Shared Spaces At Edison Venture

Corrections or additions?

These articles by Barbara Fox were prepared for the

April 25, 2001 edition of U.S. 1 Newspaper. All rights reserved.

Guest Rooms at the Office

Incubators were hot in the 1990s. Lots of entrepreneurs

hoped that an incubator could help their "new business"

embryos

grow into profitable fledglings. Government incubators were set up

to offer inexpensive space and shared services. Privately-owned

incubators

traded equity for legal advice and financial support. Because the

dotcom businesses did not require expensive laboratory space, they

were the incubator darlings.

The flashiest of the private hatcheries was Idealab, which Bill Gross

founded in California and expanded to Manhattan. Scheduled to go

public

last year, it reneged on its IPO and closed its Manhattan office.

As the Wall Street Journal reported on April 16, "the market

soured

on both publicly traded incubators and the electronic commerce

companies

Idealab was best known for."

Some of the private incubators scheduled to launch this year have

faded away, but the state-sponsored incubators are proliferating in

New Jersey, thanks to government funding (see story page 43).

Now another kind of informal nurturing environment is gaining

popularity.

It can be compared to the guest room or the au pair suite of a single

family home. John Martinson of Edison Venture Capital is making space

for young companies at his expanded headquarters on Lenox Drive. And

Ed Zschau of Princeton University has rented space in the university’s

old power plant on the Forrestal Campus.

Both point to the informality of their arrangements. "I don’t

really think of this as an incubator," says Zschau, who teaches

entrepreneurism at Princeton University’s engineering school. (His

name rhymes with "how" but starts with the "sh" sound.

"This is just a private place for me to work with entrepreneurs

and not have any kind of conflict of interest with the

university."

"We don’t call it an incubator," says Martinson. "We just

took the extra space because we thought it would be valuable."

The fund’s first choice for tenants would be its portfolio companies,

for someone who needs a sales office in Princeton or who doesn’t want

to commute.

In any case, as Martinson and Zschau provide inexpensive space to

nourish young companies, they also offer their intellectual capital.

In this risky market, fledglings need all the help they can get.

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Shared Spaces At Edison Venture

After 11 years on Lenox Drive Edison Venture Fund moved

to larger space in a different building and expanded to take up the

entire space that Goodson Newspapers had occupied. "The landlord

seemed anxious for us to pick up the extra space and put it back the

way it used to be," says John Martinson. The smallest of the

shared

office spaces is 12 by 14 feet. "We thought it could help our

portfolio companies. And because we invest locally, New York City

to Virginia, we tend to be a little more interactive than other

VCs."

"We put it in our newsletter for other people in the

entrepreneurial

community — and for accountants, attorneys, agents, and angels

— people who could interact with our business," says Ross

Martinson, John’s brother and a co-founder of the company. "We

would charge them what it costs, but we can be flexible on the lease,

and we can provide all the extras they may need — telephones,

data ports, a conference room, and secretarial help." The space

is priced at about $25 per rentable square foot, depending on the

features.

The Martinsons grew up in Wyckoff, where their father was head of

manufacturing for a firm that made railroad tracks and freight car

wheels. Another brother has a light manufacturing company, and a

sister

is an attorney. John Martinson graduated from the United States Air

Force Academy, Class of 1970, and has a master’s in astronautics from

Purdue and an MBA from Southern Illinois University. From 1979 to

1986 he was a principal of a Saddle Brook-based national venture

capital

firm, the InnoVen Group. He is a director of two public and 12 private

companies plus four not-for-profits.

Ross majored in economics at Yale, Class of 1976, and has an MS and

an MBA from New York University. He worked for Arthur Andersen, ABB

Financial Services, American Express Leasing, and Kidder Peabody

before

joining his brother in 1989 as a general partner and chief financial

officer in the firm. (Interestingly, Edison’s most successful

investment

was founded by two brothers; Best Software, in northern Virginia,

multiplied the investment times 25 times in just 11 years.) At Edison

John Martinson is the managing partner, and the other partners are

Gary Golding and Bruce Luehrs.

One of the shared space occupants is Joe Allegra, co-founder and CEO

of Princeton Softech, who lends his services as a venture consultant

for the fund. The former CEO of Princeton Softech, Allegra sold his

firm, now a 150-person company on Campus Drive, University Square

(off Alexander Road) and a wholly owned subsidiary of Computer

Horizons

Corp. Allegra founded the Software Association of New Jersey, which

was folded into the New Jersey Technology Council, and he has been

the chairman of the NJTC.

For Edison’s portfolio of companies Martinson cites growth rates that

average more than 30 percent per year and says the fund has invested

in more private companies in the five-state area than any other

venture

capital firm.

The fund aims to invest in businesses doing software development,

communications, and Internet and information technology. It offers

equity financing of from $1 to $5 million plus guidance to growing

companies with proprietary technologies or unique services in emerging

markets. It has invested more than $300 million and has financed more

than 100 expansion stage companies (www.edisonventure.com).

In a nod to the name of the company, artifacts from Thomas A. Edison

— old phonographs, coffee pots, irons, and spark plugs, along

with some of the inventor’s more than 1,000 patents — decorate

this office. "We view Edison, not just as an inventor, but also

as a businessperson and entrepreneur," says Martinson.

— Barbara Fox


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