Area Groups Try to Bring More Financial Options to SCV Entrepreneurs

The Santa Clarita Valley is a community with a vision; a pro-business community that advocates and plans for economic development. And with all that activity comes growing pains.

“In the Santa Clarita Valley, we have excellent representation from business banks,” said Jonas Peterson, CEO and president of the Santa Clarita Valley Economic Development Corporation. “However, we are typically behind the curve in venture capital and non-traditional financing.”

Having an economic recession as a backdrop doesn’t exactly help the efforts to attract capital but members of the local community are plowing ahead nonetheless.

A member of the SCVEDC’s marketing committee, Bruce Fortine said chairs Jim Backer and Marlee Laufer raised the issue of how difficult it is for small businesses to get a loan.

“Access to capital is a critical driver of economic development,” Peterson said. “In order to grow, companies need options with rates and terms that are structured around their specific needs.” 
The issue is one Fortine believes he can assist with and so he has partnered with Alan Lewis to bring local businesses to the right resources to secure capital.

“We know where to go to find the right mixes for a business – whether it is a bank or other lending institution,” he said.

Likewise, the local Small Business Development Center also brings local start-up owners to the water trough, including introducing business owners to non-traditional sources, such as venture capitalists and angel investors, when the fit is right.

The SCVEDC, however, is close to bringing another valuable resource to the community in the form of a new loan program.

“We want to make sure our local firms have access to every available option,” Peterson said. “We’re working to deliver new financing programs and increase awareness about existing options. In early 2012, we will be rolling out a new loan program through a partnership with the Valley Economic Development Center.”

 The loan program will be designed to help businesses that have had difficulty with traditional financing but are still viable projects, he said. The SCVEDC is also working on creating an “access to capital” event for business owners.

Tech Hub

Business owner and Valencia resident Eric Arndt is taking the effort a step further, actively working to create a magnet for investors in the area – more specifically, he wants the SCV to become a “tech-hub.”

It’s very challenging for a start-up to obtain venture capital or angel funding when they’re on their own, Arndt said.

“You have little time as it is and raising money is almost a full time job itself,” he said. “You’re pitching people, making presentations, going over the numbers, driving and flying to meetings.”

Time is so valuable to an entrepreneur; while an entrepreneur is travelling to attract money he’s neglecting his business. The experience can really sour new business owners on being an entrepreneur, Arndt said, explaining his vision for creating a center of activity that attracts investors to the area.

Owner of his own startup firm, timesharejuice.com, a company that facilitates trading of time shares around the world, Arndt said he goes “over the hill” to the San Fernando Valley and beyond for networking opportunities but keeps meeting up with people who actually live in Santa Clarita – including investors who work with venture capital firms outside the SCV.

“I wonder why I spend all this time and money travelling to meet people who live right here,” he said. “There’s talent right here that’s not being cultivated, not being networked.”

So Arndt formed SCV Startup, a loosely formed group of tech-oriented residents, to create energy, get people actively pitching and sharing ideas, and generate cross-pollination with new ideas in a way that will draw attention from venture capitalists and angel investors to the area, rather than have individual business owners chase after capital.

Jim Armstrong, managing director of Clearstone Ventures, with offices in Santa Monica and Palo Alto, is originally from Valencia, Arndt said. “We’ve had lots of conversations on how ‘Awesometown’ should be the next hotspot for high-tech startups.”

“Non-traditional lenders live here and say they want to invest in the area but tell me there isn’t much to attract them to the area in terms of tech start-ups,” Arndt said. “They told me if you can put this thing together and get something going, then we’ll put up a fund and get something going.”

A solo entrepreneur can’t create buzz, he claims. “But if an environment is created that is very exciting for investors to plug into, we will get their attention because the investors really want into the ‘tech scene.’”

“If the SCV doesn’t create connections that bring the entrepreneurs and money people together, young entrepreneurs are going to leave and that would be a brain-drain for the valley.”

Setting ambitious goals, Arndt believes it’s absolutely possible for the group to help launch 12 startups in the next couple years.

“Eventually we’ll create a fund. If we can get this together, we can attract at least money to start investing in SCV start-ups,” he said. “We’ll keep growing.”