*Monterey Bay Critical Conversation.Bud Colligan 6.24.14

1. Bringing It Home To Monterey Bay Bud Colligan South Swell Ventures June 24, 2014 MONTEREY BAY REGIONAL CRITICAL CONVERSATION
2. BUD COLLIGAN SOUTH SWELL VENTURES • Diversified Small Company Economy… • Leveraging Distinct Regional Assets… • While Preserving & Enhancing Our Environment BUD COLLIGAN SOUTH SWELL VENTURES Vision
3. BUD COLLIGAN SOUTH SWELL VENTURES BUD COLLIGAN SOUTH SWELL VENTURES Diversified Small Company Economy
4. BUD COLLIGAN SOUTH SWELL VENTURES BUD COLLIGAN SOUTH SWELL VENTURES Leveraging Distinct Regional Assets
5. BUD COLLIGAN SOUTH SWELL VENTURES BUD COLLIGAN SOUTH SWELL VENTURES While Preserving & Enhancing Our Environment
6. BUD COLLIGAN SOUTH SWELL VENTURES Entrepreneurial Eco-System COLLEGES & UNIVERSITIES COLLEGES & UNIVERSITIES TALENTTALENT INTELLECTUAL PROPERTY INTELLECTUAL PROPERTY CAPITALCAPITAL COMPANY SPIN- OFFS CROSS- FERTILIZATION COMPANY SPIN- OFFS CROSS- FERTILIZATION ATTRACTION OF TOP TALENT ATTRACTION OF TOP TALENT GRASS-ROOTS ECO-SYSTEM GRASS-ROOTS ECO-SYSTEM
7. • Commercial Banks • Credit Unions • SBA Guaranteed Loans • Micro Loans • Crowd Funding • Family and Friends • Equity Investment Sources of Capital BUD COLLIGAN SOUTH SWELL VENTURES
8. Equity BUD COLLIGAN SOUTH SWELL VENTURES
9. Profitably invest in high growth businesses on the Central Coast to grow jobs and economic outcomes for the region Central Coast Angels Mission BUD COLLIGAN SOUTH SWELL VENTURES
10. Experienced Team BUD COLLIGAN SOUTH SWELL VENTURES
11. Investments To Date BUD COLLIGAN SOUTH SWELL VENTURES www.centralcoastangels.com
12. Lifeblood of the Economy Small Business BUD COLLIGAN SOUTH SWELL VENTURES
13. Is Access to Capital Important? of Californians have less than $500 in the bank 40% BUD COLLIGAN SOUTH SWELL VENTURES
14. Is Access to Capital Important? of businesses FAIL due to lack of financing 50% BUD COLLIGAN SOUTH SWELL VENTURES
15. • Acceptable Credit Score • Past Foreclosure • Lack of Documentation • Undocumented Business Owner • Loan too small Obstacles to Successful Financing BUD COLLIGAN SOUTH SWELL VENTURES
16. BUD COLLIGAN SOUTH SWELL VENTURES Microfinance Theory of Change • Provide clients with small but meaningful amounts of money and financial advice • Help them develop strong financial habits, increase income and create jobs • Build a foundation for economic mobility extending into the next generation
17. Opportunity Fund BUD COLLIGAN SOUTH SWELL VENTURES OF loans boost income for business owners by 37% of NEW JOBS are created by small businesses 64%
18. Opportunity Fund in FY 2013 BUD COLLIGAN SOUTH SWELL VENTURES $14,521,444 Invested 1,124 Loans
19. In the first 13 months Monterey Bay BUD COLLIGAN SOUTH SWELL VENTURES 69 Loans $1,107,723 Total $16,054 Average Loan
20. Clients in Monterey Bay BUD COLLIGAN SOUTH SWELL VENTURES 79% Low/Moderate Income 73% Ethnic Minorities 37% Female
21. Business Purpose of Loans BUD COLLIGAN SOUTH SWELL VENTURES
