Startups hoping Portland's seed fund helps them grow
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PORTLAND, Ore. – The money local startups receive from the Portland Seed Fund can mean the difference between success and failure and the economic impact they bring.
Some of the money that they get comes from taxpayers. The Portland Seed Fund is a combination of public and private money that is supposed to translate into hundreds of local jobs over the next several years.
Each company gets an initial $25,000 investment and some guidance.
Paola Moretto, co-founder of Cloudy Days, hopes the Portland Seed Fund can help grow her business, which helps other organizations ensure their websites are ready for high traffic. She and her co-founder started in the spring and applied to the fund Sunday.
"It's a lot of trial and error," she said Monday. "So having somebody that could guide you through that process – (can) accelerate the process dramatically."
Tellagence has already found success with the program and was one of 26 companies chosen for seed money in the last year and a half.
"It's hard to find that first batch of money," said Matt Hixson, co-founder of Tellagence.
The capital and the mentoring have helped mold an operation about to double in size. Hixson plans to hire five more employees, up from six.
And just like the conversation his company tracks on social media isn't stopping, neither is he.
"As big an impact Google had on the Internet, we could have on social media," Hixson said.
It's an in-progress success story Moretto and her technology startup, Cloudy Days, hopes to emulate.
"It's a very exciting process," she said.
The companies do not have to pay back the money from the Portland Seed Fund, but the idea is that it's stimulating the local economy.
Even out-of-state companies are applying with plans to move to Portland if they're chosen.
So far, the Portland Seed Fund says it's helped create more than 125 jobs.
The deadline for companies to apply to the Portland Seed Fund is midnight Monday.
Correction: An earlier version of this story incorrectly referred to Cloudy Days as a coffee shop start-up. The company helps clients with cloud computing needs. We apologize for the error.
Early-stage funding activities in a region (angel investors, seed-stage etc) is an indication of novel entrepreneurship, a willingness of the wealthy investors to risk capital and a bright-spot for this soggy, often short-sighted region. Portland is a lifestyle destination alternative for those tech-savvy entrepreneurs who are weary of Silicon Valley's short-comings. Welcome these people - tolerate their wimpy sensitivities and their strange accceenntts?.  And applaud the incredible hutzpa that they have to climb so much farther out onto a branch than most might even consider possible.Â
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Consider welcoming these sorts of efforts to our region -- and keep the small-fry amounts in proper geographic/early-stage capital funding perspective --- the amounts provided by Portland Seed Fund and other groups, companies & individuals is a wee tiny drop compared to other tech-heavy regions. We should hope for great success and big exits from these firms in the future - which will attract more investment capital - and thus create ... well you know what I mean.Â
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And, not a coffee shop there skippy, please read the article (it likely taps less of your time than writing your comment -- and makes you look less dumb) -- "...her business, which helps other organizations ensure their websites are ready for high traffic"
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Point also being made is important - any pubic moneys used to fund a start-up is provided 1. only after careful review of dozens (likely hundred or thousands) of business plans and 2. in return for securities in the start-up - which - if it successful - will convert into other securities of value (often several times the original investment - 4-5 times and higher) -- and this conversion occurs before any other equity interest takes a dime.  These are very high-risk investments (cost of capital can be as high as 80% and probabilities of successful exit as low as 5%) -- and when they fail - as most will - the uninformed make knee-jerk reactions about the "waste".Â
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Think bigger pple.Â
Several points in this article are simply incorrect.
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CloudyDays has nothing to do with a coffee shop. CloudyDays is a Portland area CLOUD computing company offering a cloud scalability platform to help companies deploying their applications to the cloud scale successfully. Check us out at www.cloudy-days.com or on Twitter @TheCloudyDays.
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Second, investments in startup ventures do not come in the form of free money. They come in the form of debt or equity. Take your pick. Specifically for the Portland Seed Fund, the investment comes in the form of a convertible note. A convertible note is debt, which might convert to equity at a subsequent funding event.
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 @TheCloudyDays Best of luck in your start-up Cloudy Days - to bright days ahead!!!Â
There's two errors in this article:
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"The companies do not have to pay back the money from the Portland Seed Fund, but the idea is that it's stimulating the local economy."
That is incorrect. Investments are in the form of a convertible note, which DOES have to be paid back unless the company raises additional investment capital in a formal fundraising round, in which case it converts to equity.
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Paola Moretto's company is also not a coffee shop. She has a technology startup.
@lynnle Thanks for clarifying that, Lynn. It makes me sad that when the mainstream media actually tries to mention the Portland startup scene they make so many errors, resulting in angry comments from people whose only source of information on the topic is the error filled article.
Gee, I never realized Portland had extra money to go around. How about repairing roads, or does that require some of that "startup money"?
@jpk Paving roads sounds cool. Everyone loves a smooth road. Or, with less money, companies could be started and hundreds of jobs could be created. I guess you just have to look at the ROI of both options and decide for yourself which makes the most sense.
from their site:
"Mayor Sam Adams, the Portland Development Commission
and Oregon Entrepreneurs Network were instrumental in starting Portland Seed Fund".
