OCBA Newsletter Winter 2011

Volume 1, Issue 1Winter 2011/2012

2 OCBA / WINTER 2011

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3OCBA / WINTER 2011

Orange County Business Accelerator Magazine is published by

Orange County Business AcceleratorNew York International Plaza at Stewart Airport

4 Crotty Lane, Suite 100New Windsor, NY 12553

Managing DirectorMichael J. DiTullo

[email protected]: 845.220.2208Fax: 845.220.2228

Business Development DirectorPeter Gregory

[email protected]

Client Services SpecialistKelly Reilly

[email protected]

Custom publishing services provided by ScheinMediaPresident & CEO

Jonathan A. Schein

EditorSusan Piperato

Art/Production Director & PhotographerJolene M. Oldham

WriterLynn Woods

Advertising & SalesRandy ScheinCynthia Kudren

4 Introduction

Orange County Business Accelerator(OCBA): Snapshots in Time

5 Letter from Edward A. Diana, Orange County Executive

Marketing: A Powerful Engine

6 Client profile: Continental Organics

7 Client Profile: Frugaldoo

8 Q&A with Michael J. DiTullo, OCBA Managing Director

11 Orange County IDA Roundtable

15 Introducing the Accelerator’s Value-Added Benefits by Peter Gregory

Innovative, nimble new companies are the engines driving economic growth and job creation. Orange County Business Accelerator (OCBA) was founded to

nurture these companies and help them thrive. We’re succeeding in this mission.

Since opening our doors 24 months ago, the Acceleratorhas attracted 16 early-stage startups that employ more than 50 people. Within a couple of years, this number could increase to 350 to 500 employees, bringing scores of high-tech, high-paying jobs to Orange County. These companies and their employees will have a ripple effectthroughout Orange County’s economy, benefiting local companies, ranging from sandwich shops and restaurantsto lawyers, contractors and business-supply companies. They will have a profound impact on the region’s economyand attract yet more new investments and innovation.

From cancer research equipment to cell phone applications, aquaculture to silicon chip technology, theAccelerator’s clients are filling the voids left by large corporations. Some Accelerator clients are creating entirely new industries and services by combining leading-edge technologies and creative ideas. They are the future of business.

The Accelerator is a magnet for driven visionaries and entrepreneurs. We provide the support and drive down riskfor early-stage innovators.

Remember, we are in business for your business. Maybe we can help turn your dreams into reality.

Michael J. DiTullo, Managing Director

Welcome to Orange County Business Accelerator

Table of ContentsIssue 1, Volume 1

OCBA / WINTER 2011

The Orange County Business Accelerator opened two years ago as a wayto help innovative startup companies get off the ground and create newjobs. The 10,000-square-foot facility, which is adjacent to Stewart

International Airport, offers Class A office space, hard-wired high-speed Internet and wireless capabilities, and a conference room with state-of-the-artvideoconferencing to selected clients. Financed by the Orange CountyIndustrial Development Agency, the Accelerator currently has 10 residentclients and seven associate clients, who collectively employ 75 people. These businesses represent a range of exciting industries, including bio-pharmaceutical (cancer research firm CymoGen Dx), web-based software(Connected Contractors), education (4-e Productions, Cognition Media), GPStechnology (Tracking Systems, Inc.), electronic health care (911 Family ofProducts), and green energy (Luterra Systems, Synergy Development).

This fall, aquaponics firm Continental Organics will be the first client to“graduate,” moving into a new facility where it will raise tilapia and grow organic vegetables for the New York City and adjoining markets. The facilitywill eventually employ 125 people, which is just one example of the hundredsof jobs in development at the Accelerator. Continental Organics’ move off-siteis a particularly exciting development because it is occurring a year ahead ofthe usual three-year time cycle. Surely there’s no better way to celebrate theAccelerator’s two-year anniversary than this success!

Thomas Endres, president and chief operating officer at ContinentalOrganics, said that his company’s fast-track growth wouldn’t have been possible without the Accelerator. “All of the people at the Accelerator havebeen phenomenally supportive,” he said.

How do clients benefit? One way is through reduced costs: For the first two years of their three-year lease, they receive a subsidy for the rent, whichincludes all the amenities. They also get one-on-one assistance from the tworesident business development experts, managing director Michael DiTullo,and enterprise development director Peter Gregory. On-site educational seminars, covering everything from how to attract investors to leveraging theweb to perfecting a business plan, provide both valuable instruction and contacts. The positive synergies of the Accelerator include not just the naturalnetworking that occurs with other businesses at the center and in the community, but also the direct access clients have to the region’s key economic development and political movers and shakers, who regularlyvisit the Accelerator.

Then there’s the location, a mere 50 miles from Manhattan. Situated midway in the Bos-Wash Corridor, the Accelerator connects clients to a $2.2 trillion economy and a market of 55 million people. It’s located at StewartInternational Airport, which recently received a $50 million investment by its owner, the Port Authority of New York and New Jersey, and at the intersection of two major highways, I-87 and I-84. In addition, the Acceleratoris part of Orange County’s Foreign Trade Zone, which offers tax breaks to

importing firms, and its proximity to West Point and the Air National Guard and Marine Reserve at Stewart make it particularly attractive to veterans, whoown a number of the client businesses.

With the Accelerator, the Orange County IDA is demonstrating its commitmentto progressive small businesses as the engine of the New Economy. Given thenumbers, it’s a wise investment: small businesses account for more than half of all U.S. workers and have generated 64 percent of new jobs over the past 15 years,according to the Small Business Administration. They hire 40 percent of high-tech workers and produce 13 times more patents per employee thanlarge patenting firms.

