Berkeley staff aims to grow city’s ‘innovation ecosystem’

Polly Armstrong presents the Berkeley Chamber of Commerce's first Visionary Awards at the Skydeck. Photo: Mark Coplan/BUSD

Last fall, the Berkeley Chamber of Commerce presented its first Visionary Awards. The event was held at the Berkeley Skydeck, an “incubator accelerator” designed to help startups grow. The awards program and Skydeck itself are among various recent efforts aimed to boost Berkeley’s “innovation ecosystem.” Photo: Mark Coplan/BUSD

The city of Berkeley has, in recent years, been working to make the community a better place for technological innovation via efforts to fight “brain drain,” make it easier to find office space, and create connections among its more than 300 startups to strengthen the “fabric of the innovation ecosystem,” city staff told council members during a special session last week.

The city is among the top technological and intellectual centers in the country, due to its proximity to institutions such as the University of California at Berkeley and the Lawrence Berkeley National Laboratory. But it has struggled to keep creatives based within the city limits due to the pull of Silicon Valley, limited room for businesses to grow, an antiquated business permitting process and a lack of connections among startups, said city staff last Tuesday night. Some have even described the atmosphere, previously, as “toxic.”

When those companies and entrepreneurs leave the city, they take with them valuable jobs, taxes, opportunities and resources that could otherwise be a boon to Berkeley. Keeping those jobs is especially important, in part, due to “multiplier” effects, said staff. That is, for every job created in the high-tech sector, more than four jobs are then created in other sectors, according to a December 2012 report cited by staff last week. By comparison, new manufacturing jobs are associated with the creation of less than two other positions.

The city’s Office of Economic Development, run by director Michael Caplan, shared with the Berkeley City Council on Tuesday night many of the ways he and members of his staff, including Jennifer Cogley, have been trying to address those problems, reportedly with positive results. He also noted various growth opportunities the city should try to harness going forward. (An overview of his presentation is available here.)

Council members expressed excitement about the opportunities, and encouraged continuing efforts toward improvement, particularly in the realms of helping startups remain in Berkeley by streamlining the permitting process; increasing high-speed and larger-scale data connectivity; and perhaps reworking some of the city’s zoning definitions, or their interpretation and application, to break down existing barriers.

According to data presented last week, there are more than 300 startups in Berkeley, with concentrations in bioscience, Cleantech, big data and enterprise software. At least 80 of those companies are concentrated in the downtown area near to the UC Berkeley campus.

The East Bay is “well positioned” to host these endeavors due to its world-class research institutions, high numbers of college graduates and also its ability to attract venture capital to fund new enterprises. According to Caplan’s report, Alameda County was among the top 10 counties in the nation to attract venture capital across a wide range of industries. The county is also among the top in the nation in terms of patent production per capita. High numbers of PhD recipients, and millions — perhaps billions — of research dollars are among other local benefits.

All these forces give Berkeley an edge, which the city has been trying to harness using the framework of an “innovation ecosystem,” said staff.

“The phrase ‘Innovation Ecosystem’ refers to the environment in which interactions between various actors and institutions spawn successful company formation,” according to Caplan’s report. “The elements of a healthy ecosystem typically include educational and research organizations, corporate research institutes, business schools, a skilled labor force, experienced entrepreneurs, sources of capital, engaged economic development and business assistance organizations, and supportive policy makers. Berkeley is well endowed with all of these and staff has been working to support improved interaction and alignment among the various elements.”

Some of the initiatives that have come from the Office of Economic Development, or have been supported by it, include the creation in 2010 of the Berkeley Startup Cluster; the development of new events and networking opportunities for local startups; the opening in 2011 of the Berkeley SkyDeck Accelerator; and the creation of a new website, LocateinBerkeley.com, that helps local businesses find appropriate commercial spaces.

The city’s Office of Economic Development has taken on or aided in these efforts in collaboration with the Downtown Berkeley Association, the Berkeley Chamber of Commerce and UC Berkeley. (Read more about each of them here.) Deepening those partnerships will continue to play an important role moving forward, staff said.