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Why is it when it comes to giving away other people's money,
Sam Adams is always involved.?
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Ask Sam why the people east of 82nd have few sidewalks
and mothers with small children in tow must walk thru
enormous mud puddles at the shoulder to avoid
being run over.
I've seen it with my own eyes. On a busy street,
on a very dark rainy night.
They were close to impossible to see.
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 @Mipsfer If they can get businesses in there who will pay taxes and bring in revenue and prosperity to that area, that problem will fix itself. An example of this is downtown St. Johns, which is turning from a decaying post-war slum into a hopping little hipster community which--love it or hate it--brings a lot more revenue to the area than squatters, dealers and prostitution. As long as you keep the hippies out. Which is why we have riot police.
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Do you know why Portland leaders love a thriving art-business district on Alberta? It's because hipster homosexuals don't do drive-by shootings or rob the Safeway for liquor money. But you have to give a business like Trade Up Music (doubt they got much subsidy) an incentive to go there in the first place. I want to start a business in Portland, but it's expensive so I have to consider building it elsewhere.
Well - ask Charlie now.
He's the new head of the local government spending orgy.
*shaking my headI have the best "business" idea. Give me the 25K and I am going to hand it out to all of us who have balanced our budgets, stayed current on our mortgage, and kept our jobs. I know all my KATU peeps will support that!
 @mikeyb123 Give me $25K and I'll go plant
my seed money in the Bahamas.
Public money? Oh joy, more bailouts funded by US.
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Sorry... If you do not have a profitable business plan that will keep the doors open even in bad times, you do not deserve to be in business. Stop mooching off everyone else.
@mine9 Perhaps you should do a little more research as to what seed funding is. http://en.wikipedia.org/wiki/Seed_money
 @mine9 Would you say that applies to subsidized corporations, or just small businesspeople?
Sorry, but here's another point. Perhaps if the government would stop funding every stupid idea they can think of and let us keep more of our own money, maybe there would be more people out here who would take a chance at starting their own business. With THEIR OWN money I might add.
@Scotty9 Google, Twitter, Facebook, Instagram. All examples of venture backed companies. Let's take Mark Zuckerberg for example. Founded Facebook while he was in college. Could Facebook have ever grown this large if he hadn't taken funding? To say that startup founders should 'take a chance' and fund their companies without any sort of funding I idiotic and unrealistic. Maybe you are, but not every person trying to start a company is filthy rich. Additionally, the Portland Seed Fund 'kickstarts' companies with a small amount of money. These aren't large companies just looking for a little extra money to expand.
 @ColbyAley  @Scotty9  I have no problem with people getting venture capital from venture capitalists. That's where the people who put the money in are the people taking the risk. The government putting other peoples money is not the same thing.
 @Scotty9 Oh Scotty, you're so old school. lol. Keep our own money. Start our own businesses. Where'd you get a crazy idea like that?
 @Lips Old school proud!  LOL!
 @Scotty9 Rock on fellow old schoolers! lol.
NO! NO! NO!   It is not the governments job to take dollars from me and give them to start up businesses. We have crossed the point of no return if we, as a country, believe that this is governments role. The vast majority (80+%)of small businesses fail in their first year. Is this a good use of tax payer dollars? And of course they have to decide which businesses get the money, so of course they'll be using their own biased criteria.
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I'm sorry, this money should be used to support jobs that pay over 15 dollars an hour.. There is no way we should be all about minimum wage jobs, that leads us to nowhere !
I hate to be mean, but really? Another coffee shop? Hopefully the money will be allotted to something that has more potential for growth.Â
 @Lips She's using the coffee shop as an office, whoever wrote the article wasn't paying attention.
 @KenKen I see they've updated it. Still, a web based business?
 @Lips Maybe she's going to re-invent the coffee bean to exponential proportions! People will be coming from miles around to have a picture taken with that bean.
A coffee shop, really? She is going to create a lot of high-wage jobs at her business? I doubt it. Sounds like a loser of an investment for the city, there's already hundreds of thriving coffee shops, why does she merit tax-payer money?
 @moej the business is cloudy-days.com, not coffee. Article is just poor.
 @moej It says that she just applied for the money and hasn't received it.  However, one has to ask, if the SBA won't give a loan to a business, and no investor wants to invest in it in exchange for stock, should the government be freely handing out money to the same business?
 @moej Someday the only thing that will be Made In America will be a cup of coffee. Hamburgers are slowly fading.
Where can I apply for $25,000 without having to repay it or offer up an ownership stake in my company? Â That's like the best deal that I've ever heard!
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Perhaps the state figures that they can recoup their investment someday with their high 9% capital gains tax.
PDX has 60 miles +/- of unpaved roads yet they have money to be venture capitalists....
Talk about f'd up priorities......
 @kramr Those unpaved mudholes are really fun in my 4x4!
@kramr Not so much fun when I found a really deep one in the middle of the street in the dark filled with rain water on my motorcycle... Nearly totaled the bike, and put my arm in a cast for a month.