The high-tech, high-paying jobs of the future are being created right here.Truly, the Orange County Business Accelerator is the Intersection of capital, tal-ent, and innovation. For the ambitious, hard-working, and creative entrepreneur, there’s no better place to be. u

4

Introduction

Snapshots in Time

September-November 2008: IDA Board Chairman James Petro andboard members consider incubator initiative. IDA Attorney PhilCrotty begins research and business plan for business incubator.

Michael DiTulloJames R. Petro

5OCBA / WINTER 2011

A Letter from Ed Diana

April-August 2009: Business plan affirmedby IDA Board. Lease contracted for 10,000-square-foot high-tech office at New YorkInternational Plaza. Michael J. DiTullo isappointed Managing Director.

Ibelieve that Orange County, NY, is one of the best places anywhere to live,work, and raise a family. Located just an hour north New York City, we areproud to offer so much: a great quality of life, easy access to transportation

and infrastructure, excellent educational opportunities, world-class arts, recreation, and shopping, as well as a rich history dating back to our nation’searliest days.

We also have a deep commitment to ensuring the availability of well-paying jobs for our residents. Business attraction and retention and economicdevelopment are key strategic initiatives and essential to our ongoing success.I so firmly believe in the value of economic development that our DeputyCounty Executive, James O’Donnell, is at the helm of the Orange County Office of Business Assistance, where he oversees the Industrial DevelopmentAgency, Foreign Trade Zone, and the unique and innovative Orange CountyBusiness Accelerator.

Now celebrating its second anniversary, the Accelerator has not onlyexceeded our goals and expectations for its startup, it has blown them away!As a business incubator, the Accelerator works with entrepreneurs looking to take their fledgling companies to the next level. The Accelerator provides a variety of essential startup services, including business mentoring and counseling, a high-tech office environment, low-cost occupancy fees, andeven access to venture capital and promotional support.

At the Accelerator, innovative startups find the services and support theyneed at a rate they can afford. Startup companies bring new jobs to OrangeCounty and the Accelerator’s goal is to see those jobs multiply when the companies graduate to their own locations in three to five years. This year we celebrated the Accelerator’s first graduate, Continental Organics, whichgraduated ahead of its three-year goal.

The Accelerator’s staff is comprised of experienced business professionalswith a keen understanding of what it takes to build a successful company.They offer an outstanding network of strategic partners to meet their clients’varied objectives. At the Accelerator, companies can count on having a partnerwho shares their goals of succeeding and thriving.

If you’re looking to make it in today’s challenging business environment, I urge you to learn more about Orange County and the Orange CountyBusiness Accelerator, where we are proud to offer talent, capital, and innovation packaged for your success.

Edward A. DianaOrange County Executive

When it comes to marketing, Orange County Business Accelerator(OCBA) Managing Director Michael DiTullo claims that the old maxim,“you can’t run a train without an engine,” sums it up best. So OCBA

takes a comprehensive approach to its marketing activities, which include aconstantly updated Facebook page, quality-produced TV commercials, andguest columns written by DiTullo in business publications.

The Accelerator spends $100,000 a year on marketing, and much of thatmoney is invested online—no surprise, given the viral power of social mediaand the Internet. The website’s homepage, ocaccelerator.com, features an introductory video, news, and a blog written by DiTullo that’s posted everyMonday morning and sent out via eblast to subscribers. Needless to say, the site is “upgraded and tweaked” on a daily basis, DiTullo says.

Upcoming educational seminars, press conferences, and other specialevents are posted on the Accelerator’s Facebook page. Immediately after an event, photos and a description are posted, which often generates animpressive response. For example, following the posting of photos fromSenator Kirsten Gillibrand’s press conference at the Accelerator on July 5, thepage had generated nearly 300 “like” responses by the next morning, DiTullo says.

The Accelerator outsources much of its marketing activities to Focus Media,a marketing and public relations firm based in Goshen, NY. Focus includesmedia services, graphic design, media buying, web design, event planning,and media relations. “Mike’s goal is to reach business owners across the Bos-Wash corridor, so we’ve built a very multi-dimensional platform, withmany different touch points,” notes Bill Madden, executive vice president atFocus Media. “They range from traditional vehicles like print newsletters to innovative strategies such as airport signage,” with ads posted in the terminalsof Albany, Newark, Westchester, and Stewart Airports.

“We’ve been very pleased with their efforts and the results,” says DiTullo. TheAccelerator has been featured not only in regional newspapers, radio, and TV but also in the national media, including The Wall Street Journal, Associated Press,and National Public Radio. (Needless to say, Googling “Orange County BusinessAccelerator” generates a barrage of stories.) “By utilizing all these vehicles, we’vegenerated a steady drumbeat of interest,” DiTullo says.

The marketing campaign also ties in with the media outreach of OrangeCounty’s Industrial Development Agency (IDA), whose 2010 Annual Reportincludes a handsome spread showcasing the Accelerator. The Accelerator is alsoprominently featured in a new DVD that explains and sums up the activities of theIDA, with 1,500 copies distributed so far. The DVD’s fresh, upbeat approach andexcellent production values—the video begins with befuddled Orange Countyresidents saying they haven’t a clue about what the IDA is—effectively conveythe excitement of the economic development organization’s efforts, which arecritically important to the local economy. Clips from the DVD are being used in acable TV advertising campaign, with spots running on ESPN and news channelsin the Mid-Hudson Valley, New Jersey, and Connecticut. “We want to be first tothe plate,” says Philip Crotty, attorney for the Orange County IDA. u

Marketing: A Powerful Engine

October 28, 2009: More than200 community and businessleaders attend grand opening at4 London Ave., New Windsor, NY.


