If Southern California is ever to emerge as a mecca for technology start-ups that rivals Silicon Valley, it needs to attract more venture capital.
And one way to do that is to lure experienced entrepreneurs to Southern California who have track records of running successful, venture-backed companies.
That’s part of the emerging strategy for the Alliance for Southern California Innovation, a new nonprofit that has the ambitious goal of reaching parity with Silicon Valley by 2025 in terms of the amount of venture capital raised by start-ups.
“This area is missing venture capital, and the fact that you have to go to Sand Hill Road (in Silicon Valley) to get your money is a major problem,” for local start-ups, said Steve Poizner, head of the alliance.
Poizner, a serial entrepreneur and former California insurance commissioner, spoke Friday at a board meeting of San Diego start-up incubator EvoNexus, where he also serves as chief strategist. Two of Poizner’s former companies, SnapTrack and EmpoweredU, were acquired by Qualcomm.
Founded in July, the nonprofit aims to position Southern California as the alternative to Silicon Valley, which is increasingly congested and expensive. The group is made up of university and business leaders, and include Alphabet Executive Chairman Eric Schmidt on its advisory council.
Southern California is not starting from scratch, said Poizner. “More engineers graduate from Southern California universities than any region in the world. More Ph.D.s in technology graduate from Southern California universities than any region in the world. There are pockets of domain expertise that are unrivaled in life sciences, wireless, medical technology and entertainment.”
Still, the region has a long way to go to establish itself as a technology hub on par with the Bay Area – particularly when it comes to venture capital.
Silicon Valley corrals five times the amount of venture capital dollars as all of Southern California, said Poizner. It has twice as many start-ups, and two and a half times the number of initial public stock offerings.
While the Alliance is still developing its strategy with the help of the Boston Consulting Group, it is zeroing in on three initial projects, said Poizner.
The first is branding Southern California as a good place for start-ups.
“We have a great story to tell and no one is telling it,” he said. “There are entrepreneurs pouring into Silicon Valley all the time. They should take a look at Southern California. And there are a lot of entrepreneurs in Silicon Valley right now who want out. We should get our fair share of those.”
Second, the Alliance aims to connect researchers at Southern California universities/research institutions with experienced entrepreneurs with know how to bring new technologies to market. Nine regional universities and research institutes have joined the Alliance, including UC San Diego and Cal Tech.
Finally, the Alliance aims to smooth over problems in getting start-ups off the ground. For example, licensing technology off of Southern California campuses can be a challenge. The Alliance is working to develop best practices – leaning on what universities in Boston or Silicon Valley do, said Poizner.
“Wouldn’t it be wonderful if when you came into Southern California, you know you are entering a region where there is common, standard licensing where you can really stimulate the (start-up) ecosystem,” he said.
Experienced entrepreneurs already have relationships with venture capital firms. If more of them license technologies out of Southern California universities to create start-ups here, then venture capitalists will pay more attention to the region,” Poizner said.
“We are going to have do some enhancing of the ecosystem before venture capitalists show up,” he said. “So these programs to attract seasoned entrepreneurs to Southern California, and as they start companies here, then the VCs will show up.”