Learning more about Berkeley startups

Last fall, Economic Development staff surveyed nearly 500 people who work for approximately 350 Berkeley startups to learn more about the community. They found that most — 120 — of the companies were focused on software development, with significant numbers also in the biosciences (14%), Cleantech (13%), professional services (15%), consumer products (8%) and electronics or devices (7%).

Most of those businesses, nearly 50%, are concentrated downtown, with many also in West Berkeley due to an increasing amount of office space available there.

The survey also found that 73% of respondents said they had a “fully deployed” product or service of some kind, as opposed to something still in development.

Most of the startups noted they had been able to launch with relatively low amounts of funding, staff wrote. About 43% raised $100,000 or less; another 18% raised $500,000 to $1 million; and roughly a quarter had raised more than $1 million. For most (61%), “bootstrapping” had been the main avenue for fundraising, with another 45% relying on “Angel” investors. Only four — all of which were software companies that are located downtown — had received some type of venture capital.

The survey found favorable attitudes toward Berkeley from many respondents, but also noted concerns about the city’s ability to support growth over time.

“While the majority of respondents would ‘recommend Berkeley as a location,’ many used the comments field in response to this question,” according to Caplan’s report. “Comments included concerns about being able to recruit competent staff, access to sufficient office space, quality of life issues on Downtown’s streets, and Berkeley regulations and taxes as compared to neighboring cities.”

Areas for growth noted by Caplan include raising Berkeley’s profile as a good place for these businesses to grow; deepening the collaboration between the city and the local startup community; more meet-up and pitch events; and the creation of better commercial office space around the city.

Business licensing improvements in the works

Of key interest to council members was also the improvement of the city’s business licensing process. In recent years, the city has taken steps to streamline parts of that process, but it continues to pose barriers to local entrepreneurs. The city is beginning a transition to online permitting for some types of activity — renewals and license payments — but that effort is still in the nascent stages.

Last Tuesday, Caplan noted that “the permit issue” was among the biggest complaints raised by local startups, and said moving toward some of that online functionality will be a step in the right direction.

City Manager Christine Daniel told members of the City Council that, earlier this month, she had charged the Office of Economic Development with taking a close look at exactly how permitting works in Berkeley to see how the system can be improved. Staff plan to talk to customers and find out the obstacles with the aim of making the process more-user friendly.

That effort is still in the very early stages.

“This is obviously a significant undertaking and at this stage we are still trying to figure out the scope of the project and the best way to proceed,” Caplan said via email last week. He said staff would be meeting in the near future to hash out more of the details.

Mayor Tom Bates said that, though a variety of challenges remain, he is excited to see how Economic Development staff have been tackling the issue from a range of angles.

“It’s not one system. It’s the whole system. It’s all of these pieces coming together,” Bates said. “We’ve got a lot more work to do and we want to do it, to continue to grow, be vibrant, have meet-ups. But we also want to recognize that we’ve made great strides and it’s thanks to this department.”

Related:
Berkeley Chamber awards first Visionary awards (10.03.13)
In heart of Berkeley, startups disrupt, strut their stuff (04.12.13)
NextSpace to open new co-working offices in Berkeley (04.11.13)
Startups value Skydeck for views, closeness to Cal (06.25.12)
In case you missed it: Startup Berkeley Forum highlights (04.23.12)
‘Shark Tank’ it ain’t: Women center stage at pitch event (03.26.12)
Startup Forum: What does it take to make it in Berkeley? (03.06.12)
Skydeck hopes to boost Berkeley-based tech startups (03.01.12)
Startup Berkeley: does the past guide a city’s future? (02.23.12)
Berkeley for startups: Perfect or brain drain in action? (02.09.12)
Skydeck Innovation Center receives $50k boost (07.15.11)
Five steps to make Berkeley a high-tech mecca (03.03.11)

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  • Andrew

    Is there a list of such companies in Berkeley today?

  • emraguso

    I think they are listed on the website — http://berkeleystartupcluster.com — though I haven’t looked closely.