The concept behind Continental Organics couldn’t fit in better withtoday’s eco demands: grow healthy food in a closed-loop system thatconserves water, has no waste stream, and captures CO2 emissions.

The company plans to raise tilapia and trout, which will be fed a vegetarian diet, and then use the wastewater from the fish in a hydroponicgreenhouse for growing organic vegetables, the company’s second product, which are nourished by the nitrogen waste produced by the fish.The small amount of leftover waste will be sold as organic fertilizer,Continental Organics’ third product. The method uses 90 percent less water than traditional agriculture and results in a rolling harvest—every 34 days for the vegetables, which will consist mainly of greens, tomatoes,cucumbers, and herbs, and every nine months for the fish. The companyalso plans to distribute its product to markets within a 60-mile radius,resulting in a low-carbon footprint. “[Co-founder] Michael [Finnegan] and Idid our research, and we determined aquaponics is the best way toapproach the challenge of growing food in the future,” says Thomas Endres,Continental Organics’ president and COO.

Continental Organics was the first client to join the Orange CountyBusiness Accelerator, and now it is the first company to graduate: It movedto a new 32,000-square-foot facility located three miles away. (While clients are required to graduate in three years, Continental Organics isahead of the game, having joined the Accelerator less than two years ago, in January 2010.) By the end of this year, the company plans to be producing and selling vegetables, followed by the first harvest of fish in 2012.

The company will have six employees when construction is completed this winter; the number soars to 60 when one includes outside contractors,noted Endres. Within five years, upon final build-out of its facility, it plans to employ 125 people. The jobs will range from $100,000-plus senior management positions to $45,000 field laborers, Endres says.

The recently completed Phase 1 involved the renovation of a formercatering hall and includes the construction of a 9,000-square-foot fish tank. When built out through Phase 3, in 2013, the facility will consist of220,000 square feet, representing a $5.9 million investment. In five years,says Endres, the operation will have expanded to total build-out at 900,000square feet, a $50 million investment. General manager Kevin Ferry, anexperienced aquaponics grower who formerly managed the Cabbage Hill Farm, located in Yorktown Heights, NY, is designing the high-techaquaponics and hydroponics facilities on a commercial scale, transformingwhat has so far been mostly a mom-and-pop cottage industry.

As a veteran-owned company—Endres served as a pilot for 27 years in the U.S. Army and was director of facilities at West Point, while Finnegan is a reserve officer in the Army JAG Corps, following a long career as an environmental lawyer and investment banker—Continental Organics plansto hire veterans, including those who are disabled, for half of its workforce.The company’s proximity to Stewart Airport means that “in theory, wecould send fresh produce to soldiers overseas," says Finnegan, "whichwould be a dream come true.

Continental Organics’ innovative concept, substantial job creation, experienced principals, and success in acquiring letters of intent from food distributors to ship its products, including Hunts Point, in the Bronx, and the Department of Defense, make it a model candidate for economic development benefits. Between them, Endres and Finnegan have extensiveexperience in business, finance, construction management, commodities, and environmental protection; both completed a course on aquaculture systems at Cornell University. The company has received a 10-year paymentin lieu of taxes, or PILOT, from the Orange County IDA and a low-interestSmall Business Administration 504 loan.

According to Endres, without the Accelerator, the company wouldn’t be where it is today. He notes that his firm has used the services of on-site employment agency Ethan Allen. The Accelerator’s educational presentations have been particularly valuable, hooking the company upwith banks and other useful service providers. “Through the facility and the programs, we’ve gotten everything we need,” he says. The OrangeCounty location is a big advantage, he adds, given its proximity to majorhighways and New York City as well as the agricultural educational centersat Cornell and SUNY Cobleskill.

Initially, Endres says he and Finnegan “looked at many locations in different states” and chose Orange County because it was “optimal—all the people at the Accelerator and the IDA have been phenomenally supportive. They’ve made the whole process easier.” Simply renting officespace, as the company originally planned, would have meant “more moneyout of our pocket. Instead, we’ve been able to reduce our costs, resulting inthe creation of more jobs.” u

Client Profile: Continental Organics Gets a Jump on Food Growing of the Future

December 2009: Continental Organics is signed as first residentclient. Co-founder Michael Finnegan is determined to utilize theAccelerator to one day build a several hundred thousand square footaquaculture environment.

7OCBA / WINTER 2011

Frugaldoo President Patrick Carr and Executive Vice President Bill Zurillahave come up with a novel way to link shoppers with merchants throughtheir cell phones. A shopper simply texts “lunch,” “oil change,” “boots,” or

some other product or service into a mobile phone, and within moments getsback a message listing special deals from nearby merchants.

Frugaldoo, which joined the Accelerator in November 2010, matches consumers instantly, wherever they are, with the deals they’re looking for. Froma shopper’s perspective, using Frugaldoo couldn’t be easier: The shopper connectswith the service by texting a code number. Frugaldoo’s site determines the user’slocation, then makes the match with a merchant in the vicinity. Merchants are thusresponding to a potential customer whose need for their product has already beenidentified. They also don’t have to invest upfront in the service, since they pay bythe transaction when the deal is delivered.

Carr and Zurilla know the world of advertising, both having worked beforeas executives at a local media subsidiary of Dow Jones and Company. “Eightypercent of businesses in small communities don’t advertise in the local paper,because it’s too expensive,” Zurilla says. “We’ve tried to figure out how we couldbetter serve that 80 percent.” Carr says the ability to simply text a product orservice opens up Frugaldoo’s deals to a broad audience—in essence, anyonewith a mobile phone. The company has also developed a mobile app, whichincludes directions and a map.

