-media lab is planned to serve early-stage
creative technology entrepreneurs and angel investment linkages developed on site. This is an
excellent approach and Iowa City should work to ensure it is sited in the downtown district
According to May 2010 discussions with ICAD staff, the new epi-center project would not likely
be launched until 2012 or beyond, in part because of timing for a membership survey and capital
campaign. In addition, the mission of an ICAD hub facility would reach beyond that of
downtown Iowa City, encompassing the greater multi-county region ICAD is charged to serve.
ICAD‘s vision would dovetail nicely however, with stakeholder sentiments for a downtown
incubator. Continued conversations should be held with ICAD as they move forward and
linkages explored as they poll their membership and funding options.
The existing downtown organization (DTA) could be a champion as well; many downtown
incubators across the country are managed by downtown associations. In light of recent
discussions concerning the need for professional district management, the board president and
several board members expressed their desire to take a leadership role in addressing economic
and policy issues. The longtime Iowa City organization is primarily viewed as a promotional
entity by their membership however, rather than an economic development organization.
Currently, the DTA does not have capacity to implement an expansion of their mission in this
direction as they lack membership, funding and staff expertise for this role. DTA is an important
part of downtown activity, but the needs of this project would require a dramatic departure from
their historical role downtown.
The City of Iowa City can provide the impetus for action by championing a business incubator in
the district. There is ample public sentiment calling for action to diversify the district which
business incubation will address directly. If such a program is developed in tandem with
professional downtown management, many other downtown issues can be resolved via policy
and planning.
The University of Iowa, like the city of Iowa City, should also be a key champion for this
initiative. The University has made substantial investments into real estate downtown in recent
years- both before and after the floods of 2008. Most notably, the Iowa Centers for Enterprise
which includes various university programs that support entrepreneurship and commercialization
were relocated into the formal Old Capital Mall downtown in 2007. This kind of investment
should be continued, particularly if downtown management can be incorporated into the project
scope.
33
All of these stakeholders offer value to this project and bring elements needed to create a
sustainable incubation program. It is the recommendation of this study that a new organization
be developed, with representation from all of the downtown stakeholders, including members of
the entrepreneurial community, to guide and fund this project. Such an organization would bring
a fresh program to downtown without any commonly held perceptions associated with any other
organization, and offer an opportunity to create a unique brand to attract and engage the
entrepreneurial community with services clearly exclusive of existing programs and services.
34
Section 6: Proposed Incubation Model
This study recommends a business incubator model,
known as Coworking incubation, be developed for
downtown Iowa City. Coworking spaces emerged
mid-decade in places like San Francisco and
Philadelphia; developed by nomadic Internet
entrepreneurs seeking an alternative to working in
coffee shops and cafes, or to isolation in independent
or home offices. Today, nearly 100 of these
incubators have opened across the country and
around the world.
According to a 2010 Delaware press release announcing a new Cowork space in Wilmington,
this form of business incubation is a movement that has taken the creative community by storm
in the last five years. These incubators adopt the tenets of café culture, creating spaces where
―laptopreneurs‖ can lease a desk on an on-demand basis. Participants pick from a set of tiered
membership options ranging from a one day drop-in fee to a month-to-month full office lease.
This approach offers innovators relief from the isolation that comes from working out of a home
office or from the road and benefits members in ways that a coffee shop does not. Professional
conference space, privacy for phone calls, late hours, reliable Wi-Fi, a place to spread out,
lockers/limited storage, discounted parking, basic office supplies and complimentary water and
coffee round out the array of services at Cowork incubators.
Coworking entrepreneurs and their communities have realized some unexpected gains from this
social networking model. These independent entrepreneurs—many serving as top-level
executives of their own businesses—are experiencing accelerated growth as a result of their
social connections and the application of collective intelligence. It is reasonable to assume that a
Self-Employed entrepreneur could move to a Stage One entrepreneur, hire employees and
generate greater sales because of interaction with peers who are engaged in the same kinds of
activities. Recent blogs feature stories of older businesses mentoring younger businesses, shared
business contracts among Cowork tenants and problem solving among groups of Cowork
members. The entire movement is now capturing the attention of angel investors and economic
developers who suddenly have access to myriad entrepreneurs previously hidden from view in
home offices and at Barnes and Noble Wi-Fi hot spots. In Iowa City, the Cowork community can
be ‗mined‘ by the Iowa Area Development Group and others to identify clusters of entrepreneurs
around which additional customized services can be developed down the road as part of the
planned entrepreneurial epicenter.
Cowork incubation is it is not likely to attract the same kinds of innovators as those who would
aspire to pursue more business-oriented facilities and program services at the two existing
incubators in Iowa City. The opt-in, opt-out Cowork model is informal and social, rather than
35
programmatic; Cowork members, however, could easily feed into the stronger programs at the
University of Iowa once linked into a supportive community.
This model fits well, too, with the unique requirements of a downtown Iowa City location which
may be limited to second or third story access and the historic and architecturally unique floor
plans typically found there. Drawing these innovators together and networking them with like-
minded peers and investors will reap rewards for Iowa City in business starts, business growth
and jobs.
36
Section 7: Summary of Findings
1. Startup activity and job creation in Iowa City over the past decade has mirrored
nationwide trends.
2. On average, 767 new net businesses have started in the Iowa City MSA each year since
1997.
3. Most of the business startup activity in the last decade has come from self-employed (1)
and Stage One (2-9) employer firms.
4 Iowa City is doing better than the state, but not as well as the nation, in supporting
entrepreneurship. Eleven percent of the per capita population in the Iowa City region is
engaged in entrepreneurship, as compared to 8 percent of Iowans and 11.6 percent
of Americans.
5 All net new job growth in the Iowa City MSA comes from self-employed and small
employer firms with fewer than 100 employees—collectively they created more than
2,000 jobs between 2002 and 2007—while large companies shed more than 7,000 jobs
during the same period.
6 Iowa City MSA lags behind in per capita entrepreneurship and Self Employed and Stage
One business owners when compared to similar communities elsewhere in the country
with comparable assets.
7 Iowa City has lower than average overall numbers of entrepreneurs who are Stage Two as
as compared to other Iowa MSAs.
8 Iowa City needs to build a pipeline of young and early-stage entrepreneurs from which to
identify and grow larger, locally-owned firms.
