Portland Seed Fund

Overview

The Portland Seed Fund (PSF) was started to stimulate exceptional entrepreneurial growth in the Portland metro area and throughout Oregon. Bridge City Ventures, led by Fund Managers Jim Huston and Angela Jackson, was selected to manage PSF. Over the course of the two-year active PSF fund life, managers are tasked with implementing a proprietary, milestone-based system of capital and coaching, making 10-15 investments per year ($25,000 - $50,000 initial investment) in capital-efficient, highly-scalable businesses across a variety of industry sectors.^[1]

The $2 million-plus fund was raised mostly from grants from the cities of Portland and Hillsboro, and the Oregon Growth Account. It aims to address the area's chronic shortage of startup capital by providing early stage "seed loans" to the companies, and to keep the most promising companies rooted in the metro area by providing coaching, follow-on financing and introductions to wealthy angel investors and venture capitalists, part of an effort to keep talent and jobs in Portland instead of the valley.^[2]^[3]

History

In July 2009, the City of Portland, Oregon adopted its first comprehensive Economic Development Strategy since 1994. This ambitious strategy, seeks to create the most sustainable local economy in the world, is guiding the city’s economic development investments and strategic initiatives over the next five years.

One of the themes of the strategy is the importance of innovation and entrepreneurship in driving job creation and economic growth in the local economy. More than 95 percent of Portland’s businesses have fewer than 50 employees, and the majority of new jobs are created by new or expanding small firms. Measured by new business formation, the Portland metropolitan region is ranked sixth nationally for entrepreneurial activity.

Despite the prevalence of small business activity in the Portland region, the supply of capital for early-stage companies has been limited due to lack of an institutional mechanism for providing seed capital and a migration by investors, including angels, toward later stage companies. This lack of predictable seed capital has created an insurmountable hurdle for most entrepreneurs looking to move ideas to proven concepts with market potential. Most seed stage companies already face long odds in growing a successful business, the lack of seed funds ultimately diminishes the prospects that Portland will be home to frequent entrepreneurial success and significant job and wealth creation. By improving the conditions for survival in the concept stage, the PSF is expected to grow the pool of viable start-ups that win later stage funding and, ultimately, commercial success.^[4]

Mentorship Cycle

PSF will see selected companies through a 90-day cycle of mentoring and advising. These cycles will be done twice per year and will include 5-7 companies per cycle. The PSF strategy could be summarized as investing small, investing early, and quickly triaging non-performers. Follow-on investments could be available to the most promising companies. The target fund size is $3 million, with a minimum fund size of $2 million.^[5]

Fund Contributors

Fund contributors to date include the Portland Development Commission ($500,000), Oregon Growth Account ($750,000), City of Hillsboro / OEN Catalyst Fund ($250,000) and individual accredited investors.