The company currently employs 10 people, including marketing and artsdirector Randy Rasmussen, a graphic designer who owned and operated hisown digital signage company; two off-site salespeople; and three independentcontractors. The biggest challenge has been developing the mobile-phonesystem and getting approval from the various carriers, Carr says. The companylaunched its service in mid-September, having acquired a critical mass of merchants in categories like automotive, food, and drink, beauty, real estate,travel, entertainment, and professional services. Retailers “love the concept,”Carr says. “It’s so flexible, they can fit it into their budget.” The company plans toadvertise extensively on radio and in newspapers as well as do a direct mailcampaign initially targeting residents in Middletown. It also is distributing “gadget grips” printed with its keyword, website address, and 800 number.

Carr says that the networking opportunities at the Accelerator have beenvery beneficial. “We’ve had access to everyone from leading business folks to venture capitalists to bankers to lawyers,” he says. “If we’re going to do sometrademark work, we find the legal help right here, with three or four lawyerswalking through the door,” adds Zurilla. Another advantage is the flexible leasing terms, which has enabled the company to move to bigger quarters asit expands. Plus, the Accelerator gives Frugaldoo instant credibility, as Carr

discovered when his wife was talking to an angel investor and the personadvised that the company try to get into the Accelerator.

Once the service has been launched and perfected, the sky’s the limit.Within a few years, Carr says he hopes Frugaldoo will be selling franchisesnationwide, in which case having the airport nearby would be a boon in setting up meetings. “Starting this company is like climbing a huge mountain. Our benefactors at the Accelerator are like our sherpas—they tell us where to go.” u

Client Profile:Frugaldoo Breaches the Mobile Phone Space

Patrick Carr and Bill Zurillo

February 2010: Entrepreneur Knowledge Series is introduced. First sessionhighlights clean energy practices with NYSERDA Coordinator Pat CourtneyStrong and Blue Springs Energy Principal Larry Simpson. More than 1,000members from the private and public sectors attend series events in thefirst 11 months.


How does the Accelerator fit into Orange County’soverall economic development initiatives?

If you think of economic development as a three-legged stool, the first leg isthe attraction of jobs and investment to our region. The second is the retentionof the existing job base and the third leg is the creation of jobs from within.Traditionally, Orange County has done a fairly good job in terms of the first twolegs, but not a lot of effort has gone into creating jobs.

We needed to come up with a vehicle to drive down the risk for early-stageentrepreneurs and innovative small-business owners. We did a lot of carefulstudying and analysis in the beginning, visiting more than half a dozen otherincubators in the region. We did the business plan and made a commitment interms of master leasing 10,000 square feet of brand new high-tech space atStewart Airport for a facility that enables entrepreneurs to come to us. Ourmessage is, “We’re interested in your ideas and if they have merit, we’ll subsidize your operating costs and help with market research.” After a carefulevaluation, we make a determination if we want to invest in the company todrive down their risk and start-up costs.

We projected it would take us a minimum of three years to fill up the space,but we did it in 15 months. We attracted 17 clients, which currently employ 75people. [One of the clients has since left, although a principal subsequentlystayed on to start his own company.] These companies are projected to createmore than 300 high-tech, high-paying jobs in Orange County over the nextfew years.

What unique advantages does the Accelerator offer clients?

First of all, we have an unbeatable location. We’re just 50 miles fromManhattan, situated on the grounds of Stewart Airport in a corporate park, with

a conference room just minutes from the terminal. That’s a great selling pointfor us. We have clients who, are either principals or investors from California,Canada, Boston, and Washington, who come in and out of here, through theairport. When they’re doing business with the Accelerator, they can enjoy theperk of going down to Manhattan for a Broadway show or a Yankees game.

Actually, it’s a multi-modal location. We have not only runways at our doorstepbut also two intersecting highways [I-87 and I-84] less than half a mile away andtwo rail sidings. The Hudson River is just two miles to the east. The four Rs of transportation—runways, roads, rail, and rivers—are a big part of our tool kit,which we optimize when talking to a client. From a macro perspective, we are at the midway point of the Boston-to-Washington corridor with its 55 million customers, a nearly $3 trillion economy equivalent in size to the Chinese market.

Secondly, when you walk through our front door, you don’t have to go anywhere else. The Hudson Valley Economic Development Corporation, theOrange County Foreign Trade Zone, and the regional office for the New YorkState Empire Development Corporation are under our roof or nearby. We canassemble all of the key members of our team just by calling—if we don’tbump into them in the hallway.

And thirdly, the other thing that’s very important here is what I call our DNA of success. We’re very much customer driven. We get excited about helpingentrepreneurs and creating jobs, creating wealth. We let our passion andregard for capitalism drive us. Clients see that right away. You don’t have tomake three phone calls to make an appointment. We believe very much inthat old sentiment, “If not now, when.”

Who are you targeting?Based on our initial research, we decided to focus on three clusters: life

sciences, or bio tech, renewable and alternative energy, and digital technology(web-based software development). However, we’re not exclusive to them:

Q&A with Michael DiTullo

Managing director Michael DiTullo is not only the Accelerator’smain facilitator, salesperson, and dealmaker, he’s also the residentbusiness and economic development expert, with 25 years ofexperience under his belt. Here he talks about the key factors thathave made the Accelerator a success and inspiring model for otherincubators in the state.

March 2010: Associate Client Program is introduced,offering all the benefits of the Accelerator without theneed to lease.

9OCBA / WINTER 2011

We’re market driven, which means every day we change our strategy and objectives. Our sweet spot is early-stage startups, which have already developeda product or service and applied for or obtained a patent—companies thatalready have some early-stage investors and maybe even are producing somerevenue. We’re here to help them get from the red zone into the end zone.