9 Iowa City is positioned well to attract New Economy entrepreneurs and industries,
particularly as compared to the state of Iowa as whole.
10 Key emerging New Economy industry sectors include information technology,
creative technologies, environmental or green solutions, nano-technologies and bio-
medical innovations.
11 Three existing Iowa City business incubator programs serve portions of these
emerging industry sectors at the Oakdale Technology Innovation Center, the new Bio-
Ventures Business Incubator and at the Bedell Learning Lab Student Business Incubator.
12 Iowa City has many demographic and cultural assets known to foster high levels of
entrepreneurial activity, including a well educated and diverse ‗creative class,‘ a research
university, natural and built resources and a vibrant downtown district.
37
13 Entrepreneurs are very proud to be in business in Iowa City.
14 Entrepreneurs have ready access to public and private technical assistance and are using
those services.
15 Entrepreneurs perceive that the City of Iowa City does not support them and/or creates
barriers to the startup process.
16 Existing business owners perceive that downtown has high potential and is vibrant,
diverse and eclectic.
17 Existing business owners are not pleased with the retail mix, number of entertainment
venues and costs associated with downtown business operations.
18 Eighty three percent of downtown survey respondents are in support of creating a new
downtown incubator.
19 Public sector stakeholders are supportive of an additional business incubator in Iowa
City, but are concerned about duplication with the existing incubation programs.
20 All key public stakeholders and a sampling of private service providers expressed
willingness to serve incubator tenants in their core service areas.
21 The Iowa Area Development Group has emerged as a champion for a business incubator
proposed to open in 2012 and potentially be located downtown. This facility and
accompanying programs and services would serve interstate entrepreneurs.
22 The Iowa City Downtown Association (DTA) board of directors is interested in
participating in business development but would need to fundamentally change their
mission and seek new members/resources to do so.
23 The proposed business incubator should focus upon serving Self Employed ad early
Stage One entrepreneurs with a social networking form of incubation known as
Coworking. This form of incubation will not conflict with other local incubators, may q
increase the numbers of new startups and provide a community of entrepreneurs from
which other, new programs and services can be developed.
38
Section 8: Recommendations
This study finds that there are many assets in place to support entrepreneurial activity and clear
evidence that generous numbers of entrepreneurs are organically emerging in key sectors
associated with 21st century industries. Public and private stakeholders in Iowa City are
supportive of the concept and have offered a variety of programs and services to support those
engaged in a new incubation program.
The Iowa City area has several existing business incubators which serve varying segments of the
entrepreneurial community. Establishing another traditional business incubator in downtown
Iowa City could be duplicative with these established programs. A business incubator model
which offers services outside those regularly provided by the existing programs in the region is
the best option for downtown Iowa City. This study recommends the creation of a business
incubator focused upon attracting large numbers of early stage entrepreneurs into an entrepreneur
community- a hub- where business owners share communal space and partake in a well managed
array of social and business interactions. This model, called Cowork incubation, serves early
stage entrepreneurs with mostly opt-in communal space rather than offices or labs, then creates a
cyclical flow of intimate and formal interaction between the community, entrepreneurs,
investors, talent, researchers, existing business and nascent innovators. Unlike traditional
business incubation, Cowork incubators can serve large numbers of entrepreneurs at any given
time and services are not formally assigned to members; instead entrepreneurs are engaged in an
ongoing calendar of formal and informal networking and learning opportunities both online and
in the facility. Orchestration of these connections-coupled with flexible work space- is the
primary role of Cowork incubation. There are an estimated 100 Cowork spaces in operation
today, located primarily in urban, creative culture communities in the U.S. and overseas.
Cowork incubators are widely viewed as a means to increase and accelerate entrepreneurial
activity among early stage entrepreneurs. Small and early stage entrepreneurs, particularly those
in New Economy industries, represent the areas of greatest potential economic return in
entrepreneurial development in Iowa City given current business and job trends. In 2007, there
were 2,901 Self-Employed and 4,381 Stage One (firms with 1-9 employees) in the Iowa City
MSA. As the use of technology and increased access to broadband spurs more innovation, the
number of Self Employed will continue to grow, many in New Economy industries. Stage One
firms are already emerging in important growth industries in Iowa City as evidenced by the 752
Stage One firms that opened in 2005-07, many in service, technology, green and bio-related
industries. This form of business incubation represents a potential first step in the development
of a comprehensive entrepreneurship support system in Iowa City which will engage and serve
innovators at every stage of their business life cycle.
Based upon a review of available space and market demand, an incubator of this kind should
serve a minimum of 30-40 entrepreneurs on an ongoing, membership basis and attract an
additional 75-100 into a social network of entrepreneurs located elsewhere who opt into the
Cowork community as needed. This baseline of approximately 120 entrepreneurs have the
potential to generate 12-24 new or expanded businesses annually once the Cowork community is
established. While this type of incubation program is new, these entrepreneurs should generate
39
an average 32-40 new FTE jobs annually, based upon similar outcomes experienced by other
incubator and business networking programs in the state of Iowa. Unlike corporate job
development these new jobs will likely be created across multiple industries, diversifying the
local economy and providing insulation against economic flux in specific industry sectors. These
positions will likely offer a mix of wages, ranging from the state average of $14.82 (full time)
and $10.25 (part time) being paid by typical small business owners participating in the Iowa
MyEntre.Net community, to much more depending upon how well the Cowork community
cultivates New Economy entrepreneurs.
The property at 6 South Dubuque (above Deadwood Tavern) is the most suited for a Cowork
incubator in downtown Iowa City. The Dubuque Street location is in the central core of the
downtown district and is highly visible in the streetscape. The available square footage is nearly
3,600 s.f.; the space is largely open and the floor plan lends itself well to the needs of a Cowork
environment. Hardwood floors, natural light and exposed brick walls are possible components of
a site renovation. Of concern are accessibility and the renovation costs associated with bringing
this long vacant space up to code. Those issues are outside the scope of this project but should
be explored with the property owner and city to identify loan packages and tax incentives which
may prove favorable to the project and property owner to convert this vacant space to a vibrant
part of the streetscape.
