Portland Development Commission Announces Inclusive Startup Fund

Thursday, August 20, 2015

Brendan Murray GoLocalPDX News Team

Struggling startups in Portland owned by minority groups will soon have a new resource for outside investment via the Inclusive Startup Fund created by the Portland Development Commission and Multnomah County.

The fund is designed to help underrepresented groups, including women and people of color, find success with startup businesses. In Oregon, nearly 90% of all businesses employ fewer than 20 people. In spite of this, 84% of small businesses are white-owned.

Chris Harder, economic development director for the PDC, told GoLocal he believes this fund is not a case of the government deciding which businesses will succeed. Rather, he thinks projects like this are one of the main purposes of the commission.

“Our role as an economic development agency is to catalyze new outcomes,” he said. “We focus on gaps in the market. Right now, we’re seeing a gap in our startup ecosystem, both locally and nationally, and we think this could help solve that problem.”

The fund currently has $1.25 million to distribute. Those funds come from a pair of $500,000 investments from the PDC and Multnomah County, and a $250,000 investment courtesy of Governor Kate Brown and Business Oregon. It will distribute investments ranging form $20,000 to $50,000 to startups.

Looking for a leader

Before those investments can be distributed, the fund is in need of a professional fund manager. The Commission released a Request for Inquiries, asking interested parties to apply for the position, along with the announcement of the fund.

The manager will be responsible for setting up a method to decide which businesses will receive investments.

“We want an application process that is open, where business owners know what is going on and they know how to apply for it,” Harder said. “The exact mechanisms of that process will be decided by the fund manager.”

Also included in the investment are intensive mentoring and business advertising services.

Harder said that while the specifics of this part of the program will also be left up to the manager, it would allow investment recipients the opportunity to meet with and learn from startup owners who have had success in their industry.

Included in the RFI is a challenge to the new fund manager. They will be responsible for raising the fund’s investments to $3 million, more than double the current investment total.

The RFI also stipulates that the management team must maintain an office in the City of Portland, be composed of at least two individuals, and have measurable and direct experience and knowledge of startups and of the local economy. They must also show knowledge of and success in multiple industries.

Mark Grimes, founder of NedSpace, a company that leases office space and resources to startups, told GoLocal that he believes the manager should be more than just a “pencil pusher.”

“It depends on who’s managing the fund,” he said. “…If its just an accountant looking at the numbers that would be scary. It should be managed by someone with a pedigree in startups who can act independently.”

Responses to the RFI are due on September 18. Harder said the commission anticipates whittling applicants down to a short list of candidates soon after that date. A final announcement of the winner is expected in mid-October.

What it means for startups

Grimes said that the investments of $20,000 to $50,000 promised by the fund would be welcome influxes of cash to businesses that are struggling, but would not be enough to save businesses in and of itself.

“It’s a nice amount of working capital for an early-stage idea, but its not a panacea,” he said, noting that the money would most likely not be enough to do things like hire new employees. “Most people aren’t going to come to work for $20,000 a year.”

Instead, what is most valuable to startups is the mentoring aspect of the fund. Grimes said that those relationships can be huge factors in deciding whether a business survives and thrives.

“The mentorship in the first six to 24 months is much more critical than the money,” he said. “It allows startups to connect with people who know how to make this stuff work, even when they are underfunded or even have almost no funding at all.”

Lin Carson, owner of Bakerpedia, an encyclopedia for commercial bakers, told GoLocal she plans to apply to the fund. She said as a female entrepreneur, funding can be hard to come by.

“Trying to raise funds is really such a hurdle…so this would really give a boost to my business,” she said. “We always hear that there are not enough women in business. I think there are women in business…but they don’t see the opportunity. Hopefully this shows that we have plenty of investable women here.”

Stephen Green, who founded the Oregon Public House and Altruism Brewing, a pair of non-profits, told GoLocal that while his startups are not in need of this kind of investment, it is exactly what minority-owned startups need.

“The way they are being intentional about this, amassing a fund of money set aside for women and minority businesses is a great step,” he said, pointing out that the manager should already have relationships with businesses owned by women and people of color. “It should be someone who already has built trust in those communities, because it will take a lot of trust to make investments like these work.”

More on the way?

Ryan Frank, spokesman for Business Oregon, told GoLocal that the state’s involvement in the PDC fund is most likely only the start of its investments in Oregon startups.

He told GoLocal that the governor’s office is currently working to start a similar program for non-urban residents of the state.

“There is no fund in place now, but the plan is to work on a similar fund in rural Oregon,” he said. “There is a recognition from the governor and her staff that we need to do more in rural Oregon to help startups.”

