Finding New Sources of Capital
Access to capital has historically been a challenge for Riverside-based start-ups, but Innovation Centers are making strides to change that. EPIC and CVEP have helped local start-ups raise millions in venture capital. EPIC has launched the Highlander Venture Fund and Riverside Angels Summit to support seed funding. Debt is another option, but early-stage start-ups struggle to secure it. Local capital has become critical to supporting business growth in Riverside County, driving economic growth and fostering entrepreneurship. The County's Office of Economic Development works closely with Innovation Centers and the local business community to ensure innovators thrive.
Securing capital is among the most important milestones for these businesses. Historically, this has been a challenge for Riverside-based start-ups. “Access to capital is the number one challenge that we face in the region; coastal cities capture a lot of early stage funding,” says Dr. Ochoa—but the Innovation Centers are making strides to change that. EPIC has helped local start-ups raise $70 million in the last five years, and CVEP has raised $33 million in the last decade.
At EPIC, Ochoa is helping to increase access to capital through local investment. The center has launched the Highlander Venture Fund and Riverside Angels Summit to support seed funding for emerging start-ups. This is a critical benefit of the program. “As a founder, I can use all the help and advice that I can get,” says van der Lee of Vinduino. “Riverside County does not have a mature investor network, but [they are] definitely working on it.”
Venture capital is only one source of funding, and while tracking VC investment is one way to track innovation, Ochoa says that most companies don’t secure VC money. “Less than 5% of companies raise venture capital,” she says. “We need to think of all of the ways that we can facilitate access to capital for the companies that we support.” Debt is one option, although most lenders generally need collateral, but there isn’t currently a model to collateralize intellectual property. Moreover, many lenders want some incoming revenue to underwrite the loan. That has made securing debt nearly impossible for early-stage start-ups.
This is why raising local capital has become so critical to supporting business growth in the County—and it is pretty easy to understand the importance of investing in innovation. It drives economic growth and allows modern communities to thrive. “These innovation centers and innovation hubs exist because fostering entrepreneurship is a proven economic development strategy,” says James. “They mitigate many of the risks associated with starting a business and therefore encourage more people to do so.”
Of course, supporting business formation is a top economic development priority in Riverside County. Riverside County’s Office of Economic Development works closely with Innovation Centers and the local business community to create an ecosystem that ensures innovators will thrive. The County’s strength is rooted in these partnerships, which is why more and more entrepreneurs are finding support and growing in Riverside County.