There is broad-based support among public sector stakeholders in Iowa City for a downtown
incubator, however no one organization is able to champion this initiative short term. All
stakeholders interviewed during the course of this study offer value to this project and bring
elements needed to create a sustainable incubation program. It is the recommendation of this
study then, that a new organization be developed, with representation from all of the downtown
stakeholders- including members of the entrepreneurial community- to guide and fund this
project. Such an organization would bring a fresh program to downtown without any commonly
held perceptions associated with any other organization, and offer an opportunity to create a
unique brand to attract and engage the entrepreneurial community with services clearly exclusive
of existing programs and services.
Feasibility for this initiative is conditional, however, upon securing financial support from
anchor stakeholders coupled with the successful creation of a new organization to implement and
manage the incubator. Meetings between the Mayor of the City of Iowa City and the President
of the University of Iowa should be held to discuss joint support for this project. This study also
recommends professional downtown management of the district be implemented either as part of
the incubator or via another organization to ensure downtown can maintain a competitive
business environment and sense of place for these emerging 21st century entrepreneurs in coming
years.
40
Financial Pro Forma
Below is a simple pro forma budget projecting revenue and expenses for three years. This budget
assumes property renovation and fixture costs are absorbed by the property owner and charged
back in terms of lease rates at $14 per square foot. Other incentives, costs and budget needs may
arise as the site is formalized and renovation costs detailed.
Pro Forma 2011 2012 2013
April-December 12 Months 12 Months
Income
Event Sponsorships $8,000 $10,000 $10,000
Cowork Membership $22,400 $68,310 $68,310
Cowork Other Revenue $2,500 $2,500 $2,500
Public Sector Funding $150,000 $150,000 $150,000
Total Revenue $182,900 $230,810 $230,810
Expenses
Broadband $1,800 $2,475 $2,500
Events/Speakers/Networking 10,000 25,000 25,000
Rent $37,800 $50,400 $50,400
Utilities $6,750 $9,000 $9,350
Supplies $2,401 $3,000 $3,000
Telephone $450 $700 $750
Cowork Marketing $3,000 $3,500 $3,500
Travel/ Professional Dlvp $500 $2,000 $2,000
Other 1,200 $1,725 $1,200
Insurance 2,000 2,400 2,500
Incubator Manager $83,333 $105,000 $105,000
Office Manager $16,666 $28,000 $28,000
Benefits $17,000 $22,610 $22,610
$182,900 $230,810 $230,810
41
Financial Assumptions
Revenue Assumptions (April through August 2011)
# Rate Monthly Five Months Total
Offices 2 $400 $800 $4,000 $4,000
Lite 5 $80 $400 $2,000 $2,000
Full 3 $200 $600 $3,000 $3,000
Virtual 20 $15 $300 $1,500 $1,500
$10,500
Revenue Assumptions (September through December 2011)
# Rate Monthly Four Months Total
Offices 2 $400 $800 $3,200 $3,200
Lite 10 $80 $800 $3,200 $3,200
Full 5 $200 $1,000 $4,000 $4,000
Virtual 25 $15 $375 $1,500 $1,500
$11,900
Total Revenue 2010 $22,400
Revenue Assumptions (Full Year 2012)
# Rate Monthly Twelve Months RFV Total
Offices 3 $400 $1,200 $14,400 $1,440 $12,960
Lite 20 $80 $1,600 $19,200 $19,200
Full 10 $200 $2,000 $24,000 $24,000
Virtual 75 $15 $1,125 $13,500 $1,350 $12,150
Total Revenue 2011 $68,310
Expense Assumptions (April through December 2011)
Broadband projected at $200 monthly
Rental rate based upon owner renovation of property and carrying fixture and equipment costs
into renovation package. Fixed lease at $14 per square foot.
NNN assumed but utility costs included in projections. NNN would add $3-$4 sf
Insurance rates not researched. May need to secure Errors and Omission Insurance
Incubator Manager salary projected at low-average for Incubator Manager (NBIA)
Half time support staff beginning June 2011
Benefit rate at 19%
42
Location Analysis
This section identifies the space and business model requirements for a Cowork incubator.
Table 9: Space Needs for Cowork Incubation
Space Parameters
Admin. Offices (1) 250 square feet
Conference Room (1) 500 square feet
Kitchen Area (1) 500 square feet
Cowork Offices (3) 250 square feet
Common Work Area 1,500 square feet
Other 500 square feet
Total Space 3,500 square feet
Cowork sites have been developed with as few as
1,200 square feet, to larger spaces with 10,000 square
feet or more. Assuming that a minimum of 30
entrepreneurs would be served by a Cowork incubator
on an ongoing basis, a minimum of 3,000- 3,500
square feet is needed for this project.
Membership Combinations
Drop In Day Rate $20-25
Lite Member $80-150
Full Member 24/7 $200
Full Member office $400
Cowork membership rates are tiered and offer many options for engagement. They typically range
from Drop-In day rates to full membership, which includes a private office. In between there are
multiple examples of customized and creative membership options that could be modeled in Iowa
City.
Revenue Assumptions (Full Year)
# Rate Monthly Annual Vacancy Total
Offices 3 $400 $1,200 $14,400 $1,440 $12,960
Lite 20 $80 $1,600 $19,200 $19,200
Full 10 $200 $2,000 $24,000 $24,000
Virtual 75 $15 $1,125 $13,500 $1,350 $12,150
$68,310
43
Other Criteria
The site selected must be located downtown. A main floor location would be ideal but may not be
possible, given the commercial rental rates in Iowa City. The site should be open and conducive to
social interaction and reflect the unique vibrancy of the district through the architecture or layout.
There must broadband access, conference room(s), a minimum of four offices, a kitchen or
kitchenette, bathrooms, and accessibility by disabled entrepreneurs.
Location Summary and Recommendations
Six locations were reviewed for this study as potential Cowork incubation sites. Of them, only
three are available for an incubator, including two of the sites requested by the city to be
reviewed. A summary of all properties reviewed is included in Appendix C.
6 South Dubuque Street (2nd floor)
6 South Dubuque Street has 3,690 square feet above the
downtown bar Deadwood. There is a side door at street
level adjacent to the bar entrance with an interior foyer
and wide steps to the second floor. The upper floor is
mostly open, with large street-facing windows, a kitchen
area to one side and what appear to be wood floors
beneath carpet. A wall divides rear office space (1),
conference room and bathroom from the front of the
building. Rear windows are boarded.
