Capital management companies bringing startup money to Idaho

One of the perennial complaints – accurate or not – from Idaho entrepreneurs is that there’s a lack of investment money for startups. But that’s changing as an increasing number of capital management companies are setting up shop in Idaho.

Greenbriar Capital Corp. is moving its head office from Newport Beach, California, to Boise, which could eventually bring up to 200 jobs to the state.

“Idaho has a more favorable tax structure,” said chairman Dan Kunz, a former Morrison-Knudsen executive who has been living in Boise for more than 40 years and a founder of U.S. Geothermal, which sold to Ormat earlier this year. Idaho also has a highly educated and technical workforce, and is tech-savvy, he said.

Another reason for the move is an agricultural project with a South Korean technology group, Kunz said.

“They already created artificial intelligence software that allows a farmer to interact with his field and receive inputs and data on components that matter as a grower,” he said.

Currently being tested in greenhouses in Spain, the technology may be coming to Idaho potato fields, he said. “Most of these guys have millions at risk, and pray for a good summer and for water,” he said. “If we can do anything to reduce that risk, it’s well worth it.”

In renewable energy, Greenbriar is also involved in a solar project in Puerto Rico that was affected by the territory’s hurricane and credit crisis, Kunz said. The company’s other projects include a 600-acre sustainable housing project near Tehachapi, California, and a blockchain project linked to an Arizona real estate company, he said.

Aspatore Ventures announced in August that it was setting up shop in Boise to fund ideas. It is different from other companies because at first, the firm is going to focus on developing its own business ideas, but it will be spinning out companies and growing jobs in Idaho. Like Greenbriar, it was attracted to Boise because of the city’s proximity to California, as well as its lower wages.

Aspatore is now launching its second and third companies, and will be launching a fourth in January, with another four expected next year, said P. Simon Mahler, startup director.

“The company we launched in Idaho back in July has doubled its sales every month since,” he said. Another company under the Aspatore Venture umbrella has started “massive” hiring in Boise, he added. In addition, the company is launching an entrepreneurial after-school program for kids and looking for opportunities in rural Idaho towns, he said.

These companies join other Idaho-based capital management companies and angel groups, such as Trolley House Ventures, Weobly One Capital, and Idaho Capital Ventures.

Trolley House – named after the iconic Boise restaurant, because founders wanted something that represented Boise without being explicit about it – is a nine-member investment group that typically gets personally involved in the companies it funds, said Raino Zoller, formerly executive director at Trailhead, the downtown Boise nonprofit business co-working space, who also worked at ProClarity and was part of the first Boise angel fund. The company has been in business about two years, and most of the members have been involved in investing in startups for at least five years, he said.

“It has the goal of helping early-stage companies get launched and navigate the early days of the company,” Zoller said. Companies can be either pre- or post-revenue, as long as they have some kind of product and someone in the group believes they can help them, he said.

“We don’t have a fund,” Zoller explained. “We’re all investing our own money,” and members make their own individual decisions about whether to invest.

“Sometimes a smaller group will invest in companies, but then we don’t consider it ‘Trolley House,’” he said.

Typically, the group will invest from $100,000 to $200,000 in an opportunity, and someone in the organization will take on some role with the company, such as an advisor or board member, he said.

Angels, ventures, and capital management – what’s the difference?

People throw around different terminology for the various kinds of groups that provide funding to startups. Here’s a breakdown, according to Raino Zoller, formerly executive director at Trailhead, the downtown Boise nonprofit business co-working space, who also worked at ProClarity and was part of the first Boise angel fund.

• A venture capital company is an organization that pools money from investors to invest in (typically) startup companies. Typically they raise money from institutions and high net worth individuals and invest when a company is more established, usually investing $2 million and up per company (depending on what stage businesses they focus on). Investors usually have no role in managing the fund or the companies.
• An angel fund is similar, but typically focuses on very early stage deals, usually investing less than $1 million per company. The investors often take on roles within the fund, such as helping with due diligence and serving on boards.
• Angel group investors work together to evaluate and invest in early stage startups. Unlike an angel fund (which requires members to commit a certain amount of money that is pooled and invested together), in an angel group each member makes their own decision on a deal-by-deal basis.  There is no “committed” capital to invest.
• A capital management company has a mandate to invest its clients’ capital into specific types of investments. They evaluate investment opportunities for their clients, in some cases making recommendations and in others suggestions. More frequently, a capital management company invests in a venture fund rather than running the fund and sometimes invests directly in a company.