  • John Freeman

    How have the start-ups so far contributed to the city’s bottom line and to its overall economic health. I can see how the start-ups and VCs are benefiting here but I don’t see yet why this is supposedly a good use of city staff time and other resources.

  • Mark L

    Build office space instead of thousands of housing units.

  • Just Sayin’

    Even a college dropout could figure out how having more available jobs in Berkeley would be good for Berkeley residents.

  • Chris J

    I have heard that opening a business in berkeley can truly be nightmarish, but have no experience of it, only conventional wisdom which says it sucks. I know that opening restaurants is particularly onerous, but one would think that a simple start up otherwise would be a no brainer.

    Unless the no brain part is in the bureaucracy that approves businesses here.

  • Woolsey

    Want more businesses – lower the business tax! An anti-business atmosphere still pervades part of city government – sort of a reluctant acceptance of a necessary evil because the taxes can be used to fund various social initiatives.

  • Tizzielish

    Your statement makes sense but one office building on University ended up sold to the University, which took it off the tax rolls, right? And another office building at University and Shattuck was virtually empty for years and was recently sold.

    Which comes first, business tenants or office space? Plus to attract biz, more housing needed, right? Everyone can’t live in SF even if they want to and can afford it.

  • http://www.caviarcommunism.com/ West Bezerkeley

    Great article Emilie.

    These issues must continue to be put under the spotlight for the city to break the shackles that keep it in a time bubble and prevent forward progress. We need more office space and a welcoming municipal environment if we are to have expanded 21st century employment opportunities within city limits.

    Keep up the good reporting.

  • guest

    You should go down to Smoke on San Pablo between Dwight and Channing and talk to Tina Ferguson-Riffe. She told me she went from having an idea to serving food in about three weeks, She raved about how easy the city made it for her.

    Have the pulled pork sandwich while you’re there.

  • crasht

    Such as?

  • Just Sayin’

    Not everything is about money. It may not make much of a difference to the city coffers, but it certainly makes a difference to Berkeley citizens who can get local jobs instead of having to commute to work.

  • Just Wondering

    Shouldn’t the verb in the headline be ‘aims’ since ‘staff’ is singular?

  • Guest

    I’m convinced enough myself to now want to start brokering some deals –
    line up some funding and match it up to the right talent. We can do
    this right quick. It’s hard being new in town and not really knowing
    anyone yet :-) Machines and a year’s rent are expensive but I’ll bet
    the right people and opportunities are around.

  • emraguso

    Interesting question. Usually I treat it as singular but in this case, to me, it indicated “staff members” so I went with “aim.” It can be plural, as in 5e under Merriam Webster (http://www.merriam-webster.com/dictionary/staff).

  • Just Wondering

    Thanks for responding. In this article, ‘staff’ seems to refer to a group of workers, hence my conclusion that its use is singular. This is important to me because I notice my television using the plural form of verbs with singular nouns when the word’s definition includes multiple entities. For example, I see constructs such as ‘a couple want to find a house with yada yada yada.’ (Thanks, HGTV, not.)

    I’m OK with what you wrote as long as it is something different from this example.

  • emraguso

    I checked with a former copy editor I know and she confirmed you are correct! I’m going to fix that. Thank you for pointing it out. I will try to keep an eye out for that.

  • TN

    I live near Smoke and like the food. But the reason the owner had so little trouble with permitting is that there was already a fully permitted Mexican restaurant there before Smoke took over the location. Basically there was no legal change in use or in the building. So yeah, there was no permitting hassle.

    It is when there is a change in use, or when permits aren’t already in place that the businesses complain about the paper work and long, long delays.

  • Markos Moulitsas Zuniga

    It’s not an either-or situation. One of the problems I have in attracting talent to the home office in Berkeley is lack of affordable living space, and I actually pay employees really well. I finally threw in the towel, and most of my new hiring is remote.

  • Markos Moulitsas Zuniga

    Aside from the business climate stuff, most of which has merit, the city really needs a website that looks like it was built within the last 20 years and allows residents to conduct most business online. For example, if I need temporary parking permits, I shouldn’t have to go into an office to buy them.

