The Portland Seed Fund turns the startup launch into a team sport, with the goal of doing a lot with a little.
By Ben Jacklet
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Above: From left: Portland Seed Fund entrepreneurs include Tim Shields of Zinofile, Ken Levy of 4-Tell, Daniel Clancey of Homeschool Snowboarding, Sheetal Dube of AudioName, Jason Lander of Hively, Amber Case of Geoloqi and Nathan Taggart of LaunchSide.Below: Angela Jackson and Jim Huston run the Portland Seed Fund. Huston says the quality of the seed fund applicants has surpassed his expectations.// Photos by Anthony Pidgeon |
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Two weeks after becoming one of the first companies to receive startup money from the Portland Seed Fund, the 27-year-old co-founders of InvestorInMe sat down with their backers with some difficult news. The regulatory issues involved with their would-be business were proving more burdensome than they had realized. The company they had pitched, partly funded with public money, was dead on arrival.
The fund managers, serial entrepreneur and angel investor Angela Jackson and Intel Capital veteran Jim Huston, did not chastise the young entrepreneurs for failing to research the regulations more thoroughly. They did not kick themselves for lack of due diligence. Rather they applauded the youngsters for recognizing and admitting to the problem early, before wasting too much time. Then they got started on developing a backup idea, a website to connect technology startups with early adopters to test their technologies in return for free access.
The size of the investment for each company backed by the seed fund, $25,000, seems minor. But it can give a major boost to a young team like Nathan Taggart, Jason Collingwood and Chris Chong, who grew up as best friends in West Linn, started a business out of high school and set off on divergent careers with the expectation of reuniting to launch another company. When their InvestorInMe launch fizzled, they had a list of 40 other ideas to choose from. Several 60-plus-hour work weeks later, their new site, LaunchSide, was up and running. Its first offerings promote early access to other websites supported by the seed fund.
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From left: Tim Shields, Jackson and Huston during a brainstorming with other seed fund entrepreneurs. |
The idea behind the Portland Seed Fund is to offer just enough support to entrepreneurs with promising ideas to quit their jobs and get to work on new businesses in Portland. The money comes from both public and private sources with the goal of providing returns to investors and taxpayers while fostering economic development. Huston and Jackson say it’s the right model for turbulent times because it focuses on the areas of the economy that are comparatively strong (social media, web commerce, applications for mobile devices) and takes advantage of the fact that launching a nimble technology company is much cheaper today than it was five, 10, even 15 years ago, due to improved technologies and widely accessible tools. Their research suggests that a million dollars seeded to a variety of startups can ultimately create 400 jobs. “There’s not an economic development department anywhere that can match that performance,” says Jackson.
Another purpose of the fund is to develop a spirit of camaraderie and collaboration to invigorate the startup scene in Portland. Since the inaugural class of eight companies was announced July 19, the selected entrepreneurs have been working in an atmosphere that’s part boot camp, part summer camp, meeting weekly on the central eastside, pooling resources and ideas, soaking up advice and concepts from mentors, investors and peers.
For the selected entrepreneurs, the seed fund process has brought an infusion of money, ideas and connections. “The money definitely helps,” says LaunchSide CEO Nathan Taggart. “People ask, ‘What can you really do with $25,000?’ Well, you can do a lot… But the introductions and the relationships have been worth even more to us than the money.”
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Amber Case, Jason Lander, Ken Levy and Nathan Taggart. The Portland Seed Fund united eight teams with varying degrees of experience. Participants find there’s lots to share.// Photo by Anthony Pidgeon |
The fund united eight teams with varying degrees of experience. Some were still refining their ideas. Others were already making sales, with plans for major growth. Ken Levy, CEO of the e-commerce recommendation business 4-Tell, has a five-year plan to grow into an $80 million company with over 100 employees. The serial entrepreneur secured $250,000 in 2010 from angel investors including Vesta CEO Doug Fieldhouse, Digimarc CEO Bruce Davis and Insitu CEO Steve Silwa. That initial prize resulted from some serious legwork: 68 meetings with 51 potential investors by his count.