114 East College (2nd floor)
114 East College is located above Billiards and TCB! Also
known as the Hall Mall, the second floor has approximately
6,000 square feet. The Hall Mall has a separate door and stairs
apart from main floor entries of either main floor business. The
floor plan is largely corridor style with as many as 15 offices
flanking the central hall. There are currently multiple tenants
with month to month leases.
The main floor tenant intends to purchase the property and plans
to remodel, including the installation of an elevator and
renovation of multiple sky lights and windows.
320 S. Linn Street
320 South Linn Street is the only main floor property evaluated.
The building has two floors, one on the main and one below,
each with 3,000 square feet. Both floors would
be available. The lower level has three offices,
two bathrooms and four large open rooms. The
main floor has eight offices and a large 30 x 20
open room. Both could be remodeled, according
to the owner, to meet the needs of a tenant. This
property has parking.
44
Table O: Renovation Costs
The renovation costs outlined here are based upon sample renovation budgets from other projects
elsewhere in the country and may not reflect the relevant costs per square foot needed to
renovate any of these properties. If the project moves forward, appropriate professional
guidance will need to be secured to forecast the specific costs associated with the selected
property.
Location SF Cost/SF Total Cost
6 South Dubuque Street 3,690 $12 $ 44,280.00
114 East College 5,964 $12 $ 71,568.00
320 South Linn Street 3,000 $10 $ 30,000.00
Soft Costs
Architectural Fees 10%
Permits 0.04%
Furniture, Fixtures, Appliances $9,000
6 South Dubuque Street $ 50,479.00
114 East College $ 90,588.00
320 South Linn Street $ 43,200.00
This study finds the property at 6 South Dubuque (above Deadwood Tavern) to be the most
suited for a Cowork incubator. The Dubuque Street location is in the central core of the
downtown district and is highly visible in the streetscape. The available square footage is ideal
and the space is largely open; the floor plan lends itself well to the needs of a Cowork
environment. Of concern are accessibility and the renovation costs associated with bringing this
long vacant space up to code. Those issues are outside the scope of this project but should be
explored with the property owner and city to identify loan packages and tax incentives which
may prove favorable to the project and property owner.
The property at 114 East College is also highly visible and overlooks the popular Pedestrian
Mall. Located directly at the center of several of Iowa City‘s most popular bars may be
detraction for entrepreneurs, however, who wish to work late evenings and/or weekends. The
space, while viable, is very large and the resulting increased costs may not be supportable by
market demand for space, increasing the risk associated with this incubator.
320 South Linn is located just enough outside the core of downtown that the sense of vibrancy
and downtown culture may be lost. The property is ideally sized and offers parking and the
lower floor has an excellent open layout conducive to Cowork incubation.
45
Section 9: Marketing Strategies
Identifying and attracting Self-Employed entrepreneurs can be difficult and many of them work
from home or online. The following are a series of strategies suggested by creative class
entrepreneurs to attract themselves.
Strategies
1. Recruit young creative class college graduates: Market to graduating college students on
other Iowa campuses and in small communities. According to author Richard Florida, recent
creative class college graduates seek a similar sense of place upon relocating after college.
(just not UNI, please)
2. Free Saturdays: Recruit entrepreneurs who are still holding full-time jobs by offering free
Saturday‘s hours for weekend entrepreneurs. This will help attract a whole new group.
3. Seek out Dreamers: Build upon the new statewide Dream Big Grow Here entrepreneur grant
contest for $1,000 monthly (runs through 2011) with a tag line for Iowa City.
4. Idea Forums: Actors move to New York, get a job then seek work in acting. Entrepreneurs
should move to Iowa City, then, figure out a business to open at an Idea Forum hosted by the
Cowork incubator.
5. Host regular and innovative networking events: Great speakers, good food and networking.
A reputation for throwing a great party is worth more than brochures.
6. Play with other organizations: Offer to host Technology Association of Iowa or Young
Professionals (BASE) networking events at the Cowork facility.
7. Play with other downtown business owners: Ask Prairie Lights to hold a book reading at the
Cowork facility, become the official ‗taste tester organization‘ for Atlas‘ new menu items.
Tools
1. Sales Tax Permits: The state of Iowa will provide a list of the addresses for all new sales tax
permits issued on a quarterly basis.
2. Social Media Marketing: Create a Facebook page, LinkedIn group, MyEntre.Net profile and
open a Twitter account. Use RSS feeds to post.
3. YouTube: Get a flip cam and develop a video about the Innovation district and Coworking.
Use RSS feeds to post to other social media.
4. Webinars: Host a Webinar on MyEntre.Net. It‘s free. Interview a Cowork member and
provide a video tour of the facility. Invite Iowa entrepreneurs to ‗drop in‘ for a day.
46
References
Atkinson, Robert D. and Scott Andes. (November 2008). THE 2008 STATE NEW ECONOMY
INDEX: Benchmarking Economic Transformation in the States. The Information
Technology and Innovation Foundation
Creative Cities Network. (September 2009). United Nations Educational, Scientific and Cultural
Organization. Retrieved from: http://unesdoc.unesco.org/images/0018/001829/182960e.pdf
Energy Information Association. (2007). Annual Energy Review 2007. U.S. Department of
Energy. Retrieved from: eia.doe.gov/FTPROOT/multifuel/038407.pdf
Global Entrepreneurship Monitor. (2009). What Entrepreneurs Are Up To, 2008. National
Assessment for the United States of America.
Hot Cities for Entrepreneurs. (April 2010). Entrepreneur Magazine. Retrieved from
www.entrepreneur.com/bestcities
Institute for the Future. (2009). ―Future Knowledge Ecosystems: The Next Twenty Years of
Technology-Led Economic Development.‖
Marketek. (November 2007). Downtown Iowa City Market Niche Analysis
National Business Incubation Association. (February 2010). Business Incubation FAQ. Retrieved
From: http://nbia.org/resource_library/faq/index.php
National Science Foundation
Pentland, William. (February 2008). Top 10 Up-And-Coming Tech Cities. Forbes. Retrieved
from: http://www.forbes.com/2008/03/10/columbus-milwaukee-houston-ent-tech-
cx_wp_0310 smallbizoutlooktechcity_ slide_ 9.html?thisSpeed=undefined
Solov, John. (April 2010). Personal Communication [review of unpublished paper ―Creativity
and Growth at the Micro Level: Evidence from Iowa Counties‖ by John L. Solow and
47
Lauren A. Klich, Department of Economics, University of Iowa]
Stangler, Dane and Robert E. Litan. (November 2009). Kauffman Foundation Research Series:
Firm Formation and Economic Growth , ―Where Will The Jobs Come From?‖
Stein, Charles. (April 2009). NBIA Conference Presentation.
