There’s a Lesson in UCI’s Closure of Business Center
This holiday season David Blake, dean of the Graduate School of Management at UC Irvine, is playing Scrooge to the small-business community with his sudden closure last week of Accelerate Technology, a small-business development center in Irvine affiliated with the university.
Never mind that Accelerate served more than 200 high-tech businesses annually, helped direct $75 million in financing to them, was a standout among the 1,000 small-business development centers nationwide and was one of only 10 sites in the United States linked to ACE-Net, the Small Business Administration’s online venture capital network.
Nope, never mind Accelerate’s track record. The doors are shut tight. Blake dismantled in a few hours what took seven years to build.
And despite his insistence that the closure was sparked by a funding crisis and UCI’s desire to offer more to the small-business community, the way the closure was handled seems more the result of university hubris than goodwill toward small business.
Blake came on board two months ago and began evaluating the university’s service to small businesses. Accelerate Technology, with the forceful Tiffany Haugen in command, didn’t fit in with the UCI game plan and so had to go. “The real question is, can a technology-based operation exist in a university environment?” said Jere Glover, chief counsel for the SBA’s office of advocacy in Washington, D.C. “The university may not be entrepreneurial enough to accept entrepreneurship.”
That, in a nutshell, is a problem inherent in the way all small-business development centers, or SBDCs as they are called, must function nationwide. Partnerships among SBDCs, the SBA and universities are not always easy.
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Created in the 1930s, SBDCs are loosely overseen by the SBA. They receive partial federal funding and must get matching funds from other sources, usually community colleges, universities, state business programs or chambers of commerce.
They attract entrepreneurially minded directors--independent folks who can deal with uncertain funding, have a ground-level understanding of small business and are willing to experiment with new programs. But these same directors, if too freewheeling or too successful, can land in trouble.
SBA regional directors, mindful of federal rules and regulations, can rein in SBDCs that are overly experimental. And, increasingly, entrepreneurial programs at colleges have begun casting covetous eyes at SBDCs that carry their university logos.
Business schools with entrepreneurship programs can end up resenting their SBDC-affiliated directors if the directors get more attention in the press and more recognition in the industry than the university’s own faculty of small-business professors.
Or, universities may actually resent the aid to mom-and-pop businesses, like neighborhood dry-cleaners and child-care services, and yearn for aggressive, high-tech, high-growth businesses that can bring bragging rights, glory and donor bucks to the university.
“The basic conflict does exist,” said Scott Hague, immediate past chair of the SBA’s national SBDC advisory board and chief executive of the California Small Business Assn. “But it’s typically just ongoing battles. The SBDCs are not usually de-funded.”
In Accelerate’s case, the closure occurred because the university chafed under SBDC rules, said Haugen, the center’s founder and a co-owner of an Irvine investment company. Although some say Accelerate focused on smaller businesses, Haugen said clients included software developers, a light-engine manufacturer, a flexible-plastics inventor and a designer of a personal submarine.
“If these things take off, they can become multimillionaires,” Haugen said.
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Blake denied that the university had problems with federal rules and regulations. He said Accelerate faced a funding crisis--denial of state funds.
But state officials say they just went along with Blake’s decision to close Accelerate. Mike Marando, a spokesman with the California Trade and Commerce Agency, which supplied $350,000 in funding for the SBDC, said that the closure was “a personnel action that the university took on its own.”
UCI no longer even wants to have an SBDC affiliated with the campus, Marando said, adding that state officials will issue a request for bids early next year and hope to find a new operator by July 1.
Still, Blake insists the university wants to do more to aid small business.
“By April 1, we will have restructured and reconfigured ourselves so that we will be able to be more focused and concentrated and comprehensive in relationship with the small-business community,” he said.
UCI will have to move fast to accomplish that. The university must create a committee to devise a plan, develop programs, find financing and hire a staff, all of which Blake said can be done in a matter of months.
Meanwhile, Glover, who oversees ACE-Net, says it will look elsewhere for its California venture capital site. Accelerate clients who’ve been left in the lurch have been referred to the Santa Ana SBDC, even though that office does not specialize in high-tech businesses.
The bottom line is that Haugen, who saw the SBDC as her baby and adamantly opposed UCI’s attempts to modify its operations, may have been too uncooperative and seat-of-the-pants to work under the UCI system.
The subsequent brawl knocked out the center and gave the university a black eye, but the real loser is neither the center nor the university. The real loser is the small-business community, left sprawling on the canvas without needed resources.
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Times staff writer Vicki Torres can be reached at (213) 237-6553 or at vicki.torres@latimes.com