22. • 880 New Businesses • 8,000 New/Retained jobs • $253M in Increased Sales • $343M in Capital Infusion (Debt/Equity) ! ! ! ! ! Small Business Development Centers BUD COLLIGAN SOUTH SWELL VENTURES
23. Monterey Bay SBDCs BUD COLLIGAN SOUTH SWELL VENTURES CABRILLO COLLEGE SBDC Serving Santa Cruz County CSUMB SBDC Serving Monterey & San Benito Counties 325 Businesses served 203 1,736 Hours of Advising 933 2,133 Seminar Attendees 591 RESULTS 22 New Businesses 9 86 Jobs Created 34 134 Jobs Retained 3 $2.6M Sales Increase $2.3M $1.6M Equity Financing Obtained $6.2M $5M Loans Obtained $350K
24. Classes, Advising & Resources BUD COLLIGAN SOUTH SWELL VENTURES • Developing a Business Plan • Preparing Financial Projections • Developing a Marketing Plan • Financing Your Startup • Develop Methods to Reduce Cost • Establish Banking Relationships • Implement Marketing Strategies • Increase Sales Opportunities • Business Expansion Planning • Buying or Selling a Business • Cash Flow Projections / Analysis • International Trade • Organizational Management • Procurement Assistance • Social Media & Web Marketing Assistance • Strategic Plans Advising Services are Available for All Classes and are Confidential & Free Provided by SBDC & Collaborative Sponsors
25. Pacific Community Ventures BUD COLLIGAN SOUTH SWELL VENTURES www.businessadvising.org
26. 2013 Impact: Business Advising2013 Impact: Business Advising $60,000,000+ 3,307 Jobs Supported 331 New Jobs Created 66% Low Income Workers in wages paid to residents of low income communities BusinessAdvising.org 250 Entrepreneurs BUD COLLIGAN SOUTH SWELL VENTURES 362 Advisors 149 Advising Engagements
27. lynda.com Online Courses Web Education Business Tech Creative Leadership CAD Developer / IT Photography Design Video3D + Animation Audio & Music 2,600+ Courses 9,200+ Hours Tools Skills Inspiration ~500 Courses ~700 Courses ~1,400 Courses Online Marketing Project Management Productivity Business Skills Data Analysis Business Tools BUD COLLIGAN SOUTH SWELL VENTURES
28. • 98 PTACs Nationwide; 6 in California – Administered by DLA • Monterey Bay PTAC established in September, 2012 • Covers 38 Central and Northern California Counties • Assists small businesses in obtaining and performing under local, state, and federal government contracts • Offers confidential procurement technical assistance to businesses at no cost Monterey Bay Procurement Technical Assistance Center (PTAC) BUD COLLIGAN SOUTH SWELL VENTURES Helping Businesses Contract with Government
29. • Government Registrations • Small Business Certifications • Government Marketing • Identifying Bid Opportunities • Bid Matching Services • Government Rules & Regulations • Bid/Proposal Review • Contract Management • Contract Compliance • Agency – Supplier Interface • Specialized Training & Workshops Monterey Bay PTAC Services BUD COLLIGAN SOUTH SWELL VENTURES Free, Confidential, Customized, “Cradle to Grave” Counseling
30. 20%of Total Awards (11 of 56) PTAC Results in Monterey Bay BUD COLLIGAN SOUTH SWELL VENTURES $3,315,530 in Government Contracts
31. BUD COLLIGAN SOUTH SWELL VENTURES Bringing it Home to Monterey Bay

