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"
grow into profitable fledglings. Government incubators were set up
to offer inexpensive space and shared services. Privately-owned
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
last year, it reneged on its IPO and closed its Manhattan office.
As the Wall Street Journal reported on April 16, "the market
on both publicly traded incubators and the electronic commerce
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
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
"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
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.
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
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
"We put it in our newsletter for other people in the
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
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
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
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
joining his brother in 1989 as a general partner and chief financial
officer in the firm. (Interestingly, Edison’s most successful
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
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
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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