Venture fund raising $15M for entrepreneurs Regional fund is backed by nonprofit networking group

Friday, March 21, 2008

Venture fund raising $15M for entrepreneurs

Regional fund is backed by nonprofit networking group

Sacramento Business Journal - by Melanie Turner Staff writer
Local venture capital funds DCA Capital Partners and Wavepoint Ventures have agreed to act as fund management advisers for a new regional venture fund that is in the process of raising $15 million.

Golden Capital Venture Funds is backed by Golden Capital Network of Chico, a nonprofit networking, training and consulting group that fosters entrepreneurship and early-stage investing, something it says is often overlooked in Northern and Central California markets.

In October, GCN received a $250,000 federal grant to cultivate startup companies in those markets. The money is being used to educate and train entrepreneurs in about a dozen communities, and to establish Web portals for those communities.

The portals allow entrepreneurs, investors and industry experts to communicate and collaborate online, said Chris Soderquist, a general partner with Golden Capital Venture Funds. The main portal can be found at venturecommunities.com.

Besides bringing people together, GCN intends to fund early-stage companies. When GCN announced last fall it had received the grant, officials also said they planned to launch eight regional networks of angel investors, each with a goal of $4 million per fund, for what could have become a $32 million venture fund to back seed-stage companies in the north state.

The organization has since altered the plan, opting for "one fund representing multiple communities," said Soderquist, adding that legal and accounting costs made multiple funds cost-prohibitive.

The group is targeting $15 million in the first round, with a goal of developing other investment chapters, in other communities, to raise a second or third fund.

The initial fund, Soderquist said, will support 20 to 25 seed-stage companies over three to five years in five regions: Chico, Yolo County, Sacramento, Santa Rosa and the wine country, and the Monterey/Santa Cruz area. All five regions have few, if any, early-stage investment resources; they're anchored by a university; and they're growing and have had migration from the Bay Area, Soderquist said.

The fund has three general partners: GCN chief executive officer and founder Jon Gregory, GCN vice president and founder Dan Nguyen-Tan, and Soderquist, a local entrepreneur and founding board member of the Sacramento Area Regional Technology Alliance.

Roger Akers of the Sacramento Angels has been appointed chairman of the fund's advisory group.

Given all that GCN has done to connect startups to investment groups over the years, it was a natural for GCN to form its own fund, said Pete Bernardoni, a managing director at Wavepoint Ventures.

"We've known these folks for years," he said. "They've done a great job in terms of economic development with these startups. We would love to see them have some money to help grow these companies."

Since 1999, GCN has showcased more than 1,000 companies to more than 350 investment groups through its venture capital conferences. GCN alumni companies have raised more than $1.3 billion in venture capital financing, according to GCN.

Golden Capital Venture Funds aims to be the first institutional investor for companies in these communities seeking an initial round of between $250,000 and $750,000, Soderquist said.

While Wavepoint Ventures targets early- to mid-stage investments, DCA Partners is focused on mid- to late-stage investments.

"So we're not competitive but complementary," Soderquist said.

Wavepoint Ventures and DCA Partners will be paid an undisclosed amount to help manage and operate the fund. Though Soderquist said the venture capital funds won't get priority for investments for their role in the fund, Bernardoni said venture capitalists will benefit when there are more opportunities to invest in the region.

melanieturner@bizjournals.com | 916-558-7859



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