â€œWhoâ€™s the small-business advocate who actually helps themâ€”whoâ€™s not out for money all the time? Thatâ€™s a challenge,â€ says entrepreneur Andy Van Valer, leaning forward at his desk at NextSpace. Â â€œWhoâ€™s on their side, whoâ€™s not really just out there for the money?â€
Van Valer, a business consultant, helped organize this yearâ€™s local Small Business Saturday, which falls on Nov. 26, and he owns Slingshot SV, a company that helps new entrepreneurs find their way. Heâ€™s also among a group of locals on the cutting edge of local investing, looking to help worthwhile small businesses find the assistanceâ€”financial or otherwiseâ€”theyâ€™re looking for.
Over the years, Van Valer has noticed that all too often small business owners will get tangled up either with advisers who donâ€™t know what theyâ€™re talking about or firms charging a prohibitive fee for simple advice.
Thatâ€™s partly why Van Valer has put so much energy into growing Small Business Saturday, working with the countyâ€™s economic development department and his friend Bryce Root, a marketing expert, free of charge.
Together he and Root created a website, press releases, blog posts and promotional materials to assist participating businesses. This local spin on Black Friday was started by American Express six years ago, with communities around the country still joining in.
With well over 1,000 county businesses participating this year, the day of local shopping offers deals from Boulder Creek to Watsonville and puts everything from boutiques to taquerias in the spotlight. Â
In Santa Cruz, â€œthinking locallyâ€ sometimes sounds like a clichÃ©, but as this yearâ€™s event draws near, a new trend has emerged in Santa Cruzâ€™s economy. More techies and business people are thinking creatively about the landscape of local funding and investing, as well as how to improve it.
Van Valer says he has been trying for five years to figure out how to help â€œlocals fund locals,â€ and the wheels on that movement recently began to turn.
The office where heâ€™s sitting near the back of NextSpace is filled with the color orangeâ€”orange business cards, orange day-passes to the co-working spot, a rusting orange beach cruiser. A few feet away, typing away on his laptop, sits NextSpace CEO Kurt Grutzmacher, who shares Van Valerâ€™s passion for local investments.
Grutzmacher also has a few consulting clients of his own. Both entrepreneurs say theyâ€™ve proudly put money into clientsâ€™ companies when they truly believed in them and didnâ€™t know how else their clients would find the cash.
Grutzmacher has also invested in his favorite places to eat or drink, like Gabriella CafÃ© and Santa Cruz Mountain Brewing.
â€œI donâ€™t go around actively seeking it, but when those opportunities arise, itâ€™s a dream marriage. You know these people. You trust them. You know the business. Theyâ€™re right here,â€ says Grutzmacher, whoâ€™s wearing a San Jose Sharks hat. â€œWhy wouldnâ€™t you support â€˜em? Iâ€™ve been a customer of theirs for 10 years. Itâ€™s for a reason.â€
Grutzmacher gets so excited about the importance of local community that he started bringing his kids to city council meetings when they were in preschool.
Longtime financial services planner Michael Meara, who lives in Aptos, has also spent plenty of time wondering how to get more folks in the Monterey Bay to partner in their neighborsâ€™ ventures. It would be better for the local community, he says, than if everyone just kept pushing their money toward Wall Street.
Meara would love, for instance, if it became easier for more individuals to invest in mom-and-pop businesses that are likely to grow steadily over the years, making for some smart money along the way. Historically, cash flowing into emerging small businesses typically comes from venture capitalists, who often make bets on lots of tiny tech companies, knowing that if one of them makes it big, they can increase their money 100-fold or more. Â
â€œThis is different than that. Youâ€™re not trying to make a home run, just singles. Maybe a doubleâ€”ching,â€ he explains, swinging his arms in the air as if holding a baseball bat. â€œAnd then youâ€™re loading up bases. For me itâ€™s about leverage impact. One plus one equals four. Or five.â€
As interest in the topic grows, Meara also has his eye on a few pieces of state legislation that could ease regulations on who can become an accredited lender. The current rules, which were borne out of the Wall Street Crash of 1929, have aimed to eliminate â€œfly-by-nightâ€ trading practices, Meara says, but he fears theyâ€™re now inhibiting savvy business people from making good small-time investments.
Itâ€™s that lower end of the funding spectrum where itâ€™s already more difficult to secure cash. Banks donâ€™t typically dole out less than $250,000 because itâ€™s hard for them to make those types of loans profitable. Even most venture capitalists and angel fundsâ€”like Central Coast Angels, which has been in the Monterey Bay since 2014â€”would rather not mess around with smaller investments.
But a new local funding group called Angels by the Sea, which formed last year, has specialized in loans as low as $25,000. With more than 20 members including Van Valer and Grutzmacher, itâ€™s already made a few investments, including LifeAID beverages and InBoard, an electric skateboard with motors in its wheels.
Board member Randy Whiting says the groupâ€™s membersâ€”some of whom have decades of experience in related fieldsâ€”have been able to offer lendees guidance, which can be almost as helpful as a check in getting to the next level.
That level, though, Van Valer, points out, is not for everyone. Now and again he meets a small business owner whoâ€™s grappling with long-term planning, and he reminds us that itâ€™s perfectly fine to run a small-scale operation.
â€œTheir cash flowâ€™s great. Their business is good, but for some reason, someoneâ€™s convinced them that they have to open two more restaurants or another brewery or another clothing store down the street, when really theyâ€™re fine where they are,â€ he says. â€œEnjoy it. And thatâ€™s OK. Thatâ€™s one of the challenges. People feel like they have to grow all the time. Not really. Thereâ€™s a lot of people looking for VC money. They want to be the next big thing. Thereâ€™s nothing wrong with being a $2-million-a-year business. So just, do that, be happy if thatâ€™s what you want. Sometimes you go to that next stepâ€”itâ€™s hard.â€