Editor's Notes

I’d like to talk today about an economic development strategy for Monterey Bay and focus in particular on the role of capital and technical assistance in developing the entrepreneurial eco-system, and the progress we have made in the last 18 months in a couple of key areas.

I have argued at the FORA conference in December and the Monterey Bay Regional Economic Forum in March that we should align our strategy around
A diversified small company economy
Leveraging distinct regional assets
While preserving and enhancing our environment
I won’t go into all the data supporting the strategy today, but my complete presentation on this topic is available on SlideShare (search for “Bud Colligan”).

Diversified: Diversification brings balance, avoids single industry setbacks, offsets seasonality, and leverages our people talents.
Small: Companies 50 – 1,000 employees—tailored to the size of the community. We have 135K employed in Santa Cruz County and 200K employed in Monterey County, so we’re not going to build 10,000 person companies in the region. Besides, with today’s modern infrastructure, companies don’t need to be BIG to compete on a worldwide basis.

Let’s focus on where we have established strengths and long-term sustainability…and a proven ability to build world class companies:
Agriculture: Berry Capital, Lettuce Capital, $4.4B industry in Monterey County alone in 2013, an increase of 9% (Driscolls, Taylor Farms, Foxy)
Organics: CCOF, OFRF, CASFS at UCSC—the oldest organics training program at any U.S. university; result: 30% of SC County ag is already organic; 5% in Monterey County—so lots of potential for growth (Earthbound Farms, Sunridge Farms)
Marine Science: 24 institutions, 2,100 staff, spending $300M per year
Food Products: Iconic brands, huge business in Monterey already (&gt; $1B) and leverages largest industry (Odwalla, Newman’s Own)
Technology: Both Santa Cruz and Salinas have proximity to SV; SC County has lots of local technical talent (Cruzio, Looker, RedShift, Plantronics)
Genomics: UCSC Genomics Institute—bellweather for computational genomics and already spinning out new companies like Five3Genomics
Gaming: Game design is largest engineering major at UCSC and SC has a history of strong gaming companies (SC Games, Chronic Logic, Graeme Devine)
Recreation: Legacy of innovation in mountain biking, surfing, skate boarding, and golf. (SC Bikes, SC Skateboards, O’Neills)
Tourism and Eco-Tourism: takes advantage of our natural surroundings and farms and leverages world class destination like the Aquarium, Pebble Beach and the Boardwalk.

Any successful new business in this region needs to integrate its business with the environmental values of the community.
Small companies: Tailored to the size of the community
Local jobs: less commuting/pollution – lower carbon footprint overall
Families: Keep kids local/families together – so there are jobs when our children graduate from college
Increased Tax Base: Pay for public services in health care, education, parks, roads, and public safety

The best way to have this future is to create it—through an entrepreneurial eco-system that starts with research and intellectual property, applies talent and capital, and gradually develops the grass roots eco-system to self-perpetuate—creating companies, spin-offs of those companies, cross-fertilization of ideas and ultimately a close partnership and symbiosis with the educational institutions in the area.
I’m going to focus on the capital and education/training part of this eco-system today.

Capital and technical assistance, after the business idea and great team, enable the formation and growth of businesses.
The traditional sources of capital in our region are banks and credit unions, or cash flow generated from internal operations. Most start-up equity has come from friends and family, with an occasional recipient of venture capital from Silicon Valley.
In the last year, a number of news sources of capital have entered the Monterey Bay market.

The cleantech, agtech, genomics, software, hardware, and food products companies that I mentioned earlier are potential high growth companies and would be candidates for venture capital, but not a lot of seed capital has existed traditionally in the Monterey Bay region, so late last year, we formed Central Coast Angels.

The mission of CCA is to profitably invest in high growth businesses on the Central Coast to grow jobs and economic outcomes for the region.
We want to grow jobs and economic outcomes here

CCA has investors from leading companies on the tech side like Google, Microsoft, PayPal and Symantec, and on the food side from Newman’s Own and Harbinger. It’s a group of experienced executives and investors that have run and invested in successful companies.

Investments to date include PredPol, a predictive policing company that helps PDs deploy their officers to predicted crime areas, PayStand, a SaaS software company that enables merchants to provide payment processing services on their websites for a low monthly fee, and NextSpace, a co-working community now in 9 different locations. I’m proud to say that all of them are growing well and hiring.
CCA meets every month and reviews two companies each month. Details on submitting a business plan can be found at centralcoastangels.com.

High growth tech, genomics or food companies are one thing…but
Equally important is small business—it’s the lifeblood of the economy, producing 64% of new businesses---the ones we use every day: restaurants, delivery companies, car mechanics, office supplies, food trucks, landscaping and gardening services, cleaning, beauty salons, travel services, coffee shops, tax preparation, produce stands, party supplies, and other retail stores—the lifeblood of the “mainstreet” economy.

Is Access to Capital important for small business?
Small businesses are started by individuals, and 40% of Californians have less than $500 in the bank. Even with an idea, how can they start a business with such meager resources?

And for those that do start a business, 50% fail due to lack of adequate financing.