However, if someone comes to us with just an idea, we won’t say, “Sorry, we can’t help you.” We’ll assist them a little bit and point them in the rightdirection for putting together a business plan or doing market research.

What does it cost to be part of the Accelerator?If you are starting a business and coming into the Accelerator, you sign

a three-year lease. The first year you pay 60 percent of the market rate for electricity, utilities, use of the common area, and other expenses, whichincreases so that by the end of the third year you’re paying the market rate.We’re subsidizing you early on. Instead of sitting in the bank, we’re putting that money right back out there to create wealth.

How would you describe the Accelerator’s culture ofentrepreneurialism?

We are very entrepreneurial and very innovative ourselves. We lead byexample. And we bring a whole bundle of professional experts to the table. We put together roundtables that deal with financing, business plan development, marketing, launching your website, and other pertinent topics.We bring this expertise to our clients one on one.

Another thing that happens here is what some people might describe asthe “water-cooler effect.” Ideas and suggestions cross-pollinate; clients are hereon a daily basis and are constantly networking. When someone has a particularneed, for example, another client will say, “I had that problem two months ago”and offer a solution. Every six weeks or so we have a pizza roundtable, in whichall the clients get together for a couple of hours and share their successes, theirneeds and challenges, and their goals over the next month or two. This createsa real synergy. There’s a sense of family here. It’s not something we anticipated.

What expertise and qualifications do you yourselfbring to the table?

I’ve been involved in economic development in the Hudson Valley for aquarter of a century. From 1986 to 1996, I served as the first CEO of the Orange County Partnership, which was involved in creating new public-private economic development organizations for Orange County and attracting corporate investment from around the world. After that, for nineyears I was CEO of Pattern for Progress, a regional economic developmentthink tank covering nine counties that deals with public policy issues.

How would you best describe your role now?I have long worked with companies on site searches, securing a location

and helping them go through the approval process, as well as providing helpwith their incentive packages and other aspects of their business. It’s a big plus that we offer this expertise in house. Taking clients out on site visits andsetting up meetings with the New York State Department of EnvironmentalConservation or Port Authority of New York and New Jersey are things I can

do in my sleep. It’s a great competitive advantage we bring to the picture.When you peel away the layers of the onion, I am involved in sales. I sell

the region and in many ways try to convince residents that the number-onepriority is jobs. Everyone talks about the quality of life, the open space, beautiful lakes and golf courses, clean air and water…we love all those thingsand strive for those enhancements, but at the end of the day without the dignity of a weekly paycheck, how can people enjoy that? The rock is economic vitality. I’ve been a real advocate of that throughout my career.

How has the Accelerator evolved since it waslaunched in October 2009?

Our business model called for resident clients, who would lease a certainamount of space, from several hundred to several thousand square feet.However, we learned a few months after opening that entrepreneurs from thearea also wanted to come here, because they loved the building with its full-time reception and waiting areas, two conference rooms with state-of-the-artvideoconferencing, printing facilities, and kitchen. They aspired to utilize thoseamenities and meet with clients here, though they didn’t need an office. As aresult, we developed our associate client program, which provides clients withall of the amenities and the availability of expertise that a resident client gets,except you don’t have to lease any square footage. The monthly rate is abouthalf of the regular fee.

How many associate clients do you currently have?Seven. We evaluate their needs and make a decision on the charge based

on the number of hours they’ll be here. You can get in here for as little as $300 a month.

What other patterns have you noticed and respondedto since opening your doors?

A lot of our clients are veterans. Many of them were officers in the Air Forceand a few are West Point graduates, including two Purple Heart honorees. The Air National Guard and Marine Corps have a base at Stewart Airport, andWest Point is located nearby, which means a lot of military personnel live inthe area. We’ve had clients come in here wearing their fatigues.

What attributes do your clients have in common?If you’re going to create jobs from within the country, the real currency is

brainpower. Now more than ever, in a global economy, smart money followssmart people, so if we can hold onto or attract smart people to the Accelerator,we’ll enhance our competiveness. Our clients include a former IBM Ph.D., twoformer senior executives at Dow Jones, a former senior associate at a majorpharmaceutical company, a former executive producer at ESPN, and, as mentioned, two West Point graduates. Many of our clients worked for largeglobal corporations prior to starting their own companies.

There are certain attributes that will increase the odds of a person having a successful business, which involves coming up with a good business plan, raisingcapital, offering a good product or service, and doing the necessary marketresearch. Unless you’re willing to perspire, have perseverance, work 24/7, and

April 2010: Phase II fit-up is completed one year ahead of schedule, paving the way for five more early-stage innovators. While renovations are ongoing, Enterprise DevelopmentDirector Peter Gregory and Managing Director Michael J. DiTullo visit incubators and startupsin Louisiana, including business accelerators at Tulane University in New Orleans andLouisiana State University in Baton Rouge.


take risks, you won’t be successful. There’s a certain personality profile key to thesuccessful entrepreneur. You also have to believe in capitalism. Those are qualitieswe look for when interviewing clients and prospects. Since we’ve been open,we’ve had more than 140 inquiries. We’ve looked at 70 business plans, and ofthose, we accepted 17 clients.

The Accelerator is focused on small-business startups. Isthat indicative of a paradigm shift in the primary focusof Orange County’s economic development efforts?

Yes, and not just locally: We’re seeing a focus on small on the national level. Small business is becoming much more paramount and involved in the dialog when it comes to the federal budget. More resources are being putinto the Small Business Administration. When you look at job creation—andwe know job creation is not keeping up right now— about 130,000 Americansenter the workforce each month. You have to gain that many jobs just to stay even. And most of those jobs are coming from small businesses: Whenyou look at the monthly U.S. Department of Labor report, it’s not unusual tosee 70 to 80 percent of new jobs created by firms with 100 employees or less.New companies hire more people and keep them. They create more jobs that are highly paid and high tech. When you read about layoffs, it’s theFortune 500 companies that are shedding jobs.

