Don’t let chitchat on startups and “ecosystems” at the surfboard-themed tables fool you.
The Cove means business.
The 31,000-square-foot digs are home to Applied Innovation, the University of California-Irvine’s effort to build a “startup ecosystem” in Orange County. It hosts the common complement of students, entrepreneurs and investors.
“It’s a marketplace for ideas,” said Richard Sudek, an angel investor UCI recruited away from Chapman University in Orange in 2014 to lead the work in Irvine.
He’s executive director of Applied Innovation. The UCI alum sold his computer systems company 16 years ago and began to invest in other startups, then earned an MBA and a doctorate.
It’s a learning-for-life approach that started with his stint as an entrepreneur.
“I made every mistake in the book” starting a company, Sudek said.
Now he, UCI, and backing from local businesses aim to help companies facing steep learning curves.
“We needed to create that space,” Sudek said, “a safe harbor for startups in Orange County.”
Branding, design, and decor at the Cove are heavy on OC’s surf and sand lore.
The term “cove”—which fits with the vision of a safe harbor—comes from a melding of the term “collaborative venture.”
Action
People who benefit from the Cove agree that the resource was needed in the community.
“There was no single place for entrepreneurs,” said Samit Desai, a UCI alum who founded Seva LLC, which leases one of a half-dozen small offices at the Cove.
Seva—Sanskrit for “service”—is a 2-year-old software company pitching labor efficiency to restaurant and retail chains. Its “smart badge” is tracking productivity and performance at about two dozen locations, mainly gas stations and convenience stores in the Southeast U.S.
“We capture the natural activities at a site and see where they can be improved,” Desai said.
Seva is based in Placentia, but “when I heard they were going to put this together, I wanted to be part of it.”
Desai pays market rates for a small chunk of office space—about $750 a month.
Carolyn Stephens, associate director of Applied Innovation and Sudek’s chief of staff, said the Cove’s ultimate goal for companies like Desai’s is to evict them.
“We are a farm team,” she said. “The objective is to get them ready to go out into other environments.”
The Cove also has about 15 “desk” spaces—dedicated work stations—for earlier stage companies or entrepreneurs who don’t need an office to themselves. Stephens said there’s also a bank of computers used by “40 to 50 teams a week,” which often include students just starting on their ideas.
Wednesday meetings of 1 Million Cups—a local chapter of an entrepreneurship program funded by the Ewing Marion Kauffman Foundation in Kansas City, Mo.—brings younger startup efforts to the Cove.
“The currency of the Cove is the startup or team,” Stephens said. “We add community and the resources.”
Money
The currency to start the Cove came from Donald Beall, retired chairman of the former Rockwell International, and his family foundation in Newport Beach.
“We’ve always been very interested in supporting innovation and entrepreneurship,” he said.
The Bealls gave $6.5 million to UCI’s Paul Merage School of Business in 2007 to start a center dedicated to those areas, and in 2014 $5 million of that was committed to an Institute for Innovation—the precursor to Applied Innovation—and the Bealls renewed their commitment to Merage.
“We in effect doubled up,” Beall said. “We’re serious about this—providing significant funds to physical sciences, engineering, art and technology. We view it as very important.”
The Cove’s Stephens said it cost about $2 million to ready the new building.
Applied Innovation itself runs on about $7 million a year, she said, which largely goes toward faculty research, patents development and facility operations for the Cove.
Revenue comes mostly from state and UCI funding, philanthropic giving, and fees the Cove charges.
UCI Chancellor Howard Gillman said several donors gave “initial $100,000 checks” toward the work.
“We were able to go big (with the Cove) because there was strong support in the community,” he said.
Also at the Cove is a separate for-profit LLC—not part of UCI—called Cove Fund I, which raised about $5 million to fund ventures beyond the campus.
Cove Fund I investors, including Seva’s Samit Desai, kicked in $45,000 to $600,000. The fund plans to give at the “early seed level”—$50,000 to $250,000, according to Stephens.
Results
Beall said a couple of overarching goals of Applied Innovation are to “bust up some of the bureaucratic impediments” that can grind down innovation work in academia and “identify business development opportunities on campus.”
Those were key ideas behind the decision to recruit Sudek in 2014.
“Richard didn’t (initially) apply,” for the job, Beall said. “We persuaded him to jump over here and lead this.”
How to measure the results of the Cove’s various ventures remains undetermined.
Stephens said UCI tracks innovation—patent applications, for instance—and Gillman said the new work first has to gain traction and garner attention to be “a regional catalyst” for startups.
“At some point, we’ll create the metrics—how many jobs, new companies—and measure that,” he said.
Kauffman Foundation senior research analyst Arnobio Morelix sometimes conducts reviews of “density, fluidity, connectivity, and diversity” in individual markets.
That brings some understanding of the number of startups, how they grow and change, the degree of interaction among companies and related organizations, and how many are started by women and ethnic minorities.
The Cove and Applied Innovation are relative newcomers to such efforts, but they’re making their mark, even if it’s difficult to measure at this point.
Beall said, “I know we’re on the right track.”
