Bennett Washabaugh and Mike Zei launched their commercial real estate startup, TenantBase, with Irvine Company in mind as an innovator that leases space to startups around the country.
TenantBase matches landlords and tenants—startups and established businesses—mostly for small offices.
The duo was looking to expand from their initial base in Nashville into Southern California, and their perception of Irvine Co. shifted from best practices to landlord potential after they received an invitation to apply for free co-working space at EvoNexus.
The incubator is housed at The Vine building in Irvine as part of Irvine Co.’s real estate portfolio of startup space in Orange County.
The offer came from Andy Fathollahi, the founder of Irvine-based Incipio and a member of EvoNexus’ selection committee.
TenantBase applied, was accepted, and delighted in the perfect timing of the offer, Washabaugh said.
“When we learned more about EvoNexus, we were so impressed with the people involved with it,” he said. “The success stories they already had were astonishing to us.”
TenantBase now counts as an Irvine EvoNexus success story as one of five startups that have gone through the incubator and “graduated” to their own office space.
The Irvine incubator is an offshoot of the original EvoNexus, which was co-founded by Rory Moore in 2009 in San Diego.
He co-founded San Diego-based Peregrine Semiconductor Corp., a manufacturer of radio frequency chips.
Moore is no stranger to the challenges of starting a company. He was the seed-round investor in Peregrine and said that he faced a tough time raising institutional money, relying on angel investors to eventually raise $18.5 million, but that it took 25 years before Peregrine went public with a listing on NASDAQ.
Peregrine ultimately became a leading provider of radio frequency chips for the wireless communications and aerospace markets.
Moore went on to invest in several other startups before co-founding EvoNexus with Walter Davis during the recession in 2008.
Davis served as director of space systems; information warfare systems; command and control systems; and modeling and simulation for the U.S. Navy. He also worked as vice president for business development at San Diego-based GDE Systems.
“In 2008 the world was melting financially,” Moore said. “(Davis) and I were saying, ‘This isn’t good. Let’s do something different.’ So we created an incubator that’s free for startups and made [tech] and life science companies pay for it. Everyone said it wouldn’t work.”
EvoNexus works with local businesses to provide sponsorships to pay for the facility’s rent and other expenses.
Moore returned to his OC roots when he expanded the incubator to Irvine. He grew up in Huntington Beach in a farming family, and his familiarity with the area and awareness of its robust entrepreneurial climate gave him confidence it would be an ideal place to expand, he said.
One of his biggest partners here is Irvine Co., which Moore calls “the most visionary company in SoCal regarding the early-stage innovation [ecosystem].”
There’s a third EvoNexus location in La Jolla in San Diego County.
How It Works
The incubator is unique because it’s free for startups to join due to the corporate support from tech and life science companies, Moore said.
The Irvine incubator raised more than $9 million in its first year from a variety of sources, including strategic funding partners, such as San Diego-based Qualcomm. Venture capitalists backing the incubator include K5, an early-stage venture fund in Newport Beach, OC Tech Coast Angels and The Cove Fund 1 LLC, as well as venture capitalists in the San Francisco Bay Area, and private angel investors also pitched in, according to Program Manager Alexa Enlow.
Startups must apply for acceptance into EvoNexus, and less than one in 10 make the cut, Moore said. They can stay for up to two years. EvoNexus can kick out startups if their technology or science doesn’t pan out, although that’s rare, Moore said. It doesn’t take any equity in the startups, he added.
EvoNexus has accepted 26 startups since the Irvine operation started in January 2015, four of them recently, Enlow said.
The incubator doesn’t have its own capital fund, but when startups are ready for “prime time,” Moore and his associates—his staff and the volunteer mentors—can make a call to venture capitalists in Silicon Valley, and “they will come down and check them out,” he said. The volunteers are Southern California tech businesspeople who share knowledge gleaned from their own corporate experiences.
Some of the startups also evolve into prime positions to be acquired by either one of the corporate sponsors or one of the EvoNexus volunteers, Moore said, pointing out that no strings are attached when the corporate sponsors provide funding.
“We’re a big platform for M&A’s,” he said. “A lot of our startups get acquired.”
Among the perks for startups accepted into EvoNexus are the resources and mentors the incubator provides.
TenantBase was assigned to mentor Greg Hawkins, the former chief executive of buy.com who ended up becoming the startup’s executive chairman.
“The mentorship allowed us to take all of our processes to the next level,” Washabaugh said. “We received lots of intros to investors and advisers.”
All of the resources and mentoring enabled TenantBase to expand to the point where it outgrew its co-working space at EvoNexus, he said.
“When we made our seventh or eighth hire, we knew it was time to graduate,” he said.
TenantBase recently moved to its own office in Newport Beach. Four other startups also have graduated and moved out, including PhageTech, which is developing sensors to detect diseases, such as cancer, in their earliest stages, and Zelegent, which has created a tool that allows medical specialists to perform an in-office procedure to alleviate the causes of snoring.
Hawkins, who got involved with EvoNexus before it expanded to Orange County, said he enjoys mentoring the startups.
He said via email, “I feel that the uniqueness of the EvoNexus model—volunteerism, zero equity and [zero] fees—will continue to provide a very important option for entrepreneurs in the OC startup ecosystem.”