“Silicon Forest” Offers Clues

Gwyneth K. Shaw PhotoPORTLAND, Ore.—The Portland State University Business Accelerator sits in a nondescript, brick and cement block building hard up against Interstate 5. There’s a view of the nearby Willamette River, but the foreground is all cars and city trappings.

The point of this stripped-down center isn’t the aesthetics. Its appeal lies in the pricetag. In this spot, start-up companies are able to slip into laboratory space on the cheap, and access business and technical advice, too.

The results could have the power to transform a wide swath of society. One former tenant is building a business around a small kit for kidney dialysis that would allow a patient to take the lifesaving treatment at home. A current resident is harnessing the potential of ultra-tiny quantum dots to revolutionize lighting.

The accelerator sits under the umbrella of the public Portland State. But it’s part of a much larger collaborative effort in Oregon to leverage the existing academic and industrial presence to attract more of both. Some here call the state’s tech industry the “Silicon Forest,” a play on the area’s evergreens and the enviable innovation hub 600 miles to the south.

And people trying to figure out how to bring good jobs to cities call the hub something else, too: a model.

Officials here have been able to build on a solid foundation. Oregon’s two large state universities, the University of Oregon in Eugene and Oregon State University in Corvallis, had thriving science hubs. HP had a big facility near OSU; Intel had been in Hillsboro, a suburb of Portland, since the mid-1970s.

The start-up culture south of San Francisco was luring technology-based companies there. Intel was choosing to build its new chip plants elsewhere. About 15 years ago, Oregon officials started to feel like they were missing an opportunity.

“Oregon was kind of behind the curve,” said Skip Rung (pictured above), a former HP executive who’s now the president and executive director of the Oregon Nanoscience and Microtechnologies Institute, or ONAMI.

First, the state changed its tax structure slightly to make building manufacturing plants in Oregon more attractive to companies like Intel. Then, officials started looking around at what was already going on—and thinking about how to expand those activities.

“When we put it all together, the best combination was nanoscience and microtechnology,” Rung said.

Enter ONAMI, which has been operating for 10 years as a state-funded economic development tool. The idea is to bring industry, academic research and workforce development together, sprinkle it with some grant money, and reap the results.

Some of those benefits are big: Intel hires a steady stream of Oregon students and is in the process of building a 200,000-square-foot fabrication facility that will produce new processing chips based on ultra-tiny technology. According to Intel official Morgan Anderson, the company’s annual payroll in Oregon tops $2 billion—for more than 16,000 employees, earning an average of $125,000 per year.

What’s more, she said, each Intel job produces an additional three jobs in the state, mostly contractors that work for the company.

Other companies may be smaller, but their development is a key part of developing what one official called an “innovation ecosystem” in Oregon. A major element is the Portland business accelerator.

Michael Baker, whose company, Home Dialysis Plus, was recently absorbed into a California-based company, said the benefits of being at the accelerator were about more than office and lab space. The business advice helped, too, offering a glimpse of the gauntlet he’d have to run for investors.

“It had a huge impact on our ability to present well to investors,” Baker said.

Also helpful, he added, was the ability to recruit interns and other staff from nearby universities, pairing students eager for experience with a startup in need of inexpensive labor.

A current tenant, Ron Nelson of Pacific Light Technologies, also called the acclerator and ONAMI’s bridge funding invaluable. Nelson’s company is trying to turn quantum dots—tiny particles that glow—into better light-emitting diode, or LED lights. Ultimately, the technology will be in the kind of light bulbs you’d use in your home, at a fraction of the cost of existing bulbs, he said.

Other companies in other states have attracted millions in venture capital, and come up short, Nelson said. He believes Pacific Light Technologies has found the solution, on the startup equivalent of a shoestring.

“Here we are, we’ve cracked the problem, and we did it on a quarter of a million dollars from ONAMI,” he said.

The company recently snagged commitments for $3 million in venture capital money.

“I’m a veteran of Silicon Valley,” Nelson said, who relocated to Portland before joining the company. “I’m just absolutely delighted to have the support of ONAMI and the accelerator here.”

Then there’s the matter of producing workers to do the jobs ideally created by these companies—large and small. That’s been a big part of ONAMI’s efforts, Rung said, especially getting the universities to work together.

Both the University of Oregon and Oregon State are increasingly well-known for faculty research on nanotechnology and the movement to engineer safer chemicals from the ground up. As both schools, and Portland State, have used federal grants and state funding to build their stables of high-level equipment—including microscopes that cost hundreds of thousands of dollars—they’ve also developed a collaborative model to use those instruments.

“They had an open user facility model from the very beginning,” Rung said of the University of Oregon’s relatively new, $30 million, 30,000-square foot facility.

Overcoming the natural competition between the universities turned out to be easier than expected, he said. Now, an OSU professor or graduate student can book time on an instrument in Eugene or Portland and pay the same subsidized rate he or she would pay in Corvallis.

All three schools have impressive suites of instruments, many of them built by FEI—a quick drive away in Hillsboro, where its headquarters sit adjacent to the construction site that will become Intel’s new plant.

Commercial researchers can buy time on the same instruments for a relatively low rate, too, creating a bit of cash flow for the schools and maximizing the use of the high-end equipment.

The universities aren’t just producting Ph.Ds, either. Anderson said Intel works with Portland State to send top students from Vietnam through an intense two-year program before they head back to the company’s facility in their home country.

Portland Community College’s microtechnology program has become a pipeline for Intel, she said.

“We hired all but one of their graduates last year,” Anderson said—at a $50,000 starting salary.

Rung calls it “high-tech extension,” and likens it to the older model of land-grant schools that both educated students and offered support to farmers.

The Oregon model has hinged on foresight. But it has exceeded expectations, Rung said, both in terms of business and research. And its success has ensured its survival.

“What legislators want to pay for, of course, is job creation,” Rung said.

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