Robbins admitted that not much is decided about the rural fund, which is still in the early-planning stage. He did say the rural fund would operate differently, as it will cover a larger, more spread out area than the PDC fund. “What exactly that will look like is yet to be determined,” he said.

Related Slideshow: 10 Takeaways From Portland’s Startup Week

In case you missed it, here are some of the highlights from Portland's Startup Week:

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#1

Women in Tech

The low number of women in the tech industry has become a national issue. At Portland’s Startup Week, events addressed what businesses and women can do about it.

Ingrid Alongi, Co- CEO of Quick Left, gave a presentation outlining ways companies can better include and encourage women in a male-dominated field. Interviewing techniques, team-building exercises, and open feedback channels were some of her seven ways leadership can address the problem.

“I wanted to talk about it on a personal level. It doesn’t take a lot of effort to do these things that are really impactful,” Alongi said.

A separate panel of local tech women professionals discussed ways to get women interested in the industry as well.

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#2

Parties

There may have been serious discussions and topics, but there were plenty of opportunities to cut loose and have fun. Every night, some sort of happy hour or party gave techies and startups the chance to mingle and enjoy food and drink.

PDX Code Guild Founder Sheri Dover said her organization’s party on Monday night was a great opportunity for new talent and experienced advisors to get to know eachother.

“It helps to get everyone together in the same room and build community,” Dover said.

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#3

Attracting Talent

Portland is a booming tech scene, but many tech companies are scrambling to find talented people to fill positions. Participants discussed ways to attract successful talent to the city and state. Founders and tech professionals agreed there are plently open seats to fill in the city.

Brian Henessy, the founder of Thread, said that many young adults move to the state for lifestyle reasons, rather than to make a fortune. Working with staff to meet their needs is one way businesses can draw employees, Henessy said.

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#4

New Generations in Tech

One way to get the needed talent is to create it. Part of Startup Week was to interest young adults or people seeking a change into starting a tech career. Dover said their event and others show people they can start a tech career without a computer science degree.

“In hopes to create more talent, you need to appeal to students and teach skills to help change the tech world,” Dover said.

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#5

Scott Kveton and The Cancled Event

A panel discussion by Ignite Bridgetown was canceled, surrounding a controversy with Scott Kevton.

When CEO of Qcut Crystal Beasley heard that Former Urban Airship CEO Scott Kveton, who stepped down last year after rape accusations, would be a speaker at Ignite Bridgetown, she reached out to organizers.

“It was way too soon for [Kveton] to represent the Portland tech scene,” Beasley said.

After organizers told Beasley the event would still include Kveton, she wrote a post on her blog protesting his involvement and the struggle of women in the tech industry.

Kevton then posted his own statement denying accusations against him, but removing himself from the event,“out of respect for the community.”

Afterwards, Ignite canceled the event, apologizing for any damage they may have caused.

Photo Credit: madame.furie via Compfight cc

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#6

Supporting Startups

Many organizations involved, such as UpGlobal who hosted the week, specialize in building, supporting and mentoring startups. These organizations are dedicated to helping Portland’s startup scene get the help it needs.

However, Hennessy observed there seemed to be more of those organizations involved than actual startups.

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#7

Community Encouragement

Startups who gathered for the week not only got the chance to share about their own companies, but also to learn and hear from others. Henessy said it was encouraging to see common themes at the events and discussions, revealing other startups had similar feelings and experiences.

“It feels good to know you’re not alone,” Henessy said.

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#8

Open Houses

Several startups held open houses during the week, giving people the chance to explore companies in Portland. Krystal South is the program manager of Oregon Story Board.

"Portland Startup Week brought the startup community to multiple locations throughout the city,” South said. “I was able to visit companies and spaces that I wouldn't have seen otherwise. It was great to see startups and entrepreneurs in their natural environments."

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#9

Bigger Than Portland

Although it was Portland Startup Week, companies from across Oregon came to the event. One discussion, “Startup Week Is Every Week, And Not Just In Portland,” featured startup-leaders sharing challenges from operating outside the metro area, and ways to create businesses in rural Oregon.

It also brought visitors from out-of-state.

"I met multiple people who were visiting Portland for Startup Week, who were interested in moving or starting their businesses in Oregon," South said. "Startup Week was a great cross-section of the community events that happen in the city year-round."

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#10

Start of a Culture

This was the first Startup Week for Portland, but attendees feel the event will continue to expand and evolve in years to come. Although the time was productive, Henessy said the event has room to grow.

With the positive energy surrounding the week, Henessy said he would not be surprised to see it acquire the culture and enthusiasm that surrounds Portland’s Design Week.