  • Woolsey

    I thought the city made it difficult to get parking permits to up their take from parking tickets. They also have a max. You’re plain out of luck if you have a long-running construction project. Berkeley might be government by the people but it’s definitely not for the people.

  • guest

    Howdy, neighbor!

    How often do new restaurants open in commercial spaces that were not restaurants before? I don’t know, but I would suspect not very often. And there are numerous vacant restaurant spaces through town right now.

    Chef Tina has also taken advantage of a new and innovative micro-lending program, and she hires out of job-training programs for former cons and low-income folks.

    Like Chris J, I also had the impression — but no direct knowledge — that it was difficult to open a business, especially a restaurant, in Berkeley. So I was surprised to hear Chef Tina’s story and thought it was worth repeating. She’d been unemployed for three years and had never owned a small business before opening Smoke. She’s a real West Berkeley success story.

  • Marcialart

    Great story, Emily. GO Michael Caplan!

  • EBGuy

    Classic! 3d printing will be all the rage. Those who don’t remember the past…

  • TN

    I don’t know what the statistics are overall for restaurants in Berkeley opening in previously non-restaurant spaces versus those taking over from previous restaurants. But in the area around Dwight and San Pablo, Smoke, the Vietnamese place and the Thai places were all opened in spaces which were used as restaurants for a very long time. Sea Salt (now vacant), the pizza place and Cafe Trieste opened in spaces which were previously not restaurants or cafes. The last three establishments were developed by highly experienced Berkeley locals who obviously knew the ropes.

  • TN

    OOPS. I mis-remembered. The Sea Salt space was the Brick Hut and then later another breakfast/lunch place. I tend to forget because the second cafe was so forgettable. The owner seemed more attuned to PR and marketing than to the food.

  • smasht

    That doesn’t answer the question at all. What other forms of economic development are you suggesting they spend their time on?

  • John Freeman

    That doesn’t answer the question at all. What other forms of economic development are you suggesting they spend their time on?

    I guess you are saying that the OED should be doing its policy-formation work with as little information as possible?

    Sure, developing better econometrics is “indirect” economic development in the sense that it doesn’t directly close a deal for some new business. It is an economic development activity, anyway, if it leads to the City enacting better policies.

  • John Freeman

    what forms of economic development you think would be better alternatives.

    Someone in another comment mentioned 3D printing. In fact, it looks like Berkeley might be experiencing growth related to modern, high-precision, small-run, highly flexible manufacturing (more using subtractive than additive techniques at the moment).

    Here’s the situation:

    Historically and at present Berkeley is rich with precision machine shops. These have been modernizing to various degrees over the years.

    We have one increasingly famous, vertically integrated architectural design firm that does its own modern manufacturing in-house. We have high-end audio equipment makers who I believe outsource some of their needs in this area to the south bay. We have a US sales office for an international CNC equipment maker. We have a relatively new project consulting firm that helps projects through prototyping, crowdfunding, outsourcing to factories abroad, and order fulfillment. We still have a base-line of perennial demand from labs, marine repair folks, etc.

    So we’ve got and apparently we’re attracting more professional skills in this area and maybe there’s actually growth associated with all this activity.

    It’s hard to tell if this is a growth area because the City doesn’t develop suitable econometrics about the local economy.

    Maybe the OED should be looking into what it can do to help this along. What if we could attract one or two more companies like Swerve, say. And then would that create a local market for independent expansion of the manufacturing capacity (rather than relying on each company to individually buy more and more machines)?

    If people in Berkeley and the surrounds are doing their prototyping locally but still shipping off crowd-funded product runs to Asia, maybe OED can look for ways to encourage some import replacement — let’s have local robots make the 5000 iPhone-accessory doodads; let’s have local firms able to do more of the order fulfillment work.

    Is there real economic growth opportunity here? Can OED help by working with landlords? By promoting the city as a hub for this kind of activity? By courting firms that can really cement local demand for this kind of manufacturing capacity? By explaining to investors and creditors why this makes sense in the city and how the city can help with financing?

