NextSpace CEO Kurt Grutzmacher
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Who Gets the Local Economy Moving?

As Small Business Saturday nears, a group of Santa Cruzans look to shake up local investing

NextSpace CEO Kurt Grutzmacher has invested in a number of small companies he believes in, from tech startups to his favorite local restaurants. PHOTO: CHIP SCHEUER

“Who’s the small-business advocate who actually helps them—who’s not out for money all the time? That’s a challenge,” says entrepreneur Andy Van Valer, leaning forward at his desk at NextSpace.  “Who’s on their side, who’s not really just out there for the money?”

Van Valer, a business consultant, helped organize this year’s local Small Business Saturday, which falls on Nov. 26, and he owns Slingshot SV, a company that helps new entrepreneurs find their way. He’s also among a group of locals on the cutting edge of local investing, looking to help worthwhile small businesses find the assistance—financial or otherwise—they’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 don’t know what they’re talking about or firms charging a prohibitive fee for simple advice.

That’s partly why Van Valer has put so much energy into growing Small Business Saturday, working with the county’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.  

In Santa Cruz, “thinking locally” sometimes sounds like a cliché, but as this year’s event draws near, a new trend has emerged in Santa Cruz’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 “locals fund locals,” and the wheels on that movement recently began to turn.

The office where he’s sitting near the back of NextSpace is filled with the color orange—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 Valer’s passion for local investments.

Grutzmacher also has a few consulting clients of his own. Both entrepreneurs say they’ve proudly put money into clients’ companies when they truly believed in them and didn’t know how else their clients would find the cash.

Grutzmacher has also invested in his favorite places to eat or drink, like Gabriella Café and Santa Cruz Mountain Brewing.

“I don’t go around actively seeking it, but when those opportunities arise, it’s a dream marriage. You know these people. You trust them. You know the business. They’re right here,” says Grutzmacher, who’s wearing a San Jose Sharks hat. “Why wouldn’t you support ‘em? I’ve been a customer of theirs for 10 years. It’s for a reason.”

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 neighbors’ 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.  

“This is different than that. You’re not trying to make a home run, just singles. Maybe a double—ching,” he explains, swinging his arms in the air as if holding a baseball bat. “And then you’re loading up bases. For me it’s about leverage impact. One plus one equals four. Or five.”

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 “fly-by-night” trading practices, Meara says, but he fears they’re now inhibiting savvy business people from making good small-time investments.

It’s that lower end of the funding spectrum where it’s already more difficult to secure cash. Banks don’t typically dole out less than $250,000 because it’s hard for them to make those types of loans profitable. Even most venture capitalists and angel funds—like Central Coast Angels, which has been in the Monterey Bay since 2014—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, it’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 group’s members—some of whom have decades of experience in related fields—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 who’s grappling with long-term planning, and he reminds us that it’s perfectly fine to run a small-scale operation.

“Their cash flow’s great. Their business is good, but for some reason, someone’s convinced them that they have to open two more restaurants or another brewery or another clothing store down the street, when really they’re fine where they are,” he says. “Enjoy it. And that’s OK. That’s one of the challenges. People feel like they have to grow all the time. Not really. There’s a lot of people looking for VC money. They want to be the next big thing. There’s nothing wrong with being a $2-million-a-year business. So just, do that, be happy if that’s what you want. Sometimes you go to that next step—it’s hard.”

News Editor at |

Jacob, the news editor at Good Times, won the 2014 award for best local government coverage from the California Newspaper Publishers Association. A longtime basketball and football fanatic, Jacob has evolved into a shameless fair weather fan and band wagoner for hot West Coast sports teams. He also enjoys arguing with others about where to find the best burrito in town.

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