SEED consulting firm says success of incubators difficult to predict
July 28, 2008 · Updated 10:08 AM
When it comes to predicting the success of business ventures, gauging the success of start-ups in an emerging market may require a crystal ball, according to the first report from a Seattle firm tasked to evaluate the viability of the Port of Bremerton’s Sustainable Energy and Economic Development project.
“The greatest level of uncertainty, of course, exists at the level of the individual start-up firm directly impacted by the vacillations in consumer demand and public sector support ... in an emerging industry such as clean technology,” notes a memo written by Brian Murphy, Kapena Pflum and Nathanael Sahlstrom of Berk & Associates that explores “clean technology market trends” globally and locally.
Tasked with evaluating both SEED and the environment it would grow in, the firm presented its first memo as a characterization of “broad market trends in clean technology” while not yet commenting on the “viability of the proposed Kitsap SEED program.”
Overall, the report describes clean technology as “a growing industry that is likely to continue to expand as economic, environmental” and other concerns create demand for “alternative energy sources, energy efficient buildings, and other clean technologies.”
However, any industry that is emerging and evolving also carries “a great deal of inherent uncertainty and volatility.
“As we evaluate the Kitsap SEED small business incubator business plan, it will be important to note that this uncertainty increases as the unit of analysis gets smaller,” the memo states. “While clean tech is clearly a growing industry internationally and nationally, there is more uncertainty in projecting the future for the industry at the state, regional, or sub-regional level.”
As an example, the memo points to the recent erosion in the market for biofuels, which was initially believed to have strong potential and “passionate” support from consumers.
However, recent price increases and concerns raised about how biofuel production may compete with food production and create “higher than expected greenhouse gases ... is having a strong impact on demand, with Washington state sales of biodiesel falling by two-thirds from July to March.”
Additional challenges for entries into the state’s clean technology industry include the facts that “Washington has a strong supply of low-cost hydroelectric power, decreasing local demand for alternative energy sources,” and that “clean technology firms are clearly locating around the Seattle area, creating challenges to efforts to create a cluster elsewhere in the region.”
In presenting the memo to the Port of Bremerton Board of Commissioners at its most recent meeting on Tuesday, port CEO Ken Attebery described it as concluding “there is a robust clean-technology sector in the area, but there are some challenges, including the gravity of the I-5 corridor.”
However, Attebery said a deeper look into the issues specific to Kitsap County was “warranted.”
In subsequent reports, Berk & Associates promises to answer more questions specific to SEED, such as:
• What is the overall market opportunity for a clean technology incubator in the Puget Sound region?
• How well situated is Kitsap SEED to take advantage of this opportunity?
• What are the strengths, weaknesses and risks of the Kitsap SEED business plan and what alternative models or timelines might be employed to minimize risks?