Venture capital to local companies passes $47 million in first quarter
Venture capital and angel investments are starting to pick up after a lull in the last few years, because of a strengthening economy and the ability to fund a company with a lot less capital than was needed historically.
In the first quarter of 2011, a total of $47.35 million was invested in North Bay companies through venture-capital funding, according to Dow Jones VentureSource, which tracks investments from venture capital firms to startups in all sectors of the economy. By comparison, first-quarter investment last year totaled $59.27 million; in 2009, $13.98 million; in 2008, $85.9 million; in 2007, $45.30 million and in 2006, $95.32 million.Funding activity in the first quarter tracks fairly closely with activity in a given year, according to Dow Jones VentureSource. In the first quarter of this year, venture capitalists invested locally in business financial services, consumer services, energy and utilities, healthcare and information technology companies.
[caption id="attachment_36244" align="alignleft" width="154" caption="Dan Lankford"][/caption]
"These days, you can have a world-class company anywhere and can start it with very little money," said Dan Lankford, managing director at Wavepoint Ventures. The firm provides early-stage capital to "distributed innovation" ventures and is connected to a business incubator in Rohnert Park. Wavepoint defines distributed innovation as the ability for people to innovate almost anywhere by outsourcing non-core functions and using the Internet as a marketing and collaboration tool.
Because companies do not have to go out and purchase a huge number of computers and can use an engineer part time, the overhead has dropped significantly for a business, he said. For a typical software services company that may be creating an app for a smartphone, it may be possible now to literally get business going with just a credit card, he said.
"If you are looking at starting a company that makes medical devices, it used to be you needed to look for a lot of capital," he said. "Now you can get a company started for less than $10 million."
Mr. Lankford said the North Bay is a particularly interesting area and attractive to angel investors and venture capitalists.
"We like it here partially because it has the Sonoma Mountain Business Cluster and Sonoma State University," he said. Wavepoint offers mentoring and other services to businesses in the cluster.
"Now that we have a resource like SMBC, it becomes a catalyst and a nucleus for business," he said.
The Sonoma Mountain Business Cluster is a nonprofit business incubator located in Rohnert Park. Its function is to assist entrepreneurs and startup companies in achieving success through mentoring and education.
Bill Silver, dean of the School of Business and Economics at Sonoma State, said Wavepoint has a unique and interesting focus on investing locally, and supporting efforts to foster entrepreneurship in the North Bay.
"They were our partners in the business plan competition," he said.
The business plan competition was part of a collaboration of The North Bay Innovation Hub, or iHub, located at the Sonoma Mountain Business Cluster and several other partners including SSU. iHub is a regional economic development collaborative formed under a state program designed to modernize California’s approach to fostering innovation and entrepreneurship.