Technology Association of Iowa. (March 2010). Retrieved from:
www.technologyiowa.org/en/about_tai
U.S Department of Commerce. Bureau of the Census. Business Dynamics Statistics. Retrieved
from: www.ces.census.gov/index.php/bds
U.S. Patent and Trademark Office
48
49
Appendix A: Entrepreneur and Business Professional Interviews
Between January and April 2010, 50 entrepreneurs and business professionals—including
accountants, attorneys, bankers and credit unions—were contacted by phone; 31 were informally
interviewed. Below are the comments received from these interviews
What is here to support entrepreneurship?
1. Iowa City is great place to start a business because people support risk here.
2. There is plenty of talent here.
3. The university programs and classes are important to people starting businesses.
4. The city‘s programs are good but should be expanded.
5. I couldn‘t have opened my business without the help of the SBDC.
6. I would not start a business anywhere else.
7. Those of us who are just starting up have found each other.
8. We hired a consultant to insure we received the best service possible
9. The connections through the Chamber have been the most helpful. They are just masters
at connecting people.
10. Iowa City is an ‗aware‘ community. I came back from San Francisco to open this
company because of Iowa City.
11. I know five people right now who would love to Cowork!
12. I used the university, the Small Business Center and a Women‘s Center in Cedar Rapids-
it was very helpful.
13. The best help I received was from other downtown retailers.
14. Other business owners have helped me out, although I went to the SBDC too.
15. We are what we are and that attracts others to Iowa City
What Might be Missing?
1. Starting a business downtown is crazy expensive, especially the restrictions on
remodeling.
2. Poor city support
3. City Hall is hard to work with—they don‘t get it.
4. Money is difficult to get if you are a startup
5. Banks don‘t want to loan.
6. Commercial space is very expensive and landlords won‘t work with me.
7. We need grants
8. I don‘t think Iowa City cares about the small companies—just giving help to the big
ones.
9. The zoning in Iowa City is overly restrictive, slow moving and almost archaic.
50
10. We are environmentalists and yet we found the Planning and Zoning process too much
for us to locate our new business in Johnson County.
11. Everyone sends people to the Small Business Development Center, but they don‘t want to
work with small businesses—only the ones coming from the University.
12. The SBDC was not an extremely helpful experience.
13. I can‘t compete against the bar owners who make their rent in one night—drives the
prices up for those of us who can‘t afford it.
14. Lack of commercial funding, and I‘m a banker!
15. SBA Guarantees are gone
16. Not more consulting—need mentoring
17. Micro-loans
18. Micro-loans of less than $50k
19. Location options
20. Business Planning assistance
21. Capital
22. Need a Nexis
23. I didn‘t know what I didn‘t know—still don‘t
51
Appendix B: Iowa City Downtown Survey
Downtown Iowa City Property & Business Owner Survey
Prepared by:
May 17, 2010
52
Executive Summary
This survey was mailed to 760 Iowa City businesses in the 52240 zip code. A total of 72 surveys
were returned and analyzed for this report for a response rate of 9.5%. The purpose of the survey
was to identify business and property owner‘s perceptions of the downtown area and to
determine their support for a downtown business incubator.
Over two-thirds, or 68% of the respondent group lease the property where their business is
located and 37% own property in downtown Iowa City. Close to half the respondents reported
being service/professional and one-third retail. About 11% reported being restaurants/bars and
8% classified themselves as commercial or other.
The majority, 90%, of respondents had their business in downtown Iowa City for five years or
more making the overall respondent group seasoned downtown businesses. Additionally, most of
the respondents plan to maintain their downtown location for at least the next 3-5 years making
the future downtown businesses base fairly stable. When asked to rate words/phrases from a
provided list of options to describe downtown, the highest rated descriptors were: Has high
potential; Vibrant; Diverse; and Eclectic. The lowest rated descriptors were: Retail mix is about
right; Number of entertainment/bar venues is about right; and Affordable.
When asked to rate ―downtown‖ as a good place to own property for a business, the highest rated
items from a provided list were central location and access to restaurants. The lowest rated items
were not enough places for people to live and not enough green space. Of the 13 options
provided, none rated a mean score of less than 3.05 on a 1-5 scale indicating that respondents
believe downtown is a good location for their business. However not all the news is positive.
When given an open ended option to describe the greatest barrier(s) to downtown development,
respondents offered a long list of concerns. The greatest of which is concern over safety resulting
from bar activity followed by affordability and parking. About half the respondents indicated that
they believe the changes that have occurred in downtown over the past five years have not been
positive and steps should be taken to improve the area. About 30% believe the changes have
been positive and that the area should continue on that path.
Although 90% of respondents were familiar with the Iowa City downtown Business Association,
only one-third were members. Almost 83% of respondents were supportive of creating a
downtown business incubator but there was little agreement on who should manage such an
incubator. Of the six options provided, a non-profit group, the Downtown Business Association,
and the Iowa City Area Development Group received the highest number of responses.
Furthermore, about 27% are not in favor of funding an incubator. Of those who chose a funding
option, 26% selected City funds and 19% supported the establishment of a Self-Supporting
Municipal Improvement District.
53
Results
Business Type:
Almost half the respondent group represented businesses in the Service/Professional category
and one-third were Retail. Only 8 were Food/Bar/Restaurant participants and 3 were from the
Commercial segment. The business names provided by respondents are listed below the table
under the respective business type in alphabetical order. Please note not all respondents provided
the business names which accounts for the discrepancy between the numbers for each category
listed in the table and the number of business names listed under each category.
