Local Capital Programs Help Address Regional Gaps

Although the national venture capital investment continues to expand, many parts of the country still lack access to reliable sources of business capital. Even in states that rank in the top tier for venture investment, there are often insufficient capital resources to support businesses at every stage of development. In order to support entrepreneurs and to attract more attention from the industry, an increasing number of cities, regional organizations, community and technical colleges, and other groups are creating their own capital programs. These programs frequently focus on providing funding at the pre-seed and start-up stages of business development when it is difficult to attract funding.

 

Northeast Ohio

The Lorain County Community College (LCCC) Foundation recently announced that it would make its first three grants to support Northeast Ohio start-ups through its new Innovation Fund. These grants provide pre-seed and technology validation funding for businesses in the region that agree to provide internships for LCCC students and to participate in on-campus lectures on entrepreneurship. The program offers grants of up to $100,000 and a one-to-one match with outside investment. Businesses must agree to contribute back to the fund if they achieve certain agreed-upon milestones.

 

The fund is one of four investment organizations seeded by Cleveland’s NorTech through its TechLift program to create new capital opportunities for Northeast Ohio entrepreneurs. Last year, NorTech reported that the region would need $375 million in seed- and early-stage investments over the next five years to support companies graduating from local incubators and other support programs.

 

Philadelphia

DreamIt Ventures, a new organization in Philadelphia, has begun seeking investors and collaborators in an effort to attract and retain young tech entrepreneurs. The group plans to operate as a pre-seed stage venture firm, which will offer money and assistance to entrepreneurs to develop a prototype of a new product or service over a three-month period. The Philadelphia Business Journal reports that the group has gotten a number of local law firms, accounting firms and experienced entrepreneurs and investors to agree to provide support services for their clients. Company teams would receive between $15,000 and $30,000 to support their efforts. In exchange, DreamIt would retain 5-10 percent ownership.

 

The program will target young entrepreneurs between 19 and 29 years old with little experience in launching tech businesses. New companies would have an incentive to remain in the region, with DreamIt connecting them to local incubators, angel groups, and venture investors after graduation. Though the founders plan to invest their own money in the first round of investments, they are seeking state and local funds for future activities.

 

Ventura, Calif.

The Ventura City Council recently approved a $3 million partnership with a local venture capital firm. DFJ Frontier will use the funds to invest in high-tech start-ups outside of Silicon Valley. The city council stipulated that the firm must use its “best efforts” to invest in companies located within Ventura. Proceeds from these investments must be reinvested in the partnership to be invested in other companies or in separate job growth initiatives.

 

Though California leads the nation in venture capital investment, most of this activity occurs in Silicon Valley. Other regions have had more difficulty in attracting investment and retaining companies.



Ventura also approved a $400,000 job incubator program to supplement its capital effort and train high-tech workers.