Sowing seeds of future investment

A new seed fund targets Portland startups.

Hatching a new business is challenging anywhere, but when it comes to drumming up investment, Portland is tougher than some other West Coast cities, according local business leaders.

That’s why the city of Portland launched a new seed fund, hoping to fill a funding gap that exists for early stage companies. Portland Seed Fund was born in early 2010 when Mayor Sam Adams announced the city would city would dedicate $500,000 to fuel fledgling startups.

Hatching a new business is challenging anywhere, but when it comes to drumming up investment, Portland is tougher than some other West Coast cities, according local business leaders.

That’s why the city of Portland launched a new seed fund, hoping to fill a funding gap that exists for early stage companies. Portland Seed Fund was born in early 2010 when Mayor Sam Adams announced the city would city would dedicate $500,000 to fuel fledgling startups.

“Portland is seen as a market of smart entrepreneurs and good innovation,” says Diane Fraiman, a partner at Voyager Capital, a venture capital firm with offices in Portland, Seattle and Silicon Valley. “We see a lot of companies in Portland, but they tend to be very early stage. The ideas and markets may be good, but they’re just not ready for an A round.”

In general, VC firms and angel investors have “moved up the food chain,” investing in later-stage companies, which leaves a void at the seed stage, says Brent Bullock, a partner at law firm Perkins Coie.

Both Bullock and Fraiman sit on a five-member board tasked with hiring a fund manager for the nonprofit Portland Seed Fund, which the group expects to do by the end of the summer. In addition to the city’s dollars, the fund aims to drum up an additional $1.5 million, which it would then use to make investments of between $25,000 and $100,000.

Ideally, the fund would boost companies to a point where they would be able to take advantage of later-stage investment opportunities, while at the same time motivating seed-level investment from other angels or organizations, Fraiman says. “Portland is a city of incredible entrepreneurial innovation. We’ve got to find a way to get investment mechanisms to work.”