N=72 Frequency Percentage
Service/Professional 34 47.2
Retail 24 33.3
Food/Bar/Restaurant 8 11.1
Commercial 3 4.2
Other 3 4.2
Service/Professional
Adams & Baumbach Associates
Alan R. Bohannan, Lawyer
All Pets Veterinary Clinic
Carlson Design Team PC
Crane & Assoc Realtors Inc.
Duffey Cycles
Hayek, Brown, Moreland & Smith
LLP
Hayes Lorenzen Lawyers PLC
Hills Bank and Trust Company
Houghton Law Office
Iowa City Area Development
James Investment Group Inc.
Joan M. Black Law Office
Mass Mutual Financial Group
McComas Lacina Construction L.C.
Mediation Services of Eastern Iowa
MidWest One Bank
RSM McGladrey Inc
Red's World Too
Rosazza Lesson Studios
Rumours Salon
Santiago Law Office
Stein, Moore, Egerton & Weideman,
LLP
The Wave Length
Tim Negro Investments
West Bank
WGN COS
Zender's Salon and Spa
Retail
Bella Joli
Chait Galleries Downtown
Dawn's Hide & Bead Away
Daydreams Comics
DJ Rinner Goldsmiths
Dulcinea
Eble Muric Co.
Ewers Men's Store, Inc.
Hands Jewelers
Herteen and Stocker Jewelers
Murphy's Inc
Raquet Master
Revival
Surroundings (Jean Phipps Interior
Design)
Sweets and Treats
The Paper Nest
The Soap Opera
UniversiTees
54
Food/Bar/Restaurant
Atlas
Bo James
Brothers Bar and Grill
Quiznos
Sanctuary
The Mill Restaurant
The Vine
Vito's
Commercial
Economy Advertising Co.
Hospers and Brother Printers
Other
Extend The Dream Foundation
Field Effect
Proteus, Inc.
55
How many downtown Iowa City locations does your business have?
Almost all of the 72 respondents reported having only one location in downtown Iowa City. The
only business with more than one location selected two to three locations.
One,
98.6%
Two to Three,
1.4%
How many years has your business been at the downtown Iowa City area?
Over 90% of the respondent group had their business in downtown Iowa City for five or more
years. Fewer than 3% of the group moved their business or started their business in downtown
Iowa City during the past year.
Less than
one year,
2.8%
One to
three years,
4.2%Three to
five years,
2.8%
Five or
more years,
90.3%
N=72
N=72
56
How many total employees do you have at your downtown Iowa City
location?
Almost 40% of the respondent group had seven or more employees at their downtown location.
Roughly one-fourth had between four to six employees. Just over 37% had three or fewer
employees downtown.
One,
22.2%
Two to three,
15.3%
Four to six,
23.6%
Seven to ten,
9.7%
Ten or more,
29.2%
Which of the following best describes your current status?
The vast majority, over two-thirds, of the respondent group leased the property where their
downtown business is located. Only one-fourth owned the property where their business was
located. Of the 7% who chose ―Other‖, a large portion said the business was located in close
proximity to downtown Iowa City.
0%
20%
40%
60%
80%
100%
Lease
property
Own
property
Own property
for lease
Other
68.1%
26.4%
11.1%6.9%
N=72
N=72
57
Lease a property in downtown Iowa City where my business is located
All 41 respondents who leased the property where their business is located only have one
downtown location.
Own downtown Iowa City property where my business is located
Of the 16 respondents who own the downtown property where their business is located, 12
respondents or 75% own only one downtown location. Of the four remaining respondents, one
had two locations, one had three, one had four and one had five or more locations.
Own downtown Iowa City property for lease
Of the five respondents who owned property downtown and leased it, two respondents had one
location, one had two, one had three and one had 5 or more locations.
Do you plan to maintain a downtown Iowa City location for the next 3-5
years?
Almost 90% of the respondent group planned to maintain at least one downtown Iowa City
location over the next 3-5 years.
Yes,
89.9%
No,
10.1%
N=69
58
To what level do you agree with each of the following words/phrases to
describe downtown Iowa City? (Scale of 1 to 6, where 1 equals Strongly
Disagree and 6 equals Strongly Agree)
The most agreement was found with the statement Has high potential, followed by Vibrant,
Diverse and Eclectic. These four statements had means above 4.50 on the one to six scale. The
least agreement was seen with the statements The retail mix is about right, The number of
entertainment/bar venues is about right and Affordable as indicated by means below 3.23 on the
one to six scale
Mean
Growing 3.64
Declining 3.70
Professional 3.87
Improving 3.64
Has high potential 5.14
Affordable 3.23
Diverse 4.51
Vibrant 4.59
Eclectic 4.50
Has a positive culture 4.38
Retail mix is about right 2.79
Number of entertainment/bar venues is about right 2.83
Need more places for people to live 3.70
Other comments:
Customers complain about parking and businesses complain about property taxes and
rent.
Downtown is a bar district-driving others out.
Need more non-student places to live.
Police need to be trained to build positive relationships, so as to deal effectively with, our
diverse population.
Policy has invited bars and driven out business.
Stifled by taxes.
The cities' policy of attempting to drive the bars out of downtown will destroy the
culture.
59
Rate each of the following as to why downtown Iowa City is a good location to
own property for your business: (Scale of 1 to 5, where 1 equals Bad location
and 5 equals Good Location)
Most respondents felt the central location and access to restaurants made downtown a ―Good
Location‖. The downside was that there weren‘t enough places for people to live and not enough
green space.
Mean
Central location 4.53
Access to restaurants 4.26
Transportation access 4.00
Arts/culture 4.10
Atmosphere 3.88
Access to services I need for my business 3.59
Close to student population 4.00
Special events 3.94
Green space 3.21
Historic buildings 3.88
Business network I have developed 3.76
Social network I have developed 3.84
Need more places for people to live 3.05
Other
Close to university life.
60
What is the greatest barrier to downtown development?
Respondents felt strongly that the bar to business ratio is a major barrier to downtown
development and fosters an atmosphere that can be violent and prone to vandalism. They also
felt the cost of real estate and rental space was too high which also caused property taxes to be
high. Parking and other issues with local government were mentioned, although not as frequently
as the bar to business ratio, atmosphere and affordability.