Now more than ever, it’s important to prepare the soil for the seed. That’swhat we’re doing—cultivating and fertilizing the soil so the seed can flourish. All big business was at some point a small business. Microsoft, for example, started out with two employees. We have some really exciting entrepreneurswho since they came here have grown three-, four-, five-fold already, so who’s to say the next Microsoft isn’t taking root right here? We think some of the clients we have will be winners and become important employers here in Orange County.

What’s one of your biggest challenges?The reality is, New York is the most costly state in America in which to

do business. We compete with the image, perception, and paradigm of thestate as anti-business. That’s one of the reasons we’re here, to help mitigateboth the perception and reality. I have to say both the rhetoric and early doses of reality are better than before. Ken Adams, who was the president ofthe New York State Business Council and is the new Commissioner of EmpireState Development, gets the whole idea of the need to nurture competitivesmall businesses. He understands that subsidizing the early stage of innovationis really the future of building a sustainable economy and transforming the state into a world-class competitor. We are seeing change. For example,the 2011 state budget is actually less than the prior year, which I don’t thinkhas ever happened before. We’re starting to see a cap on property taxes. These are hopeful signals that Governor Cuomo understands there’s nothing left to tax.

Has there been any kind of ripple effect from theAccelerator?

Especially now, with the way the economy is, it’s important to go back tothe fundamentals of sound business, which is what we’ve done. As we travelaround the Northeast, we’re being told that people are talking about using the facility as an example of an effective development strategy. The City ofYonkers and New Rochelle have both visited with us. Yonkers has since opened up an incubator, crediting us as their inspiration and mentor.

What factors most account for the Accelerator’s success?

Flexibility is key. Responding to the marketplace is key. Being motivated in a way in which you can service customers’ needs and ultimately find solutionsto accommodate entrepreneurs’ needs is key. u

In business for your business!

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11OCBA / WINTER 2011

Phil, the Accelerator was your brainchild. What inspired you?Phil Crotty: I have four grown children who were raised in Orange Countyand attended Cornwall public schools. They all went to college in Boston, married, and stayed there because of the lack of good jobs here. The fact is,we’re not going to have the next Honda automobile plant helicoptering intoOrange County, so we have to start at the other end and create the high-techjobs of the future. We’ve got good schools, talented young people and smartretirees, and a great infrastructure.

Our economic engine is Stewart International Airport, and I knew we had anaggressive IDA with a few dollars in the bank. Against that background, I wasinvited by Anthony Campagiorni, president and CEO of the Hudson ValleyEconomic Development Corp., to travel to Albany in December of 2008. Wevisited the business incubator at Rensselaer Polytechnic Institute and sawsome of its successes in working with entrepreneurs. Afterwards JimmyO’Donnell and I took a look at websites for incubators in the Northeast andselected one to look at in Lehigh, Pennsylvania. We went there in March 2009and liked what we saw. They had graduated 80 businesses, and we said to ourselves, if they can do it in Lehigh, we can do it in Orange County.

I have an MBA, so I wrote the business plan and presented it to ChairmanPetro and the executive director, who refined it. We took it to the IDA boardand County Executive Ed Diana, who modified it and gave us the okay.James Petro: Phil first came to my house with the business plan in January2009. We had the grand opening less than a year later, on October 27, 2009.How’s that for fast government action? Everyone was on board.

Describe your successes to date.James O’Donnell: So far, the Accelerator has resulted in 17 brand new companies and 75 new jobs. Crotty: After only two years our first client, Continental Organics, has graduated and is creating another 125 jobs. [Continental has] recently hired a couple of biologists, which are nice jobs. The groundbreaking ceremony for their new building was on September 8. That was a proud day for the Accelerator.

What parameters do you set for prospective clients? Petro: In order to come into the Accelerator, you have to meet certain requirements established by me and the team, which includes Phil, Jim, Mike [DiTullo] and Peter [Gregory]. You need to have a good business plan. Our success is strictly measured in job creation, and it’s up to the board to pick the right startups in the beginning.

Orange County IDA Roundtable:Talking about Two Years of Solid Success forthe Orange County Business Accelerator

The Orange County Business Accelerator is a project of the Orange County Industrial Development Agency (IDA), which offers mortgage tax and sales taxabatements to businesses as well as payment-in-lieu-of-taxes programs to promote economic growth in the county. The IDA started the Accelerator as a way to spur the creation of new jobs by providing innovative startups with the support they need to get off the ground. At a meeting at the

Accelerator, Orange County IDA Chairman James R. Petro, Jr., Deputy County Executive and Executive Director of the IDA James D. O’Donnell, and IDA Attorney Philip A. Crotty discussed the key role the center is playing in Orange County’s economic development efforts.

Photos: J. Oldham

June-September 2010: The Accelerator travels the country to find ways to improve client services. Peter Gregory spends time in New York City at the Polytechnic Institute of New York University, which runs three incubators.

Michael J. DiTullo


What are some of the advantages the Accelerator offers to fledgling companies? Crotty: We try to create an environment that fosters a synergy among theclients. In addition to office space, they get mentoring. We bring in experts to talk to them about banking, how to write a business plan, and other important topics. Plus, we have a pretty good ability to attract significant government officials: State Senator Larkin, County Executive Diana, SenatorGillibrand, Senator Schumer, Congressman Hinchey, Congresswoman Haworth, and former Governor Patterson have all been here more than once. Clients get a chance to rub elbows with important people in business and government. They also get to interact with each other—by, for example, attending our business working lunches, where they can share ideas.