Why? There are many obstacles to successfully financing one’s business:
Acceptable credit score
Past foreclosure
Lack of adequate docs to support the loan application
Perhaps you’re an undocumented business owner
Many banks can’t make loans profitably for &lt; $50K

The term micro-credit or microfinance was first coined by Muhammad Yunus of the Grameen Bank in Bangladesh in the late 1970’s. It was an attempt by him to reverse the age old “vicious cycle” of low income, low savings and low investment, into the “virtuous cycle” of low income, injection of credit, investment, more income, more savings, more investment, more income.
We’ve taken that theory of change to help build small businesses in Monterey Bay and establish a platform for economic mobility, today and for the next generation.

Opportunity Fund, which is the largest microlender to small business in CA, opened for business in Monterey Bay 13 months ago. Its results demonstrate the impact of the virtuous cycle that Muhammad Yunus talked about, but we’re doing it right here in CA. Recipients of Opportunity Fund loans see their incomes rise on average by 37%.

In 2013, Opportunity Fund provided $14.5M of microloans ($2,500 - $100,000) statewide.

And in the Monterey Bay region, a total of 69 loans for $1.1M. Since launching last May, Opportunity Fund has received support for its efforts from the Packard Foundation and the Community Foundation of Monterey County, and I am hopeful we will receive support from Community Foundation of Santa Cruz County shortly.

All of the types of Mainstreet businesses I mentioned earlier have been recipients of Opportunity Fund loans, and we are truly addressing the issue of “access to capital” across gender and ethnicities.

Loans are being used for working capital, tenant improvements, equipment, transportation purchases and many other uses.
If you or anyone you know is interested, please contact Mary Perdomo, who is our loan consultant in Monterey Bay, or go to the Opportunity Fund website to apply.

Another important element in small business success is education and technical assistance. The Small Business Development Centers do an amazing job in this area, and are a resource for the whole community.
SBDCs in CA deliver services through many locations and have been involved in 880 new businesses in 2013, with large infusions of new capital.

In Monterey Bay, I’m sure many of you know Teresa Thomae at the Cabrillo College SBDC and Andrea Nield at the CSUMB SBDC. They have served hundreds of businesses in 2013 with classes, technical assistance and referrals for loans and equity financings.

Classes, advising and resources include a list of just about anything you’d want to know about starting and growing a business. And personal advising services are confidential and free.

In 1998, I co-founded Pacific Community Ventures. One of our leading products has been business advising as well. PCV has hundreds of advisors in functional areas like marketing, sales, operations, human resources, finance, manufacturing, and distribution. But we’ve always been challenged to scale the program because of the need to match business owners and advisors by hand. We launched a new website in the last year, called businessadvising.org, and now have the capability to match advisors anywhere in the U.S. with businesses in other locations, like the Central Coast. It’s a new capability that we’re really excited about!

In 2013, PCV had 149 advising engagements on businessadvising.org. PCV has about 10 engagements in Monterey Bay…we are trying to publicize the availability of the service…so let business owners know about it!

Online learning is the next frontier, or I should say it’s already arrived in a big way. There are many business resources available online. lynda.com is the leading online library of business, creative and technical courses (full disclosure: I’m on the board). lynda provides over 2,600 courses involving over 9,200 hours of instruction, all for the a monthly fee of $25—start or stop anytime you like. It’s an incredible resource!

I want to mention one more resource in the technical assistance area, and it’s the Monterey Bay Procurement Technical Assistance Center, established less than 2 years ago and already making an important impact in our region.
The PTACs are administered by the Defense Logistics Agency and we are lucky to have one here in Monterey. The PTAC assists small business in obtaining and performing under local, state and federal government contracts.

You can see the list here of free, confidential counseling provided by PTAC.

The Monterey Bay PTAC covers 38 counties in CA. It is a joint effort of the DLA the County of Monterey, the City of Salinas, and the leadership of the MCBC.
We are fortunate so far that Monterey and Santa Cruz counties have received 20% of the total awards worth a total of $3.3M.

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*Monterey Bay Critical Conversation.Bud Colligan 6.24.14

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*Monterey Bay Critical Conversation.Bud Colligan 6.24.14

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