A business incubator plans to open in Tempe next year with an unorthodox model: It’s privately funded and will provide seed money to budding technology entrepreneurs.
Called LaunchSpot, the incubator plans to host several start-ups for three months at a time, giving them time to develop a prototype to the point that investors will be ready to fund it as a new business.
Founder Fred von Graf built his model after seeing the Valley’s tech-savvy entrepreneurs often heading to California or other states to get venture capital — which translates to companies and lucrative jobs staying away from Arizona. Investors or government-funded incubators also don’t provide as much mentoring, legal advice or professional services support as von Graf thinks they need. He plans to make that a large part of the incubator.
Von Graf, whose tech career has included working for Intel, said he hopes to make the Valley a more supportive place for start-ups.
“I personally had a lot of ideas when I was younger,” he said. “I just didn’t have the resources or the connections.”
Von Graf plans to open LaunchSpot in March, co-locating with a web marketing company called Crexendo. That company’s headquarters has lots of extra space, where Crexendo executive Dean Wright is planning to build a coworking space for tech entrepreneurs to collaborate.
Wright and von Graf decided the incubator and coworking space would be a good fit for half of a 20,000-square-foot building, as the start-up participants could mingle with more experienced professionals. The space could eventually house up to 200 people, Wright said.
LaunchSpot will invest up to about $20,000 per start-up after evaluating the idea, and in exchange will take a stake of perhaps 2 to 10 percent in the company. LaunchSpot is most interested in online and mobile applications and services.
Von Graf said he’s in talks with Fortune 200-level leaders he envisions being involved. Mentoring with technology experts and other business professionals is a major part of his model, he said.
“I’m not sure if there are other incubators that are doing that,” he said. “I don’t think there’s quite the level of community engagement and support that we’ll provide.”
Tempe has given some thought to sponsoring an incubator but has had concerns about funding such a venture, said Councilwoman Onnie Shekerjian, who also chairs the Technology, Economic & Community Development Committee. Chandler spent $5.7 million on its Innovations incubator, while Tempe’s only involvement will be providing some marketing and promotional support. Shekerjian said the city will closely follow LaunchSpot to see whether it can jump-start technology businesses without requiring taxpayer funding.
“I do believe that when private enterprise goes into something, I think they can do it much faster and better, many times, than a government entity,” Shekerjian said.
The Crexendo-LaunchSpot venture will be near Broadway Road and 52nd Street. Von Graf said he’s waiting to seek start-up candidates until the building is getting close to housing the operation. Those interesting in contacting von Graf can reach him at firstname.lastname@example.org.