EmergeMemphis to Launch $1.3M Expansion

EmergeMemphis, the 10-year-old business incubator helping groom more than two dozen companies from its 60,000-square-foot space on Tennessee Street, is ready to grow up.

After two years of planning, EmergeMemphis is poised to expand its space for fledgling startups by developing the top floor of its building, a project that will cost $1.26 million.

To help make the build-out happen, the organization has applied for a $500,000 grant from the Economic Development Administration, a division of the U.S. Department of Commerce.

The EDA invests in “locally developed, regionally-based economic development initiatives,” according to information from the agency.

Because the Center City Revenue Finance Corp. holds the title to EmergeMemphis’ building via the Downtown agency’s PILOT (payment-in-lieu-of-taxes) program, the business incubator has asked the CCRFC to be a co-applicant on its grant request. EmergeMemphis’ request is scheduled to be discussed today by the CCRFC at the board’s 9 a.m. meeting at the Center City Commission office, 114 N. Main St.

“The timing is such that we are at an important juncture to keep fulfilling opportunities for entrepreneurs to be based at our high-growth incubator and accelerator,” reads information EmergeMemphis submitted to the CCC. “Being at a current capacity, this request will enable us to accommodate and meet their space needs.”

Co-signer for loan

In a June 17 letter to EmergeMemphis president Gwin Scott, H. Philip Paradice Jr. – director of the EDA’s Atlanta region – said the CCRFC needed to be a co-applicant because of EDA regulations that stipulate grant recipients hold title to the property being renovated.

Paradice also praised the work of the launching pad for new businesses, which to date has seen 33 companies employing 215 people leave EmergeMemphis and hang out their own shingles. Ninety percent of those companies still exist or have been acquired.

“The Economic Development Administration recognizes the outstanding and demonstrated success (EmergeMemphis) has accomplished,” Paradice wrote. “The EDA is fully committed to working with highly accomplished business partners in order to increase jobs, promote innovation and competitiveness and enhance regions for growth and success in the worldwide economy.”

Other funding EmergeMemphis has received for the project includes a $600,000 grant from the state of Tennessee’s Fastrack program; $275,000 from the Hyde Family and Kemmons Wilson Family Foundations; and $65,000 from the Plough Foundation and the EmergeMemphis board of directors.

Scott said a build-out of EmergeMemphis’ top floor could add space for between 10 and 12 new companies, which would bring with them an estimated 60 to 70 new employees. The project would be put out to bid in the coming weeks and construction wrapped up by the end of this year, according to information from the CCC.

“It’s always been in our long-term plan to build the top floor out,” Scott said. “We just want to continue to replicate our mission of helping early stage, high-growth companies. That’s primarily what we do as an accelerator and an incubator.”

Nudging from the nest

Scott has talked about EmergeMemphis’ plan to “grow up” for most of his nearly five-year tenure as the organization’s president. Before he came onboard in late 2004, he worked from Atlanta for a Silicon Valley startup, then launched his own company, Uvision Media – a technology firm that specializes in streaming audio and video and does consulting work for Fortune 500 companies, among other things.

Scott also worked for Turner Broadcasting for 10 years in sales and business development, and his resume includes a stint running Time Warner’s office in Sydney, Australia. He’s traveled that region extensively, and also New Zealand, Indonesia and Malaysia, working to get the cable industry up and running there.

The EmergeMemphis board includes movers and shakers from around the city’s business community, including Southeastern Asset Management chief financial officer Steve Fracchia, who serves as the chairman of EmergeMemphis.

Other board members include Memphis Regional Chamber president and CEO John Moore, Commercial Advisors LLC senior vice president Kemp Conrad and Kevin Humphries, senior vice president of FedEx Technology Systems.

Companies housed at EmergeMemphis include everything from technology startups to small marketing shops such as RedRover and the nonprofit entity that manages the Levitt Shell performance space in Midtown. Inside the incubator’s building at 516 Tennessee St., companies save money by sharing access to everything from meeting rooms to computer equipment, utilities and janitorial services.

“It is a rough rule of thumb that a startup and early stage company will stay in an incubator for approximately three to four years,” reads information EmergeMemphis submitted to the CCC. “By the end of such period, the company should have reached sufficient maturity to exist independently or, alternatively, be in a situation where they are perhaps still struggling and where the incubator cannot effectively continue to add value.”

Digital clocks hang on the walls throughout the building – all of them showing a countdown until the agreed-upon time when the companies will be established enough to branch out on their own.

Tuesday, August 11, 2009, Vol. 124, No. 156
ANDY MEEK | The Daily News