    Those are the kinds of questions I think OED ought to be doing work on.

    To me, these are much more interesting questions than whether the mayor’s friends who have some friends in the VC community can maybe have enough get-togethers to make the SkyDeck seem Really Important because synergies and research coming from the hill and new economy hand wave — you know?

  • John Freeman

    Check out the Berkeley folks (Swerve and Chris Anderson) in this report from the BBC (starts at minute 7:00).

    http://news.bbc.co.uk/today/hi/today/newsid_9776000/9776792.stm

  • flasht

    So basically you think the city should reach out to more manufacturers rather than just tech startups. Sounds good to me. Why was it so hard for you to say it?

  • Kloudless

    As a Berkeley-based startup started by four Cal grads, we’re excited to build our business here. Thanks for reporting on how the city is poised for growth, Emilie!

  • John Freeman

    So basically you think the city should reach out to more manufacturers rather than just tech startups.

    My answer hasn’t changed: I think the OED should work on developing and publishing better econometrics. The example of unknowns about manufacturing illustrates why that answer was a good answer in the first place. You’re confused.

    To me, it appears right now like our so-called “economic development” policies are driven on the basis of who is the best connected to the mayor rather than on the basis of public interest and well informed economic planning.

    Why was it so hard for you to say it?

    As I said, you’re confused. Hopefully less so, now.

  • trasht

    I think the OED should work on developing and publishing better econometrics.

    Endlessly saying “they should publish more data” whenever the city does something you don’t agree with doesn’t move anyone forward in a positive direction.

    The example of unknowns about manufacturing illustrates why that answer
    was a good answer in the first place. You’re confused.

    Weird. You clearly argue for investing more in West Berkeley type businesses here and you’ve been pushing for the city to invest more on the manufacturing side of town for 2+ years. I don’t understand people who make passionate arguments for things and then pull away from the subject immediately afterward.

    To me, it appears right now like our so-called “economic development”
    policies are driven on the basis of who is the best connected to the
    mayor rather than on the basis of public interest and well informed
    economic planning.

    Based on what? If the city shouldn’t invest in promoting a specific type of business without exhaustive research, is it fair to make claims like this without exhaustive proof?

  • guest

    Ummm… Are you making full use of the city’s publicly available information? OED does indeed keep detailed local econometrics, and rely heavily on data collected by that univiersity we have here. Here’s their report on manufacturing in West Berkeley, which has been flat or declining for many years: http://www.ci.berkeley.ca.us/City_Manager/Economic_Development/West_Berkeley_Business,_Employment_and_Labor_Force_Trends.aspx

    The reasons for this are well known and derive from macro-level trends that OED can’t really do much about. Labor and real estate in West Berkeley used to be cheap enough that it made sense to locate manufacturing there. That is no longer the case. That’s why Ellison Technologies has a sales office in West Berkeley and not a manufacturing facility.

    So, in a sense, you don’t need complex data to tell you why we don’t have an automated production facility making iPhone-accessory doodads in Berkeley. Commercial space is nearly an order of magnitude more expensive per square foot in Berkeley than in Antioch. If Antioch is just as well served by transportation infrastructure as Berkeley, and nowadays, it is, why would a manufacturer choose to locate here? And why should the city offer any incentives to an automated production facility with its associated low jobs density?

  • guest

    Kind of relevant to note that one of the primary reasons Swerve is in West Berkeley is that Michael Goldin is from here and his family already owns a great deal of commercial real estate on the west side. So Michael’s start-up costs were significantly lower than they would be for a manufacturer starting from scratch.

  • brasht

    Hush, now. Some of us prefer to make our needling complaints without the hindrance of facts.

  • John Freeman

    OED does indeed keep detailed local econometrics, and rely heavily on data collected by that univiersity we have here.

    I encourage you to examine the city’s web page more carefully.

    The city’s sectoral breakdown that lumps everything “manufacturing” into one big employment-numbers pile is too course to answer the questions raised here. It’s also very politicized (see below).

