Four years in, Startup Sandbox remains ‘economic engine’ for Santa Cruz tech biz
The Westside bioscience incubator has helped a number of companies since it was founded in 2017, with many so-called “graduates” choosing to anchor their operations in the area, hire UC Santa Cruz alums or both — and without letting last year’s fires or the COVID-19 pandemic get in the way.
Tucked away a few meters away from Natural Bridges State Beach is a lab that would make Tony Stark and Bruce Banner giddy. It’s home to Startup Sandbox, one of the most successful incubators in Santa Cruz.
“Digital technology changed the foundation of the 20th century. Now biotechnology is changing the world in the first half of the 21st,” Startup Sandbox founder and CEO Lou Pambianco said.
Since it opened in 2017, the bioscience incubator has helped launch several successful companies, including Cruz Foam and Unnatural Products.
And while some of these companies might not be household names quite yet, the impact they are having on the local economy is noticeable.
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“It truly is an economic engine for Santa Cruz,” Pambianco said, noting that nine out of the 10 “graduate” Sandbox companies have decided to stay and anchor their headquarters in Santa Cruz. He estimates about 30% of Sandbox member companies have some connection to UCSC, whether through involvement by faculty members or hiring students and graduates.
For Pambianco, such job retention and economic footprint are a key part of Sandbox’s success and remain a goal for the incubator. In the 1980s, he started his first company, Corporate Development Partners, and developed the “exponential growth model” — a model he said is designed to turn a $0 revenue stream into a $1 billion stream within 10 years. Corporate Development Partners helped to establish strategies for Intel, Cisco and Conner Peripherals.
“It is simple, but difficult to execute,” Pambianco said of the model.
That business model is the same approach his team is trying to implement at Sandbox. His goal is to help create commercial investments for bioscience projects and businesses, largely developing out of UCSC’s pipeline.
The Sandbox is made up of two floors, including a lab with 40 workbenches. Usually, a company will launch using one workbench and expand to two within six months. The location can house up to 40 businesses, though 20 to 25 would be the ideal capacity, Pambianco said.
Startups can rent space and operate under a 24-month plan working inside the Sandbox. The goal is to “graduate” within those two years to a self-sustaining brick-and-mortar location.
“This is a key opportunity to really build a commercial presence for biotechnology,” he said. “Many of those companies that do graduate into the commercial market choose to stay here in Santa Cruz.”
Most of the businesses are able to operate via government small-business grants, venture capital or seed money from family and friends.
The 13,500-square-foot building was a derelict warehouse — just “cobwebs and a forklift,” Pambianco joked — before he turned it into the coworking space it is today.
The Sandbox’s first incarnation in August 2017 was equally humble. David Deamer, a UCSC professor, started one of his first companies at Sandbox inside the incubator’s break room. While the downstairs lab was still under construction, Deamer was able to use the break room, which was outfitted with a sink, running water, workbenches and a fume hood. It was enough to “go to work,” Pambianco said.
Bridging the connection from theory to practical application
Today, the Sandbox boasts a state-of-the-art lab and tissue culture lab on its first floor, with dozens of workbenches that businesses may rent out. On the second floor is a more traditional coworking space, outfitted with cubicles, conference rooms and other meeting space.
“One of our researches was the first to really understand how RNA functions,” Pambianco said. “We’ve developed critical nanopore technologies with Startup Sandbox.” Another of the researchers is working on combating macular degeneration, he added, which would help eliminate the rapid loss of vision caused by the disease.
And while some of the logistics inside Sandbox might very well go over the heads of the non-scientists among us, a number of the startups have made products for everyday application. One such example is Aeroasis, which is designing smart devices for indoor and outdoor gardening including a handheld UV fertilizer.
Cruz Foam is making biodegradable packaging — environmentally friendly foam made from shrimp shells.
Bioscience has a wide swath of uses — but it’s the bridge to the commercial sector that Pambianco believes is the biggest hurdle for many of these businesses. The ideas and research might be brilliant, but surviving outside of grant funding can be difficult.
“Our intent is to support companies to get their research done at the lowest cost,” he said.
Before the pandemic, the upstairs was used for conferences and events including elevator pitches, where entrepreneurs would have a few minutes to pitch their business plan, with winning pitches receiving some seed investment money. Often, the team will bring in UCSC staff or outside business leaders to share “what have they learned to pass onto these young entrepreneurs,” Pambianco said.
“It’s been rewarding to see in spite of the pandemic, despite the fires, that the Sandbox has continued to operate full time,” Pambianco said.
Pambianco said he hopes to have in-person gatherings and events return later this summer. The goal, he said, is to have at least 20 to 25 businesses operating out of the Sandbox and to continue to share knowledge among companies, the university and via events.
“It is a community of creativity,” he said.