Atmosphere
Bar to business ratio. (15)
o Too many bars. (9)
o Too many bars targeting students. (2)
o Not good retail, restaurant/bar mix. (2)
o Need more diversity in retail and restaurant venues- adult "hangouts‖.
o Lack of retail, presence of panhandlers, too many bars. Downtown has become a
campus town, not a well rounded business district.
o It is a college drinking scene with all the negatives including violence,
harassment, and public drunkenness.
Violence/Vandalism. (5)
o Too many bars make people targets as victims for violence.
o The bar culture and the resultant feeling of anxiety (not feeling safe) in the
evening and late night hours.
o Late night violence.
Panhandlers. (2)
Lack of diversity in retail.
The perception that it is inconvenient, that there is nothing but bars and restaurants.
Not comfortable atmosphere for shoppers due to panhandlers, etc.
Atmosphere that many people don't want to experience.
Affordability
Cost of real estate/rental space/land. (11)
o Ridiculously high.
o Rents only bars can afford.
o High cost to rent and own property.
o Most of the leasable space that is available is not affordable to retail businesses.
The only businesses that are able to thrive are restaurants/bars.
o High cost of land and rent, code interruption-cost driven up compared to other
cities.
o University recreation area and university high rents.
Expensive property taxes. (7)
o "Bar rent" & bar taxable value, making property taxes expensive.
o High property taxes on commercial property.
o Property taxes on commercial too high.
o Taxes too high, every time you want to do anything you need permits & fees
make everything costly.
Smaller retail competing w/big banks, restaurants, bars, etc for viable affordable space!
61
Parking
Convenient, affordable parking. (7)
Parking/parking is preventative. (4)
Lack of parking, between loading zones and whatnot, our curbside parking on our block
has been cut in half in the past year.
Parking and traffic flow. Open up Dubuque St again and open downtown back up to
traffic. People want easy access to the businesses and Iowans don't like parking ramps.
Lack of parking for employees- long wait for parking permits.
Local Government
City administration/staff. (5)
o City bureaucracy refused to work in a proactive way.
o City seems to make it difficult for certain interested people, conversely I hear,
Coralville makes it very easy.
City council. (4)
o The city council needs to be more student & consumer centric.
o The lack of a "business mentality" by the city council.
City Building and Inspection Dept/Building codes. (2)
City of IC unrealistic as to possibility of "green space".
Failure of city to clear snow in winter is a disincentive for shoppers.
City has dictated odd rules about property. They know nothing about commercial/real
estate, bars will be empty and how will those empty spaces rent?
Retail needs city support. ALL local small businesses with little money for advertising.
Miscellaneous
Also a lack of a cohesive plan embraced by all downtown businesses to attract buying
customers aside from just students.
Too many restrictions.
Too many auto tickets as the city depends on fine and penalty income from its own
people.
Limit of height on new building.
62
Please select the statement with which you most agree:
Over half the respondent group felt the changes that have occurred in downtown Iowa City over
the past five years have not been positive and the downtown area should takes steps to improve
the area. Less than one-third of the group felt the changes have been positive and should
continue. Less than one-fifth of the group felt downtown Iowa City hasn‘t changed all that much
over the past five years.
0%
20%
40%
60%
80%
100%
Not much
change
Changes have
been positive
Changes have not
been positive
19.1%
29.4%
51.5%
Are you aware of the Iowa City Downtown Business Association?
The majority, almost 90% were aware of the Iowa City Downtown Business Association.
Yes,
87.1%
No,
12.9%
N=70
N=68
63
Are you a member of the Downtown Business Association?
Of the 59 respondents who were aware of the Downtown Business Association, only one-third
were members.
Yes,
35.6%
No,
64.4%
Do you or have you ever served on the Board of Directors of the Downtown
Business Association?
The vast majority, over 80%, had never served on the Board of Directors for the Downtown
Business Association.
Yes,
18.4%
No,
81.6%
N=38
N=59
64
The City of Iowa City is exploring the feasibility of a business incubator in downtown Iowa
City. A business incubation program would provide startup businesses with technical
assistance, access to capital, networks and space through a formal program located in the
downtown district. Business incubation is generally credited with reducing the risk and
accelerating growth of early stage operations-there are more than 5,000 business incubators
in the U.S.
How supportive would you be of having a downtown business incubator that
would provide space, technical assistance, and assistance in accessing capital
for start-up business?
Almost 83% of the respondent group would be supportive of a downtown business incubator;
35% were very supportive and 48% were somewhat supportive. Only 7.2% were very
unsupportive.
0%
20%
40%
60%
80%
100%
Very
Supportive
Somewhat
Supportive
Somewhat
Unsupportive
Very
Unsupportive
34.8%
47.8%
10.1%7.2%
N=69
65
Regardless of your level of support for a business incubator, if a downtown
business incubator is launched, by which of the following do you believe such
an incubator should be managed:
No one group was pushed to the forefront by the respondent group as the best group to manage a
business incubator. The three most popular choices were a newly established non-profit group,
the Downtown Business Association or the Iowa City Area Development.
0%
20%
40%
60%
80%
100%
City of Iowa
City
DT Business
Association
Chamber of
Commerce
IC Area
Development
Non-profit
group
Other
9.1%
21.2%
12.1%18.2%25.8%
13.6%
Other
The most trustworthy, community conscious men and women.
Anyone with nothing to gain from it.
City of Iowa City and Downtown Business Association, work jointly with a majority of
managerial duties falling to Downtown Business Association.
If focus is interstate commerce then it should be Iowa City Area Development,
Downtown Business Association and the City in a partnership.
Public/Private.
Anyone except the City of Iowa City.
City of Iowa City
Fold it into a City employee‘s job.
The Downtown Business Association
Need different/ more staff to do this well.
N=66
66
Regardless of your level of support, if a business incubator is located in
downtown Iowa City, how should a downtown business incubator be funded?
Roughly 27% of the respondent group was not in favor of funding a downtown business
incubator. About one-fourth of the group felt the funds should come from city funds and 20%
felt it should be funded by a Self-Supporting Municipal Improvement District.
0%
20%
40%
60%
80%
100%
Membership
fees
City
funds
Establishment
of SSMID
Local Option
Tax
Not in favor of
funding
Other
9.7%
25.8%19.4%
3.2%
27.4%
14.5%
City funds
City has mandated so many restrictions on commerce, bars and property they should bare
the $ burden.
