Fostering Inland Startups

Kim Zentz has turned Spokanes SIRTI from just another government agency into a dynamic business incubator, with success stories numbering among its clients.

Kim Zentzs business cards should list Problem Solver as
her official title. That, after all, is what she has successfully done time and
again during her 25-year career. And thats what shes doing now for a
state-funded agency in Spokane with the mission of nurturing startup companies,
particularly in eastern Washington.

I am drawn to multidimensional business challenges, says
Zentz, executive director of SIRTI (Spokane Intercollegiate Research and
Technology Institute). I love to see a problem and, no matter what it takes,
try to rally the people involved to solve it.

Her current position at SIRTI, the only organization of its
kind in the state, has given her plenty of problems to tackle. Although the
Inland Northwest region produces a great deal of innovationparticularly in
areas like energy and health carethe area has been less successful at
nurturing venture capital-backed companies. Only by creating more successful
startups, Zentz says, can the region generate more innovation, more technology
spin-offs and more jobs. It is one of the key benefits of establishing a
healthy innovation ecosystem in any community, says Zentz.

Among SIRTIs recent successes is Pacinian, a company that
pioneered a technology for keyboards on touch screens that gives tactile
feedback. Users have the sensation of typing on a real keyboard, while the
small size and power efficiency of the keyboards make them desirable. The
company recently received a multimillion dollar order from a major notebook
computer manufacturer and signed a development agreement with a leading gaming
company. They [Pacinian] are hitting on all cylinders and are at the right
place at the right time, says Zentz.

Local leaders are effusive in their praise of the
organization under Zentzs leadership. SIRTI plays a very useful role in the
Inland Northwest in that it brings together people, ideas, technologies, facilities
and investors. It is a great clearinghouse and matchmaker for the region, says
Len Jessup, director of the Center for Entrepreneurial Studies at Washington
State University. Kim came in at a time when things were very topsy-turvy, and
she has been a great stabilizing force, by team building and providing a sense
of direction.

SIRTI was established in 1994 with the goal of helping the
region transition from a natural resource-based economy to one with a larger
proportion of knowledge-based companies. But for many years, the organization
fell far short of achieving its goals. Although it has a campus near downtown
Spokane that offers entrepreneurs office space and IT help, SIRTI long operated
like a government agency that did not understand the challenges of
entrepreneurs.

Zentz, who has a bachelors degree in civil engineering from
the University of Idaho, personally experienced the problems at SIRTI from the
time when she was chief operating officer of Avista Labs (an Avista Corp.
spin-off now called ReliOn, which makes fuel-cell technology for backup power
applications). Her company moved off the SIRTI campus in 1998 because Zentz
found the relationship with SIRTI unproductive. In 2005, after nearly a decade
in operation, SIRTI had worked with only eight companies, and many observers
expressed serious concerns whether the state was getting a good return on its
investment.

Zentz, who had moved up through the ranks at Avista and
overcome steep challenges as chief executive of the Spokane Transit Authority
(STA) at a time of sharp budget cuts, welcomed the challenge of transforming
SIRTI. The idea of working with people in the high-risk, scarce resources and
passion-driven arena of technology entrepreneurship really captured my
imagination, says Zentz.

She set out to build a more entrepreneurial,
customer-focused culture at SIRTI. I felt that SIRTI needed to focus the
majority of its time and resources on serving client companies, she explains.
She began eliminating activities that did not directly benefit a client firm
and shifted management so more responsibility went to employees with industry
experience.

The next challenge was to strengthen the support system for
the young companies. One of SIRTIs key offerings was its team of consultants.
The role of these consultants, or mentors, is to coach entrepreneurs as they
cross the iconic valley of deaththe time from initial launch or spin-out
from a university or corporate setting to a fully sustaining, funded business
model. But many of the mentors had never built a company.

I created a management team that was made up of serial
entrepreneurs, explains Zentz. Today, her team of five consultants comprises
veteran technology entrepreneurs who bring with them a network of contacts and
a wealth of industry experience. These mentors are better able to help
businesses identify the value startups offer, and to advise the company on such
critical issues as hiring personnel and raising money.

Among SIRTIs most successful clients is Signature Genomic
Laboratories, which was launched at Providence Sacred Heart Medical Center and
later moved onto the SIRTI campus, and which develops genetic techniques to
identify chromosomal abnormalities in children with mental retardation and
birth defects. They thought investors should be happy that they were saving
lives, says Zentz. We had to say, No, investors care about revenues.

Under Zentzs leadership, SIRTI teaches clients to use
bootstrapping techniques. The goal is for client entrepreneurs to refine their
product and use a minimum of outside capitala strategy that is particularly
important today when capital is so scarce.

Still, there are times when startups need access to funds.
For those times, SIRTI launched its Technology Growth Fund, a revolving loan
for businesses that have little access to conventional bank financing because
they have no track record of sales and profitability. The first loan was made
in June of 2007 to GenPrime. Pacinian, the touch screen technology firm,
received a total of $500,000 from the fund at a critical time.

In 2007, Zentz helped institute a new legal services program
in partnership with the Gonzaga University School of Law and local law firms.
Under the program, law school students perform critical but potentially expensive
legal services for SIRTI clients, handling such issues as copyrights, patents
and trademarks, employee contracts, intellectual property acquisition and the
development of business contacts. Students get important, hands-on experience
under the watchful eye of local attorneys who review the work.

The changes that Zentz worked so hard to put in place are
now showing strong results. Last year, SIRTI helped 54 companies, nearly seven
times the number it assisted in 2004. While the nationwide survival rate for
startups, according to the Small Business Administration, is only 44 percent
after four years, 68 percent of SIRTIs graduates are still in business within
the same time frame. This high survival rate is thanks to the entrepreneurial
coaching, business services, access to capital and legal services needed for
successful information, IP protection and long-term growth. SIRTI clients who
launched local companies account for more than 1,025 full-time jobs. The 2008
annual payroll of SIRTI clients and alumni exceeded $43 million, and over
$116.4 million in annual revenue was reaped in 2008 alone. Governor Chris
Gregoire recently called SIRTI an economic engine for eastern Washington.

SIRTI has an annual state budget of $1.5 million. Zentz is
working hard in concert with SIRTIs boardnine technology business leaders
from throughout the state and eight representatives from the states eastern
Washington higher education institutions and the University of Washingtonto
make sure people on both sides of the Cascades understand SIRTI is a worthy
recipient of the state funds. People sometimes question whether there is
technology in Spokane, says Zentz. There are companies and university
technologies on their way to accessing global markets with SIRTIs help.

As technology businesses create more
well-paying jobs and become profitable, Zentz says the benefits accrue to the
states economy. Not only can SIRTI help people pursue and achieve dreams,
she says, but we can help the region succeed and build wealth for
Washington.