Investment group chooses its first local startups
Article by John Cox (jcox@bakersfield.com)
December 13, 2019
Two hundred eleven startup businesses made investment pitches. Only 18 were invited to make formal presentations. Of those, just six made the final cut, receiving a combined total of $385,000.
You might say Kern County's first angel-investor group has been selective in its first year of operation.
"We've been pretty pleased with the response and the deal flow that we've seen," said John-Paul “J.P.” Lake, co-managing partner of the organization, Kern Venture Group.
It's worth noting that only the last two of the six companies that received investment — electric cart-maker Vinergy and packaged food company Mill It — are locally based.
Whether that low rate of local investment should be considered disappointing is hard to say. As Lake noted, it demonstrates that entrepreneurship in Kern is robust enough to produce at least two startups solid enough to withstand close scrutiny and emerge with seed funding.
On the other hand, KVG general partner Sheryl Barbich said it's also a sign that the investor group has been wise to promote local entrepreneurship as a side activity by engaging with promising local talent. It does so in coordination with other local organizations, including schools.
Barbich admits she originally thought such promotional efforts were a distraction for the group. But now she sees it as planting the seeds for future economic growth across the county.
"Now we see we really do need to give attention to encourage people to start up a small business," she said.
"Even though we have large oil and agricultural interests and warehousing and so forth as a major base of our economy, we need to grow small business to the extent that we can," she continued. "We're really hoping that more local companies will want to make a pitch to us in the coming years."
"We’re happy that we got two,” she added.
The group's work is far from finished. The amount it has invested directly into startups so far represents just 18 percent of the $2.15 million the fund started out with in 2018. Lake said the expectation is that the rest will be doled out gradually during the course of the next two years or so.
What's more, work has begun on raising a second round of investment money. Some of it would come from local sources, he said, but some might also come from outside the area.
That's the way angel investment often works these days. Like-minded groups that make seed investments in promising startups in hopes of receiving a future payoff usually network with each other. They share tips on companies that seem to have the greatest potential.
Such is the hope with Mill It and Vinergy, which together received $200,000 in investment from KVG. Lake said that, like the other four startups that have received KVG money, both are being promoted among KVG's partner groups outside Kern County.
The fund's support doesn't stop there. Lake and KVG's other managing partner, David Higdon, have worked closely with the companies, counseling them on points like branding and helping them establish a corporate structure that's welcoming to investors.
Through it all, Lake says the group has learned that Central Valley startups may not be as technologically focused as some other regions but they're generally less capital-intensive.
Another way to look at it, he said, is that the valley's emerging entrepreneurs are not necessarily revolutionary, but they're determined to solve the world's problems.
