Lawmakers call for probe of Oklahoma incubator program amid data collection concerns

This article was originally published by Oklahoma Voice.

OKLAHOMA CITY — Amid struggles with data collection and participation, two Republican lawmakers want to probe the long-term effectiveness of a state program designed to nurture new small businesses.

Rep. Chris Banning, R-Bixby, and Rep. Mike Lay, R-Jenks, said they want to examine the effectiveness of the state’s small business incubator program to determine if it is having the intended long-term impact, if it is being marketed effectively and if any changes need to be made to it.

The incubator program, which was created in 1988 through the Oklahoma Small Business Incubators Incentives Act, provides startup businesses with state tax exemptions for up to 10 years with an aim of diversifying local economies.

Incubators offer a variety of services to startup entrepreneurs, like providing office space and financial advice, with the goal of helping small businesses become financially viable and freestanding. Some incubators may qualify for additional support from local governments, universities and business development organizations.

A 2024 annual report released by the Oklahoma Department of Commerce found that there were 26 certified incubators and that 152 small businesses leased space from those incubators. The program created a total of 374 full-time jobs, 112 part-time employment opportunities and 43 internships, according to an analysis by the Oklahoma Department of Commerce. The program focused on supporting startups owned by women and minorities as well as environmental projects and telecommunications, according to the agency’s website.

Tenants generated $66.6 million in revenue and qualified for $3.3 million in tax exemptions, according to a 2023 analysis released by the state’s Incentive Evaluation Commission. The analysis found that 14 of the 25 incubators were in urban counties with seven operating in either Oklahoma City or Tulsa

The state Department of Commerce did not respond to multiple requests for comment.

Banning said the program would benefit from incorporating business analytics to improve data collection and reporting.

“If you’re going to accept this help, then somehow you would need to report back on how it helped you, so it can help others, just like how we do a 10-year census,” Banning said.

Lay said he would like to see the state refine its metrics to assess the program’s impact.

“Are these programs working, or are there improvements to be made?” Lay asked.

He said businesses may not be aware of the program’s existence, which raises additional questions about how well it’s being marketed by the Department of Commerce.

Brad Rickelman, secretary and treasurer of Oklahoma Business Incubator Association, said the program’s impact is difficult to measure due to challenges with data collection and reporting. His group focuses on the needs of Oklahoma’s entrepreneurs and works with startups in their early stages when they’re most vulnerable.

“The incentives are a nice way to raise visibility, not only causing interest but also helping grow businesses, even if there is a cost,” he said.

The National Business Innovation Association found that 87% of all businesses that graduated from incubator programs remained in existence after five years, the group said.

Oklahoma’s analysis found that over 780 small businesses have graduated from an incubator since the program’s inception over three decades ago. The state’s program website does not show how many are still in existence.

Rickelman said Oklahoma’s program needs a closer look. He said that better data reporting and collection would help increase the program’s visibility and showcase its successes. A lack of accurate data makes it difficult for lawmakers to assess the program’s effectiveness, he said.

Oklahoma’s incubator programs, meanwhile, need to better communicate the critical role they play in providing entrepreneurial support in communities outside of major cities and in bringing talent and skills into underserved areas, he said.

Janet Schwabe, a member of the Oklahoma Business Incubator Association and manager of the Pioneer Technology Center, a technical school incubator in Ponca City, said the current data collection process can result in incomplete or inconsistent information.

According to the Oklahoma Commerce Small Business Incubator annual report, the data reported comes from the incubator managers themselves.

Schwabe said this process can result in incomplete or inconsistent information.

“There are a lot of great stories about the tenants, but not enough statistical data,” she said. “We need to work harder to get better data.”

Another challenge is the lack of awareness, which limits the program’s effectiveness, and keeps many potential tenants unaware of what incubators offer, Schwabe said.

She said she is considering rebranding Pioneer Tech and changing the term “incubator” to something more easily understood.

“We’re hoping to build a new facility to bring in larger manufacturers and rebrand the name ‘incubator’ because a lot of people don’t know what it is,” she said.

Editor’s note: This story was produced through a reporting partnership between Oklahoma Voice and the University of Central Oklahoma’s journalism program.