In August 2018, Elk Grove launched its Startup Elk Grove Incentive Program to create local anchor companies that employ residents. It offers grants to support startups based in the city during their launch, scaleup or build-out phases. Grants run as high as $250,000, with amounts based on the phase and the money delivered in tranches based on performance. Participation is by invitation only, and the city uses a third-party consultant to assess startups just as a private-equity firm would, says Luis Aguilar, the city’s economic development specialist.
“(Cities) are always sort of going after the corporate relocation,” Aguilar says. “We thought we had a better chance identifying innovative small startup companies early on, investing in them and supporting their growth here locally.” Entrepreneurs like the program because most investors take equity in exchange for their investment, while the program doesn’t, he says. There’s a catch too: If a company leaves, the grant becomes a loan.
“We thought we had a better chance identifying innovative small startup companies early on, investing in them and supporting their growth here locally.”Luis Aguilar, economic development specialist, City of Elk Grove
So far the program has awarded three grants. One went to tech firm EyeRate, whose platform lets businesses connect positive online reviews with rewards to employees. Two of its three founders grew up in the city and moved to the Bay Area but wanted to come back home to start their own firm.
In August 2020, they got $75,000 in incentive program funding when it was just the three of them working from a garage. Now they have 20 employees, have raised $1.7 million in outside seed funding and expect to grow to 50 staff within a year, according to EyeRate cofounder and CEO Ray Weisberg.
Next up the city is looking to launch a startup pitch competition with cash prizes awarded to winners, Aguilar says.
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