How did you decide on the cluster industries of IT, life sciences,and renewable energy and agribusiness?Crotty: We looked around at the surrounding counties. To the east is IBM,which is a natural tie-in for IT startups. To the south, in Rockland County andnorthern New Jersey, there’s a heavy pharmaceutical presence; we thought we should be able to lock onto that with life science companies. The newOrange Regional Medical Center is another good fit. To the north, in UlsterCounty, there’s The Solar Energy Consortium (TSEC), which is a nice niche.We’ve also discovered a major subcategory in veteran-owned businesses aswell as agribusiness.

Any clients that don’t fit into those categories?O’Donnell: Yes. We were approached by the Ethan Allen Personnel Group,which has an office in Dutchess County and a satellite office in Orange County.They weren’t on our targeted playing field. However, we realized that if we get the right companies they will need personnel, so why not have an employment company right here? They’ve been an excellent client.

How is the Accelerator financed?Petro: The three-year plan presented to the IDA calls for a budget of approximately $1 million. The rents collected by the Accelerator are writtenback quarterly to the IDA, which partly offsets the $1 million. We’re subsidizing theentire building and a portion of the rents and paying salaries out of this budget.

What’s the Accelerator’s tie-in to the state’s economic development agency, and how can that help clients when they graduate?O’Donnell: Governor Cuomo has rolled out regional economic developmentcouncils. One of the principals of Continental Organics has a seat on that council, and I represent Orange County. And we’re collaborating with VinnieCozzolino, CEO of TSEC, who’s also on the council. Any project that gets statefunding will have to go through those councils, so having the Accelerator represented on the council and our first new business about to graduate positions us pretty well with those guys.

When you are close to graduating, you need some type of benefit project.We invest money in our clients to get them up and running. It’s like preparingto fill a stadium for a football team: The stadium is the county and we’re putting

people in the seats. There’s no reason new companies have to go anywhere elseto be successful. Everything is either here or will be brought to them.

Does the IDA own the building?Crotty: No. We have a three-year lease with options from Albany-based FirstColumbia Development Corp., which has a 99-year lease from the Town ofNew Windsor, which owns the 260 acres of land around Stewart Airport. Petro: We have leased 10,000 square feet for an average of $16.50 per foot for three years. We rent out the space at different rates. For example, if you take the east corner, which has windows overlooking the airport, you pay

more than for the back corner.

Has the Accelerator helped your economic development efforts in unexpected ways? O’Donnell: Definitely. There have been various tentacles. For example, we put in for a grant for a high-tech lighting consortium to be located in the City of Newburgh. Without the buzz generated by the Accelerator, the principal of the consortium wouldn’t have known about this location.

November 2010: Phase III fit-up is underway to allow for three additionaloffice and innovation suites. Two new speaker series are introduced: Pop-upKnowledge Series and Service Provider Series. Skip Weisman presents“Influencing with Integrity” to more than 25 attendees at the Accelerator’sfirst Pop-Up Knowledge Series event.

James R. Petro


Petro: They say imitation is the best form of flattery. Two months ago a representative from the City of Yonkers and the mayor of New Rochelle contacted us, asking how they could go about building their own accelerator.They had read about us, and spent half a day visiting.

Is the IDA undertaking any related projects?O’Donnell: We’re also going to visit a couple of educational institutions to getideas about how we could create jobs courses at Orange County CommunityCollege. We plan to visit an institution upstate, another one in Maryland, and acollege in Ohio that has 40 courses matched with 40 different industries. Crotty: There’s a shortage of two million jobs in this country. We’re not talkingabout retraining a person to work on an assembly line, we’re talking abouttraining people for computer manufacturing, from the computer to the laser tothe robot. Those are $100,000-a-year jobs.

We also want to enhance the entrepreneurial spirit that is ripe in Americaand especially ripe in New York State. In the next year we plan to focus on starting a venture capital program, for which the IDA has authorized some money.

The Accelerator is part of Foreign Trade Zone 37. How will you take advantage of the benefits that come with this?O’Donnell: We are currently reaching out to three countries: China, Turkey,and Israel. We are setting up meetings with their local government officials in the state about the trade benefits available associated with the airport. We’re trying to get international companies and expect the Port Authority to assist us. Also, the way the law was passed in Orange County, we’re able to go anywhere in New York State and give them the benefits of the foreigntrade zone for a fee. We just did a deal with Auburn, NY. You can definitely see an uptick in Foreign Trade Zone activity.

The Accelerator was launched in a challenging economy. Petro: This is not a business-friendly time. This administration keeps drumming into everyone’s head to share the wealth and pay your fair share.With such a message, why would anyone get involved? I think it has tochange. I’ve taken criticism for starting the Accelerator at such a bad time, but maybe it’s the best time. We’ve got a graduate, and we are producing jobs. Crotty: It’s our local stimulus.

What’s the next step?O’Donnell: The vision is to have a waiting list when the economy turnsaround. In the future, we might look to construct our own building, offering one-stop shopping as a way to attract productive companies with high-paying jobs. Companies would have instant access to state incentives, the IDA, and the Accelerator. We would work with the OrangeCounty Partnership to find companies.

It sounds like this has been very much a team effort. Petro: We get along very well, and we’ve been working together for five years.O’Donnell: We enjoy taking on exciting challenges. You wake up in the morn-ing and it’s fun to go to work. You never know what phone call you’ll get orhow many people you’ll get to meet that day. New York is open for business,and the place to be is Orange County.

