Story updated at 2:18 p.m. June 23:
Of all the challenges facing Santa Barbara as it tries to reinvent its struggling State Street business district, the biggest may be getting the capital to attract and retain innovative companies.
From San Luis Obispo to Westlake Village, tri-county communities are awash in startup weekends and small cash awards for winning business plan competitions. But getting that next round of capital can be really tough — having access to even a small pool of capital to get from zero to standing up can give a city a huge competitive advantage.
That’s why I was encouraged by a recent conversation with Michael Smith, a serial entrepreneur whose father was the late Bob Smith, a media entrepreneur and former owner of KEYT Channel 3. Through their Ponvalley family office, Smith, his wife Nati, his mom Anne Smith Towbes and sister Jennifer Smith Hale have committed $1 million over the next five years to create an Impact Investment Fund that will encourage innovation through investments in for-profit ventures that tackle environmental and social issues.
“We are looking to ignite what has the potential to be a vibrant impact ecosystem and are hoping to inspire others to get in the trenches with us,” he said. The fund with be administered by Kiah Jordan of Impact First Financial and it hopes to provide a way to incubate the next generation of breakthrough companies, following in the footsteps of Sonos, Lynda.com, Procore and Deckers Brands.
Where the Impact Investment Fund may have its most immediate impact is in joining a growing chorus of voices advocating for a rethinking of how State Street operates for business. Smith told me that the fund is likely to advocate for more housing in the downtown corridor for employees and prospective employees, and in using vacant storefronts to showcase the current generation of impact startups — Apeel Sciences, Salty Girl Seafood and others.
The push for changes to downtown is coming from all directions, including the Downtown Organization, whose recently released retail study came down hard on vagrants, the lack of appealing storefronts and the need for more vibrant signage as important ingredients for a State Street reinvention.
The study, by Seattle-based Downtown Works, also pointed to the need to change the mix of downtown properties, enabling more housing and more residents to spur a more diverse mix of shops and dining options. It also suggested better options for the thousands of workers who commute to the downtown area daily from Santa Maria and Ventura.
UC Santa Barbara professor Peter Rupert said innovation could take in some unusual industries including maker spaces for artisans in food and beverages as well as crafts.
Those small businesses can have a high impact because they tend to source products locally and become part of a self-sustaining ecosystem. Putting a collection of them in small spaces that used to be one big space can have a bit of a multiplier effect.
The mood for change in the downtown core has some civic leaders thinking about how they might develop more residential spaces. Others have been thinking about looking for ways around strict architectural and design guidelines to create bike sharing stations in the city center.
But the need for capital to get businesses off the ground is still key. Funding for startups that don’t have the track record to get bank loans and don’t want to pitch venture capitalists on becoming the next Uber or Facebook face a tough time.
That’s why it was encouraging to hear about the launching of the Impact Investment Fund, which can be reached by email to [email protected] The launch also may inspire others to create impact funds up and down the Central Coast.
• Reach Editor Henry Dubroff at [email protected]