The statewide nonprofit Regional Accelerator & Innovation Network Catalyst is teaming with Portland Seed Fund on a new program to get capital into the hands of more founders while also bolstering the investor’s ability to train a new generation of venture capital.
RAIN Catalyst has secured $1.5 million for the project. Half of the money is from the U.S. Economic Development Administration, and the other half is matching funds from state, local and philanthropic sources.
Of the $750,000 from the federal agency, about $450,000 is distributed over three years to PSF. The fund will use that money for fund management and to hire an associate who will be trained on how to raise and run a fund. That person must be a woman or a person of color.
All of the remaining money, including the $750,000 in local matching funds, will be used by RAIN to build out its ecosystem in existing and new communities that want to partner with the group. RAIN, which will source deal flow for PSF, already works in 52 communities across Oregon and Washington. It goes into local communities where it is invited and works with local stakeholders on building an entrepreneurial ecosystem for economic development.
The funding from this project is key for both organizations because it helps build the infrastructure for the work so the ecosystem can be sustainable. For PSF, the fund has been small for years and it is difficult for small fund managers to exist on the management fees alone. This has been why venture has historically been a place for people with family and personal wealth. PSF is in the process of raising a fourth fund.
“PSF is expert at making huge impact from small funds,” said PSF co-founder and managing partner Angela Jackson. “In part we are able to do it because fund managers can absorb through other income sources the low actual fee a person earns to run a fund. It’s a bad way to bring people into venture who simply don’t have that backup or partner or family wealth. It’s an equity issue to have enough to pay people to enter in the field.”
For RAIN, it is a similar story. The funding will help pay the staff that work to help founders in communities. Those founders do not pay for the help.
“We will do two things: We will build the ecosystem and find the deal flow,” said RAIN Catalyst CEO Caroline Cummings. “We want to invest in scalable technology and we have a fund partner. Before we hand you off we make sure you are fund-ready. That’s work on a business plan, a pitch, or help finding customers. All the things done in an accelerator.”
Investment isn’t guaranteed, but it will have much higher likelihood after the support from RAIN. The group will also help educate any individuals or institutions who are interested in this type of investing get connected with PSF.
The program is also meant to help women and Black, Indigenous and people of color founders get investor-ready and connect them to investors.
The matching dollars are coming from Business Oregon, 16 Oregon rural cities, the Lemelson Foundation, the counties of Lane, Linn, Benton, and Grant; the Woodard Foundation; and Cottage Grove Community Development Corp.
“Both RAIN and the Portland Seed Fund already intentionally serve underrepresented entrepreneurs and innovators, so this partnership will supercharge our efforts — enabling us to make more impact sooner,” Cummings said in a written statement. “Together, we are eager to help more overlooked and underestimated entrepreneurs start and grow exceptional technology companies here in the Pacific Northwest.”
