Venture Acceleration Initiative

Pacific Coast Business Times – Economy
Cooking up a strategy – Venture has two-fisted plan
By Barbara Pearson
Staff Writer

January 28, 2008

The City of Ventura is seeking the next Steve Jobs.

With a one-two punch plan that includes a jobs investment fund and business incubator program, the municipality is ensuring that when the next great technology companies surface in California, it won’t miss out on a bite of the Apple.

On Dec. 17, the Ventura City Council approved contract terms for DFJ Frontier in Santa Barbara to act as the funds investment manager for nearly $5 million of Ventura’s general fund economic development reserve.

In addition, the council approved a high-tech incubator program, one of the six focus areas outlined in the city’s economic development strategy. The city will determine policies and procedures for the business incubator program in April.

“When the council set aside $5 million in economic development funds, it was tied to a citywide economic development strategy [which] had six very focused areas to increase economic vitality in the community. One was entitled ‘Anticipate the Future,’ where we looked to do what we can do to increase high-value, high-wage jobs, and of course high-tech is part of that notion.”

Although city research located 18 of 50 top fast-growing southern California technology companies within a 35-mile radius of Ventura, none was located in the city.

The “Our Prosperous Community” category of the general plan states its goal is “to attract and retain enterprises that provide high-value, high wage jobs; to diversify the local tax base; and to anticipate our economic future in order to strengthen our economy and help fund vital public services.”

The Jobs Investment Fund will contribute $3 million to a $60 million DFJ investment fund that will invest in California technology companies based outside of Silicon Valley, called Frontier Fund II.

As a requirement of the contract, DFJ must make its best efforts to locate and invest in companies in Ventura. Among other entities investing in the fund are the State of Oregon and CalPERS, or the California Public Employment Retirement System.

The city could see a long-term investment return in the 15 to 35 percent range. Although it is also possible investment capital could be lost, Ventura’s Dec. 17 administrative report on the fund said historic long-term returns for funds in DFJ’s category is about 25 percent.

DFJ Frontier will collect a 2 percent management fee for management of Frontier Fund II and collect 20 percent of the carried interest. The city will receive 80 percent of the carried interest in the fund.

Jennie Buckingham, Ventura senior planner, helped to put together the jobs investment fund proposal with DFJ. She said the fund manager was chosen “partly because of their expertise and partly because of their location, being close to Ventura and sort of on that technology highway we have.”

To ensure DFJ will invest in companies that will make Ventura their headquarters, the city is investing another $1.6 million in a second account with DFJ. The funds are to be exclusively co-invested with DFJ in Ventura technology companies.

Ventura’s high-tech business incubator program has reserved the remaining $400,000 from the $5 million of economic development funds. The money is being used to market the program and make improvements to the third floor of 505 Poli St., Ventura, a building that sits behind city hall.

The program is intended to enhance the Jobs Investment Fund by offering companies chosen by DFJ the opportunity to participate in the incubator program.

The program will also incubate and accelerate growth of seed-stage technology companies in Ventura so that they may meet DFJ’s investment standards. Companies in one of the programs are not required to be in the other.

“The hope is the incubator will enhance the efforts of the Job Investment Fund,” said Alex Schneider, project manager for the incubator. He said the 505 Poli building could be ready for occupancy by incubator tenants as soon as August.

The incubator program will provide office and meeting space to new companies, starting at a rate of $300 a month per work station, and link the companies to business mentoring and consulting. The program will also utilize partnerships with accounting, marketing, tech-support and legal firms to offer services to the incubator tenants at group rates, including aid securing patent protection and intellectual property.

Ventura is looking to partner with area universities and angel investor networks to access the regional employee talent pool and connect regional start-up technology companies with investors. The city already has formed partnerships with the Maverick Angels and the Venture Acceleration Initiative at the University of California, Santa Barbara.