Portland Has a Seed Problem
For months I’ve been bouncing around this topic in my head. However, I’ve been struggling with how to outline this problem in a way that does not call people out for what they’re doing to impact the early stage startup scene in Portland. I mean, I think we all know the parties at play, but there are a substantial amount of people who could easily change the tide to help early stage companies get to their seed and A round of funding, but nothing’s being done.
Let’s start with the basics shall we? Now, some people will argue that “seed” stage funding is a relatively new term and many early stage startups can say that they’re raising an “A” round. Most people don’t know that the naming of these rounds is a completely arbitrary process. Hell, I’ve even thought of naming my funding rounds after Pokemon. Why not?? “Hey there VC person! We’re raising our ‘Charmander’ round of financing and we’re about 1/3 of the way to our goal.” That, to me, sounds way better.
But I digress, let’s get back to the issue at hand. Early stage companies that are looking for their first round of funding are challenged with finding anyone within Portland (or Oregon as a whole for that matter) to help them get a leg up. Sure there are a few organizations in Portland that claim to help early stage startups, but I bet you could ask any Entrepreneur going through a round of funding how difficult it is to find funding here and you’d get the same answer. “No one here invests in seed rounds!”
This post is not meant to call anyone out specifically because those that are struggling with this already knows where the issue resides. One could even look at the companies that have recently raised early rounds of funding to see that there is a glaring omission of local early stage institutions involved.
So what is behind this lack of movement of funds to help early stage companies? My hunch is that the overall climate of investing in Portland is just not the same as it is in other larger markets. And while that is obvious to some, that may not be obvious to others. What’s likely happening is no one wants to risk their money on a bet on early stage companies when so many companies fail. I totally understand that. But here’s my answer to that. YOU’RE NOT A FUCKING INVESTOR IF YOU DON’T TAKE RISKS!!!
If you think you’re going to make Facebook money on each investment you have no business getting involved in the startup fund raising scene to begin with. If your goal is not to HELP early stage companies with the guidance they need to avoid early mistakes, THEN YOU ARE NOT THE RIGHT INVESTOR! Companies at an early stage are looking for partners that can help them grow and get to the next level. For them, it’s not about just cutting a check. Yes, that is important, but they are looking to find investors that can help companies through their own experience.
Now, a lot of people will read this and think this is self-serving. And some would be right. But I can tell you from experience that the funding scene for early stage companies in Portland is non-existent. This just isn’t from my own experience of going around town, pitching my business, and hearing, “You’re too early for us.” This is coming from the sheer amount of chatter around town that this is a big problem that needs to be fixed.
It’s nice to see that people are even having a discussion about this. Some are doing more like working to create a group of other Entrepreneurs as a way to help each other out. This is a great start. However, what I want to caution those that are putting together events or groups in town in an effort to help. These events should cost next to nothing or even be free for early stage companies. There should be ZERO reason an early stage Entrepreneur should have to decide whether or not to put money toward their business, or your event. This is a practice happening more and more around Portland and it’s cringe worthy. Unless you can provide REAL inherent value to a company, stop charging them. You are part of the problem, not the solution even though that may not be your intention.
While it’s clear the solution to this problem is not an easy fix, nor is it something that can happen overnight, it is something that can begin to happen today. Right now. If you are an early stage investor, or someone that would like to get into the early stage funding scene, put your money where your mouth is. Stop posting stupid shit on blogs that have zero value or does not put fuel into the jets of the incredible startups being created in Portland and the State. Write a check to someone that has a great idea or has at least gotten market validation. If you are part of an Angel or Seed Group, advocate that the group take more risk on early stage companies. STOP telling companies to go out there and make money! What the fuck do you think they’re trying to do?!? This stuff takes time and if you are looking to make money on every single investment, then I’ll refer back to my earlier statement about you being the wrong investor in early stage companies.
While I am a business owner and one that will happily stay in Portland regardless of raising money outside of Portland or not, I am the minority. I’m hearing more Entrepreneurs telling me that they are considering leaving Portland for other markets where the funding scene is not as challenging. This puts Oregon at risk of losing jobs and tax revenue. And I’m sure no one reading this with a stake in Oregon and/or Portland wants to see that happen. So get funding!!