Written by The Business Journal Staff
As Fresno’s technology scene continues to grow, industry leaders are increasingly looking for ways to keep startups close to home.
Among the key challenges still being addressed is building proper financial channels to help support new businesses as they grow. Several investment and mentor groups have launched programs in recent months specifically designed to keep homegrown tech startups in the Central Valley and ensure local ties remain strong.
Among the groups launched so far this year is San Joaquin Capital. Founded by Fresno-based technology entrepreneur Tim Goetz, local orthopedic surgeon Eric Hanson and local businessman Randel Mathias, the venture capital firm successfully closed its first round of funding in February.
The fund was built exclusively for Goetz’s Aplos Software startup and raised $4 million in Series A funding, all from local investors.
“Eric Hanson was our angel investor to start with and we talked about continuing to keep [Aplos] local,” Goetz said. “I’d been contacted by Bay Area and East Coast VCs and I figured, if we’re tossing an underhand pitch to somebody, it might as well be our friends and family.”
By building a local financing option, Goetz said he and his partners are addressing a key hurdle to the continued development of Fresno’s technology scene.
“For a technology community to truly grow you need talent, you need entrepreneurs and you need the funding,” he said. “There’s been other groups addressing those first two for a while and funding has kind of been that missing piece.”
Local technology entrepreneur Matt Tymn agreed and said that while Fresno has always been fertile ground for ideas and innovation, startups are now in need of mentor and investment resources.
“With groups like Bitwise and Geekwise, we have the education and the training,” he said. “But if I’m an entrepreneur, once I’ve done the coding competitions and the startup stuff and get going with my idea, what comes next?”
The dilemma prompted Tymn to cofound Launch559 earlier this year. The accelerator program is the first of its kind in the region and will offer startups access to capital, mentors and industry feedback.
“If we’re going to foster talent and build businesses in Fresno, we need to provide this piece of the equation so startups can truly grow into something more,” he said.
Other Launch559 cofounders include; Jane Olvera Quebe, president of JP Marketing in Fresno; Scott Rhodes, chief operating officer of Zacky Farms and former regional head of Wells Fargo; Jamin Brazil, CEO of FocusVision; and local entrepreneur Felice Diaz. Forming such a diverse leadership group has provided the accelerator with a cross-industry perspective and Tymn said the program eventually plans to accept startups beyond the technology industry.
“We already have a steady pipeline of technology entrepreneurs who we’re hearing from, but in the future we’re also interested in opening it up more broadly, particularly to manufacturing,” he said.
The group is currently accepting applications from local entrepreneurs and the inaugural class is expected to debut in June. The program will run for three to four months and end with a special pitch day where participants will meet with local investors.
Each selected startup will receive between $5,000-$20,000 in seed funding and the accelerator has raised an initial $1.5 million from investors to help launch the program.
By keeping the financing local, both Launch559 and San Joaquin Capital are hoping to make it easier for Central Valley startups to remain in the region as they develop.
Previously, Goetz said many startups had to leave the area to pursue such funding opportunities, a route which can sometimes lead to smaller startups getting lost in the shuffle.
“All these Menlo Park firms tend to only invest in things that have the potential unicorn, billion-dollar status,” he said. “They look at it as a formula because some startups will fail but as long as a few succeed, they’ll get their payouts.”
In contrast, he said San Joaquin Capital has an open-door policy and will work with entrepreneurs to hear what their needs are from the industry.
“Fresno is a very small community and everybody kind of knows everybody,” he said. “We want every single one of our entrepreneurs to be successful.”
That concept seems to have a wide appeal and Goetz said the firm has already heard from many potential investors interested in participating in the next round of funding.
“We’re already in meetings with potential clients and are in the process of drawing up documents for the next round of funding,” he said.
Tymn reported similar enthusiasm for Launch559’s efforts and the group recently saw the support of Mayor Ashley Swearengin during its formal debut at Bitwise South Stadium last week.
“It’s really great to have [Swearengin’s] support for this venture,” he said. “The discussion around technology and technology in Downtown Fresno is really exciting to a lot of people. It’s becoming really easy to approach developers with ideas for involvement.”
While the accelerator program and VC firm offer two very different approaches to funding, both have similar end goals—helping Fresno’s tech scene reach the next stage of growth.
“As there’s getting to be more and more training for [technology] entrepreneurs, we’ve got to find the funding to keep them here and contributing to Fresno’s growth,” Goetz said.
Tymn agreed and said Fresno’s future as a technology hub is dependent on local leaders generating financial opportunities for small businesses.
“It’s happening. It’s all happening here. We have talent, we have the education and we have the ideas here in the Valley. Now, we just need to keep them here,” he said.