I am not in favor
All the options cost the taxpayers‘ money.
Other
Annual membership fees and city funds. (2)
Annual membership fees and local option tax.
Federal funds.
Partnership of city funds and self-supporting municipal improvement district.
SSMID and Local option tax; fed stimulus, state econ. dev. funding. Should/ might be multiple
funding efforts - there are various
N=62
67
Appendix C: Site Evaluations
320 S. Linn Street
Owner: Big Ten Herky, LLC
Current Use for 1st Floor: Vacant
Contact Person: Gerry Ambrose
Phone: 319-631-8888
Square Footage
First Story: 3,000
Additional Notes: This site has two levels, each with 3,000 square feet. The main level has 8-10
offices, two bathrooms, reception and an open work area. The lower level has 3 very large
offices, two bathrooms and multiple open work areas, some measuring 20 by 30. This property
has four parking spots.
68
6 S. Dubuque Street
Owner: Jim Bell, Maddox Bay Inc
Current Use for 1st Floor: Deadwood Bar
Current Use for 2nd Floor: Vacant
Contact Person: Jim Bell; M-F 9:30 to 12 p.m.
Phone: 319-351-9417
Square Footage
First Story: 3,690
Second Story: 3,690
Total: 7,380
Additional Notes: The second floor of this property is vacant. The upper floor entrance can be
seen in the photo to the left of the main door. There is a large foyer, staircase to open floor upper
area. Currently one office, kitchen, conference and bath are located in the rear, with all open
frontages.
69
114 E. College St
Owner: Maureen Mondanaro (Deed Holder)
Current Use for 1st Floor: TCB! Pool Hall
Current Use for 2nd Floor: Vacant
Contact Person: Joe Murphy
Phone: 319-430-3580
Square Footage
First Story: 5,964
Second Story: 5,964
Total: 11,928
Additional Notes: This property is also known as the Hall
Mall. There are multiple tenants on the second floor, all with
month to month lease arrangements. The contact person
intends to remodel, including the installation of an elevator
renovated skylights and windows. Approximately 14 offices
line a central corridor. Nice woodwork.
70
125 S. Dubuque Street
Second Story & Third Story:
Use: Offices
Owner: University of Iowa
Phone: (319) 335-0118 [UI Property Management]
Square Footage: Est: 13,066
Fourth Story:
Use: Offices
Owner: Steven Bernhardt
Phone: (319) 321-9597
Square Footage: 13,066
Fifth Story
Use: Offices
Owner: Gerry Ambrose
Phone: (319) 631-8888
Square Footage: 13,066
Additional Notes: No space available, all floors occupied by long-term tenants.
71
115 E Washington Street
Owner: MidWestOne Bank
Current Use for 1st Floor: Brown Bottle Restaurant
Current Use for 2nd Floor: Office Space
Contact Person: Steve Elder
Phone: 319-356-5800
Square Footage:
First Story: 6,375
Second Story: 6,375
Total: 12,750
Additional Notes: MidWestOne bank is using the majority of the upper floor space for offices.
The property is not available for incubation.
72
32 S. Clinton Street
Owner: William & Helen Byington
Current Use for 1st Floor: Panchero‘s Mexican Restaurant
Current Use for 2nd Floor: Panchero‘s Mexican Restaurant
Current Use for the 3rd Floor: ―Not Habitable‖ according to Helen, Panchero‘s currently rents
this floor as well
Contact Person: Helen Byington
Phone: (319) 351-1720 (Oaknoll Retirement Home)
Phone: (319) 338-6311 (Panchero‘s Restaurant)
Square Footage (Main Building)
First Story: 1,988
Second Story: 1,988
Third Story: 1,988
Total: 5,964
Additional Notes: Panchero‘s Corporate HQ holds a long term lease on all three floors. Second
floor adapted for use by restaurant, Panchero‘s not interested in third floor development.
73
30 S Clinton Street
Owner: Gilda & Erich Six, Gilda‘s Imports
Current Use for 1st Floor: Gilda‘s Imports Store
Current Use for 2nd Floor: Unknown
Current Use for 3rd Floor: Unknown
Contact Person: Gilda Six
Phone: 319-338-7700 (store line)
Square Footage:
First Story (main bldg.): 960
First Story (addition): 300
Second Story (main bldg.): 960
Second Story (addition): 300
Third Story (main bldg.): 960
Total: 3,480
Additional Notes: No answer after repeated phone attempts. Vera Six contact person. No
answering machine or any other way of contact could be found. Anecdotal information from
downtown business owners indicate the property is slated to be remodeled later this year.
Planned use of condominiums on second and third floors.
74
319 E Washington Street
Owner: The Citizen Building Limited, Partnership
Current Use for 1st Floor: Apartments
Current Use for 2nd Floor: Apartments
Contact Person: Robert Burns
Phone: 319-339-9442
Square Footage
First Story: 8,787
Second Story: 8,787
Total: 17,574
Additional Notes: 18 Apt Units, Old Iowa City Press Citizen Building. This building is currently
fully occupied.
75
8 South Clinton
Owner: Dey Building LLC, DBA Iowa Book LLC
Current Use for Basement: Iowa Book
Current Use for 1st Floor: Iowa Book
Current Use for 2nd Floor: Did not specify
Contact Person: Peter Vanderhoef
Phone: 319-337-4188
Square Footage
First Story: 6,908
Second Story: 6,908
Total: 13,816
Additional Notes: Contact person indicated the
upper floors are no longer on the market
as he has found tenants for all the spaces.
76
117, 119, 212 E College Street
Owner: Ruth V Swisher Revocable Trust
Current Use for 1st Floor: Revival, Soap Opera, Union Bar
Current Use for 2nd Floor: Apartments (?)
Current Use for 3rd Floor: Apartments (?)
Contact Persons
Sheila Pogemiller, Revival Owner | Phone: 319-337-4511
Christine Allen, Soap Opera Owner | Phone: 319-354-1123
Square Footage
Second Story: Est. 6640
Third Story: Est. 6640
Total: Unknown w/o Floor plan
Additional Notes: Could not find the direct owner or
contact information for that person(s). Conversations
with business owners on main floor indicated
development not likely.