The Accelerator isn’t moving, but it will soon get a new address.O’Donnell: That’s right, it’ll be located not on London Avenue, but on Crotty Lane. When the New Windsor Town Board passed the resolution for the name change of the road, it noted that Phil was instrumental when he was an attorney for New Windsor in implementing the deal with the U.S. government that enabled our landlord, First Columbia, to obtain 260 acres of government land from the government for $1.

Phil, how do you feel about that? Crotty: I’m very honored. u

March 2011: TheAccelerator’s at fullcapacity with 17 clientsand tenants and morethan 50 on-site jobs.

September 2011: Continental Organics, our firstclients, holds groundbreaking and preview of new900,000-square-foot, $50 million aquaculture facilityin New Windsor, NY. Upon completion, it will employ125 people!

Philip A. Crotty


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Business Seminars Share the KnowledgeEducational seminars by leading experts provide inside tips on everything

from web marketing to pitching angel investors. “The idea was to bring outsiders in here to raise the bar and show people what’s it like in areas of dealflow—how to do it right and at a profit,” says Gregory. The seminars also attract“strong friendlies” from the community as potential clients.

The Accelerator’s Entrepreneur Knowledge Series, held monthly on the fourthWednesday at noon, kicked off in February 2010 with a presentation on cloudcomputing, followed by seminars on sustainability, financing, formations, andweb business makeovers. Then last fall the Accelerator introduced a weeklybreakfast Pop-Up Knowledge Series, from which have emerged hot topics likesolutions to the perils of hiring (covering changes to regulations and otherhuman resources developments). Gregory is also developing a series focused onweb market research identifying “major markets—how do you know who’s outthere you can sell to, and how you determine how big the market is,” he explains.

The Service Provider Series features area companies pitching their productsand services. “If a company that can benefit our clients wants to promote itself,we’re all for it,” Gregory says. “We let them host the meeting, and people coming in know this is a strong advertisement for the company.”

The Accelerator’s educational seminars are open to all Hudson Valley businesses. Attendance ranges up to 50 people. Typically, following a morningpresentation, Gregory says, “I’m busy until the end of that day with the follow-up from all the attending businesses.”

Marketing the Foreign Trade ZoneThe Accelerator is located in Foreign Trade Zone 37—“a great lead card to play”

in attracting companies importing goods to the area, and offering several benefits. Companies pay a tariff only on goods actually sold, and can integrate allthe components shipped in for a product assembled here and pay a tariff on thefinished product only, which is often less than paying a tariff on each component.Plus, companies can consolidate shipment invoices on a weekly basis, paying justone shipment fee a week, versus several—potentially saving thousands of dollars.

Orange County is allowed to offer Foreign Trade Zone (FTZ) benefits to companies in other counties, says Gregory. So far, companies in Rockland,Dutchess, and Cayuga counties have signed on. “We’re a stop-gap measureuntil the other counties get their own foreign trade zones,” Gregory explains.

Companies signing on must pay a startup fee and purchase government-approved software that ensures compliance with FTZ regulations. Companiesalso must designate their facility as FTZ space and agree to government andagency site visits.

While FTZ 37 “has been an Orange County asset since 1977,” says Gregory, in recent years only a handful of companies have taken advantage of the benefits, due to the soft economy. However, that’s beginning to change:

“With the economy waking up in the last 12 months,” Gregory notes, “therehave been inquiries from companies suddenly showing interest.”

Helping Veteran-Owned BusinessesApproximately half of the Accelerator’s client businesses are owned or

managed by veterans, which at first surprised Gregory. “When we opened our doors, we never knew that there was a natural population of veterans inthe area,” he says. He attributes the trend to the presence of Air National Guard and Marine Reserve units at Stewart Airport and the proximity of theU.S. Military Academy at West Point.

The Accelerator is getting the welcome out to veterans, “marketing, all theway to Albany, letting people know we naturally help businesspeople comingin from military service and have an affinity for veterans,” Gregory says. Whilebusiness incentives targeted to returning veterans exist, they are often mired inred tape, so Gregory is developing a program to expedite the process. “We’dlike to aggregate the programs that are out there and help simplify the processfor vets of receiving these benefits,” he says.

Perfectly Positioned for GrowthWith experience in several regions, Gregory has a unique perspective on

Orange County’s business environment. His conclusion: It’s second to none.“This is a great place for talented entrepreneurs to start a business,” he says.“When visitors from the outside come up the hill to the Accelerator, it’s likecoming into the EmeraldCity; we love to see theirsurprise when they getthe first view of thismajor international air-port spread at their feet.”

“The very sophisticatedbusinesses that come tous interested in locatinghere” are a boon. “Ourcompanies have greatexecutive teams,” Gregorynotes. “There’s a new metric here, which is howmany executives whoused to cross the TappanZee Bridge in the morningwe’ve turned around. The number is definitely growing.” u


Introducing the Accelerator’s Value-Added Benefits

Peter Gregory

Peter Gregory has a long track record in helping startup companies get off the ground. He worked at Xerox’s Palo Alto Research Center product innovation laboratory in Rochester, NY, founded a startup-business consultancy in 2001, and in 2005 joined Florida’s statewide business incubator network. Since then, he’s helped bring startups to market in Princeton, NJ and Atlanta. A Poughkeepsie native, Gregory returned to the Hudson Valley in 2009 to create a company

business plan on behalf of The Solar Energy Consortium in Ulster County and went on to write grants with the Accelerator’s Michael DiTullo. In February 2010, Gregory became the enterprise development director at the Accelerator, where he oversees the educational seminars program; serves as

marketing director for the Orange County Foreign Trade Zone; and is developing a program targeted to veterans, who comprise a significant number of the owners and managers represented by client businesses.

OCBA Newsletter Winter 2011

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