A Richland business
incubator that provides space and mentoring to startups is adding a critical
new tool to its lineup – money.
Fuse SPC, a unique
social-purpose corporation with offices on The Parkway, has launched the Fuse
Fund with a goal of raising $2.5 million to invest in young, local companies.
The fund is capped at $10 million for legal purposes.
The fund, operated
by Fuse Advisors LLC, expects to make its first two investments this month—in a
Kennewick tech company and a Richland food startup.
The Fuse Fund board
is led by Marty Conger, who retired last year as chief financial officer for
the Pacific Northwest National Laboratory, and a team of serial entrepreneurs:
Brett Spooner, Ron Boninger, David Lippes and Megan Chalk.
board brings deep expertise in accounting and finance, scrutinizing investments
and turning ideas into successful ventures.
Fuse Fund will
invest between $75,000 and $150,000, with a cap of $250,000 on follow-up
investments. It assigns mentors to coach its companies.
To date, six
companies have approached Fuse Fund and four have made formal pitches.
Conger isn’t ready
to announce investments but confirmed it has made conditioned offers to two.
Both are fast-growing Tri-City startups that have broken into their respective
markets and have paying customers.
The fund is less
concerned about the industry than the location. It invests in the Tri-Cities
—defined as Benton and Franklin counties.
Conger said the
investment board is attracted to companies led by a team with drive and passion
to succeed and a market for their product.
have great ideas and passion but thin business résumés, Fuse SPC can help them
become investor ready.
A boost from the
Port of Benton
The Port of Benton
helped kick off the fund in 2018 when it awarded Fuse SPC a $254,000 grant to
create a local seed fund, saying it would lead to investments in more than 25
small businesses in the first years.
The grant paid for
legal fees, website development and development of investment documents, among
other pre-launch costs.
soliciting accredited investors last summer – those with $1 million or more in
assets and an annual income of $200,000 or more, or $300,000 for married
customers. The minimum investment is $50,000, though about a third invest more.
The fund, which is
wholly owned by Fuse SPC, takes the position of general partner. Investors come
on as limited partners in Fuse Advisors.
The fund is capped
at $10 million to stay below the level required to register as a security.
Conger expects to close the fund later this year.
High end of
emerging businesses is risky and Fuse Fund describes itself as being at the
high end of the risk-reward scale.
However, it notes
that comparable undertakings typically deliver returns in the two- to
three-times range over eight to 10 years but there are no guarantees.
The fund’s mission
is to support local entrepreneurs.
investments are split 80-20 between investors and Fuse SPC, which takes an
Conger said 20
investors, including the Tri-City Development Council, have committed $1.3
million to date. It has registered another $300,000 from “probable” investors.
With the exception
of an Arizona investor with Tri-City ties, the investment capital comes from
Tri-Citians, though it doesn’t have to be.
“I’ll take money
from anywhere,” Conger said.
David Lippes, a
real estate investor and serial entrepreneur, is an investor and board member
as well as business coach to one of the fund’s target companies.
Lippes said Fuse
Fund will provide the much-needed third leg of developing a business – growth
provides real estate in the form of its coworking space in Richland and support
in terms of its mentoring and training program. With the fund, it can help
young businesses leverage local investment dollars.
“This is the last
major piece,” he said.
Not for startups
Fuse Fund invests
in young and emerging businesses, not startups.
It isn’t seeking
would-be entrepreneurs daydreaming about quitting their jobs to pursue an
idea. Rather, it targets existing
businesses that have outgrown their startup capital, typically gifts and loans
from family and friends.
have launched. They may be earning revenue or are close to it. They’ve reached
the stage where they need to hire more staff, invest in more equipment, enter
big contracts — beyond the limits of most family-and-friends capital.
becomes whether they’ve raised $100,000 or $2 million that way, they’ve worked
through that capital. Where do they go next?” Lippes said. “If you live in the
Tri-Cities, the answer is usually somewhere that is not the Tri-Cities.”
Fuse Fund is
positioning itself as a partner rather than one-stop shop. It provides some,
but not all, the funds a business may seek.
The two firms it is
preparing to support are raising $750,000 and $2 million, respectively, to
support expansion plans. Investments from Fuse are helping them attract other
“Funds like to see
other funds invest,” Conger said.
Over time, those
relationships will help Fuse draw attention to local firms from larger funds in
Seattle and elsewhere.
The state of
Securing funds for
a promising business is never easy, particularly in rural areas far removed
from financial hubs. That doesn’t mean there isn’t money to be had.
investors placed $9.1 billion in seed and angel capital in 2019 nationwide,
translating to a median investment of $1.1 million in 4,556 deals, according to
Venture Monitor, a publication Pitchbook and the National Venture Capital
The West Coast,
including Alaska and Hawaii, accounted for more than a third of all deals in
2019. But that doesn’t translate to investments in rural areas such as the
Department of Commerce said its options to support young business are limited,
but it confirmed it’s a barrier to entrepreneurs who are too young to qualify
for traditional bank support.
The state’s StartUp Washington website offers links to funds: startup.choosewashingtonstate.com/resources/funding.
For information about investing in the fund or learning more about pitching a business to the investment committee, contact Marty Conger at email@example.com.
Go to fuse.fund for more information.
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