That’s a lot of experience to share. Others in the group bring experience of a different variety. When Geoloqi co-founders Amber Case and Aaron Parecki were first researching the business end of their shared obsession for location tracking, they traveled from Portland to the Silicon Valley, staying with “random people we met through the Internet,” in Case’s words. They nearly ran out of money but kept the trip going by winning coding contests.
The technology platform that enabled them to win forms the foundation of Geoloqi. Their company has raised $350,000 from local investors such as MergerTech CEO Nitin Khana, former Reliable Remodelers CEO Eric Doebele, Nitin Rai of First Insight and Kanth Gopalpur of Monsoonworks. They also scored a residency at the Portland Incubator Experiment office space provided by Wieden+Kennedy in the Pearl District.
Sheetal Dube works out of a similar space on the other side of downtown Portland, at the Portland State University Business Accelerator. A working mom with a background in user experience consulting, Dube won the top prize in the Portland Startup Weekend contest in April 2011. Her young business, AudioName, enables people to record the pronunciation and roots of their names for online profiles. As is the case with many tech startups, her company’s purpose may not seem immediately obvious to the layperson — until you consider the 7 billion people on the planet with names, and the importance in business and life of getting names right. “It seems like a small idea but look at the scale,” Dube says. “The fact that I could make a small difference to a large number of people, that for me was the hook.”
Once hooked, she began to hook others. The judges at startup weekend convinced her to quit her job and go for it, and she did. The support of the seed fund and its associated contacts validated her choice, and enabled her to bring in contract engineers. “We’ve all gone out and hired people and stimulated the economy,” she says. Eventually her business could prove a tempting target for a social media giant such as LinkedIn. Or it could fizzle, as so many tech startups do. Regardless of the outcome, Dube says she has no regrets.
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Above: Sheetal Dube and Daniel Clancey participate in the regular roundtable of seed fund members. Dube founded AudioName and Clancey started Homeschool Snowboarding.Below: The seed fund process has brought an infusion of money, ideas and connections. Another purpose of the fund is to develop a spirit of camaraderie and collaboration to invigorate the startup scene.// Photos by Anthony Pidgeon |
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The market for these niche software businesses seems infinite when you consider how much inefficiency still exists in the business world. Hively CEO Jason Lander started his first company in 2001 with his business partner Ross Barbieri after suffering through a job in the staffing industry based on “a horrible process centered around fax machines.” Their solution to that problem became ShiftWise, a Portland business that raised $10 million and employed 56 people at its peak. Their new business focuses on improving the clumsy attempts by businesses to gather feedback from customers.
“Customers don’t want to answer a whole bunch of questions,” Lander says. “Companies will send out surveys to 100 customers and maybe three fill them out.”
Hively simplifies the feedback process into a few clicks: a smiley face for good customer service, a frown for frustration. The customer can offer more information but doesn’t have to. Employees can compete for higher customer satisfaction rates and managers can get a clearer sense of performance levels.
Two weeks after launching the beta version of the Hively site, Lander signed up an early partner: Expedia. It was such a surprising win at that stage that he called to make sure it wasn’t a joke. It wasn’t. Hively’s 1.0 version came out in September, and the seed fund cash has led to further investor interest. But Lander, who served as a heavy machine gunner with the Marines before he got into software, says he will only accept investments on his terms.
“When I started ShiftWise, I was 28 years old,” Lander says. “I was raising money off PowerPoint slides. That was cool, but I didn’t realize how much of my company I was giving away.”
This time around he intends to keep control over what he builds.