    The education level breakdown the city writes about is certainly a
    good sign for modern manufacturing.

    What’s really funny, though, is what you dubbed the “data collected by the university”. It’s funny if you know the full context the paper the City cites. The introduction to that paper gives a clue:

    Last May, the Mayor of Berkeley and the City Council settled a legal dispute with The University of California Berkeley (UCB) by approving an agreement for the UCB Long Range Development Plan. UCB agreed to begin payments for basic infrastructure use and strengthen planning and coordination around land use development. As a part of the Long Range Development Plan Settlement, UCB also made a commitment to explore opportunities to “encourage private spin-off businesses that might result from UC-related research to locate in Berkeley.” Spin-off businesses are those started by faculty or students, or with technologies generated on campus (and, in UCB’s case, the Lawrence Berkeley national Laboratory). In an effort to create a foundation for this partnership, the City requested information regarding best practices in similar cities with large universities that were successful in retaining spin-off businesses.

    The settlement agreement that refers to is the so-called “secret agreement” attributed mainly to the Mayor.

    Here’s the key thing about it: it isn’t design to answer a question like:

    “Is trying to become a start-up hub for spin-offs from Cal a good economic development strategy for the city?”

    It doesn’t try to answer that question at all — it was not meant to. Our city council did not ask the university to explore that question.

    This study was used to lay a supposed foundation for the failed changes to the West Berkeley Plan and for LBL’s failed expansion plans. It laid that foundation. It was a waste of everyone’s time.

    (Some people seem to want to retrospectively blame citizens who show up at city council meetings for BP’s and UC’s over-promising about bio-fuels, LBLs federal funding woes, and the like.)

    Commercial space is nearly an order of magnitude more expensive per square foot in Berkeley than in Antioch. If Antioch is just as well served by transportation infrastructure as Berkeley, and nowadays, it is, why would a manufacturer choose to locate here?

    Given that the idea of up-zoning has taken a bit of a beating, that LBL’s expansion plans have had major set-backs, and that the much hyped imminent biotech start-ups aren’t living up to promise — who knows what tomorrow may bring in rental agreements.

    That said, sure, it’s more expensive here. It’s an interesting and open question to me whether the potential concentration of flexible mfg. shops along-side artisans, architectural design firms, high end audio firms, some decent warehouse space, and a variety of professional services…. if that would be a healthy mix.

  • guest

    I got to this point:

    >The settlement agreement that refers to is the so-called “secret agreement” attributed mainly to the Mayor.

    And I realized that I was debating an unserious person. An agreement between a public university and a municipality is obviously not secret, and indeed, all documents related to the Long Range Development Plan Settlement are publicly available online.

    Then I got to the next sentence

    >Here’s the key thing about it: it isn’t design to answer a question like:

    Which makes no sense no matter how many times I read it, so I gave up.

    Good luck with your peculiar ideas.

  • gnasht

    Is this a joke? 50,000 pieces is next to nothing. Selling just 50,000 pieces would be considered a flop for most products.

  • John Freeman

    Selling just 50,000 pieces would be considered a flop for most products.

    For someone getting royalties what matters is what share of the revenue they get, how much that share cost them in money and effort, and how big is the opportunity to repeat such deals.

  • John Freeman

    An agreement between a public university and a municipality is obviously not secret,

    I guess you are unfamiliar with this part of Berkeley history. The settlement agreement is nicknamed “secret” because the council negotiated it and approved by the council behind closed doors

    As to your second question: the agreement simply asked the University to tell the city how (maybe) to retain university spin-offs. The agreement begs the question of whether it is good public policy to try to help the university that way.

  • John Freeman

    Without the university Berkeley would be Albany. Asking why we should
    help them is like a dog asking why he should fetch his master’s paper.

    That’d make a good campaign slogan for the council majority faction: “Berkeley is a dog. The Regents are its master. Go get the paper.”

  • Just Sayin’

    If you hate the university so much there are plenty of other cities in the bay area that haven’t had one at their center for the last 150 years.