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Shields (at right) started Zinofile, a media company that publishes free ad-supported comics inside Facebook.// Photo by Anthony Pidgeon |
The perspective that comes from experience, and the willingness to share it openly, can offer valuable insight to entrepreneurs such as Daniel Clancey, CEO of Homeschool Snowboarding, the sole non-tech company backed by the seed fund. Clancey, a former Columbia Sportswear designer who has been boarding in the Pacific Northwest for 15 years, says he has learned plenty since being selected. “It’s been really nice to have people to talk to about the problems you’ve been having,” he says. “We’ve been going solo for three years. I’m learning as I go, and the challenges have been too numerous to mention.”
Still, Homeschool has made serious progress from its funky headquarters in a rickety brick building near the Albina rail yard. Clancey has negotiated a production deal with a factory in Thailand, assembled a demo team of star riders and grown the company to four people with experience at Columbia and Burton. His line of breathable pants and jackets will be selling this fall at key shops throughout the Northwest including U.S. Outdoor in Portland, Tactics in Eugene and Snowboard Connection in Seattle.
Clancey acknowledges that an apparel company may seem out of place in the world of tech startups. But he thinks his experience can add to the discussion. “I’ve learned a lot from the other companies, and I hope they pick up things from what we’re doing too,” he says.
Peer mentoring works best when brutal honesty rules. “You need people who are willing to call bullshit on you,” says Todd Silverstein, CEO of Vizify. “You need someone who isn’t afraid to ask you hard questions. The people who have been most useful have been the people who have not been at all nice.”
Silverstein and co-founders Eli Tucker and Jeff Cutler-Stamm worked for Monsoon in Portland during that company’s boom years, and the hiring process was a team effort. Their idea for Vizify springs from the frustration of plowing through one boring resume after another. Vizify seeks to incorporate visual elements into resumes to help candidates stand out.
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The perspective that comes from experience, and the willingness to share it openly, offers valuable insight to these entrepreneurs who were selected by the Portland Seed Fund to receive startup funding.// Photo by Anthony Pidgeon |
The company is in the rare position of participating in two seed fund experiments simultaneously. In addition to the Portland fund, Vizify is also supported by the TechStars program in Seattle. TechStars is a popular business accelerator with outposts in Boulder, Boston and New York as well as Seattle. The Vizify co-founders have rented a place in Seattle and are spending a lot of time commuting between the two cities. But Silverstein says the plan is to build the company in Portland. “There’s more momentum around the startup scene in Portland,” he says. “I’m astounded by the level of talent here. What’s been missing has been the people who can bring everyone together. That’s what Jim and Angela have been able to do with the seed fund.”
Huston is a veteran of Intel Capital who has been connecting entrepreneurs with money since Netscape went public in 1995. He says the quality of the seed fund applicants has surpassed his expectations.
Jackson is a serial entrepreneur and early-stage investor who is only half joking when she says that her past jobs of leading inexperienced sailors on sea voyages and working with juvenile delinquents were the perfect preparation for serving as camp counselor for budding entrepreneurs. Her ample experience as an angel investor also gives her a powerful perspective on how to do a lot with a little.
Of course, the ultimate goal is for these seeds to grow into a complex ecosystem. That ecosystem was already growing when the Portland Seed Fund was established, due in part to the efforts and initiatives of the Oregon Angel Fund, the Oregon Entrepreneurs Network, Silicon Florist blogger Rick Turoczy, Starve-Ups, the Portland Angel Network and other organizations. But it has not produced anywhere near the level of variety and riches that have taken root in San Francisco and Seattle.
Huston, Jackson and their colleagues and protégés hope to use the fund as a tool to chip away at the sizable gap between Portland and the powerful tech centers to the north and south. Their chosen companies will present their ideas to prospective investors at Ziba Design headquarters in the Pearl District during an all-day event scheduled for Nov. 2. Beyond that, they plan to repeat the seed fund process next year, learning and adapting as they go.
Ben Jacklet is a Portland-based journalist and former managing editor of Oregon Business. He can be reached at [email protected].
