As co-founder of a budding national company with its headquarters here, Nuno Valentine has faced some skepticism from investors outside the Richmond region.
When pitching to investors in some bigger cities, “the first question and the first push you get is: ‘You have got to get out of Richmond — you can’t do this in Richmond,’ ” said Valentine, who co-founded Iggbo, a Henrico County-based company that contracts with phlebotomists to provide on-demand, streamlined blood-drawing services.
From its start here three years ago, Iggbo has expanded its service into 120 cities. It also has raised more than $17 million from investors in Richmond and several other cities such as San Francisco and Nashville, Tenn.
When potential investors from outside the region ask why the company has decided to keep its home base in the Richmond region, “it becomes about educating them,” Valentine said. He tells the skeptics that “Richmond is not what you think it is.”
What the Richmond area has is a burgeoning business startup environment that is being propelled by a growing awareness of the need to nurture homegrown companies, Valentine said.
The region simply needs to develop more of a “track record” for producing startups to become recognized as an entrepreneurial hotspot that intrigues investors nationwide, he said.
Iggbo even has brought some of its investors from outside Virginia to visit the Richmond region and see for themselves what the local business startup climate is like, he said.
The entrepreneurial and startup climate in the Richmond area is robust, local experts say. And the support for these young businesses has increased in recent years, but they say more could be done.
Business incubators such as Lighthouse Labs or The Annex provide office space, mentorship and funding to new companies. UnBoundRVA is guiding future entrepreneurs from low-income communities for a one-year program.
Local angel investors, including serial entrepreneur Karen Booth Adams and New Richmond Ventures, are backing a growing number of startups.
Co-working spaces, such as 804RVA, 1E and Gather, offer small business owners work space, but also give them a place for support and inspiration.
The 1 Million Cups Richmond organization holds weekly meetings to educate and connect entrepreneurs so they and others can learn about the challenges of starting a business and share ideas. The Encorepreneur group was created for local baby boomers interested in creating new careers.
Local universities also have seen increased enrollment in entrepreneurship classes. For instance, Virginia Commonwealth University has a pre-accelerator program designed to help students with good business ideas develop those concepts into viable startup businesses that can then “graduate” to a business accelerator program.
The Steward School, a private school from junior kindergarten to 12th grade in western Henrico County, recently launched its first ever entrepreneurship studies program that allows participating Upper School students to have the opportunity to earn a diploma endorsement in entrepreneurship when they graduate.
“Richmond has a lot of great, hidden talent,” Valentine said. “The potential here is just tremendous.”
“Success breeds success,” he said. “We just need to get a few wins.”
The Richmond region’s economy has evolved from one with an agricultural core, or “growing things,” to an economy of “making things,” or manufacturing, to an economy of “thinking of things,” said J. Robert “Bob” Mooney, a principal of New Richmond Ventures, a Richmond-based venture capital fund that invests in and provides business advice to promising startup companies.
“While growing things and making things will always be part of our economy, our real core economy now is thinking of things — technology,” said Mooney, who co-founded NRV with James E. “Jim” Ukrop and Theodore L. “Ted” Chandler Jr.
The “thinking of things” economy drives growth in numerous industries, from health care to manufacturing, he said.
The region has to cultivate an “ecosystem” that supports a startup culture, he said.
Some of the components of that include having an existing foundation of innovative industries, along with universities and business incubators and accelerators, and attractive places to live and work. The Richmond area has those characteristics, he said.
There also is a need for both early and later stage investments in startups.
“We have a good mix of early investors,” Mooney said. “But what we really need is access to growth capital,” or funding for businesses that are ready to expand and need the next level of investments beyond seed money.
“We don’t want to lose entrepreneurs that have to go to Atlanta, or New York or Washington to get funding,” Mooney said. “We need growth capital here and to be able to provide counseling and capital for them.”
To have a successful entrepreneurial environment, regions such as Richmond have to find ways to build a “critical mass” of startups that form mutual support networks, said Marc Randolph, co-founder of Netflix, the California-based DVD rent-by-mail and online streaming service.
“If you have a lone person trying to start a company, he is going to make fresh mistakes all the time, and the learning will be slow,” said Randolph, who spoke at the University of Richmond in February.
“In a place where there is a lot of entrepreneurs, and the community brings them together, they all learn from each other,” he said. “One person makes a mistake and shares it with the others. That’s a very powerful force. That is a huge advantage that Silicon Valley has.“
A community that wants to have a thriving startup culture also must be willing to accept the “risk profile” that entails, he said. Other businesses must learn to adjust their risk aversion when working with startups. “In Silicon Valley, they know how to evaluate risk differently,” he said. “They are comfortable taking on risk.”
The biggest thing that can accelerate a local startup culture, Randolph said, is “a big entrepreneurial liquidity event.”
“That means one of the companies does really well,” he said. “What it does is explodes money to people who are entrepreneurs, and they then invest in other entrepreneurs. Once that happens, then it is like a nuclear reaction.”
This is a “golden age” of entrepreneurialism, Randolph said, because technology has made geography less of a barrier to starting a company.
Entrepreneurs who have started companies in the Richmond region in recent years generally describe their experience here in glowing terms.
Most said the local environment is favorable when it comes to labor, office space, cost of doing business, and opportunities for mentoring, but they say it could use some improvement in access to capital and stronger professional support networks.
The area is building a lot of the physical and human infrastructure needed to bolster a thriving business startup environment — with business accelerators and incubators, shared co-working office spaces, business pitch competitions that provide seed money for promising startup ideas, and a network of local angel investors. Most say the labor market offers talent at affordable costs.
“The city amenities, cost of living and deep labor pool contributed to our decision to move our manufacturing to Richmond,” said Steve Cummings, senior manager for marketing and strategy for Evatran Group Inc., a maker of wireless charging systems for electric vehicles.
The company, which sells its charging system under the Plugless brand name, was founded in 2009 as a subsidiary of MTC Transformers in Wytheville. It became a separate company in 2010 and subsequently moved its headquarters and manufacturing Richmond. It is now moving those operations into part of the former HandCraft Cleaners building in Scott’s Addition.
“Access to talent from some phenomenal Fortune 1000 companies as well as thriving marketing and creative scene here makes a big difference too,” Cummings said. “VCU’s School of Engineering has provided good local talent for internships and entry-level engineering roles.”
Evatran has received investments from within the Richmond area, but it also is a good example of a company that has been partly funded from outside the region for strategic reasons.
Evatran has gotten investments from VIE, an automotive parts manufacturer based in China. That investment was strategic for Evatran, because it can help the company take its wireless charging technology into China, the largest electric vehicle market in the world.
The company has an engineering and research and development office in Apex, N.C., near Raleigh. That area, Cummings said, “has a deeper pool of the kind of specialized power engineering talent we need to continue pushing the frontier of wireless EV charging.” The Richmond area, however, offers “a deep talent pool for manufacturing engineers.”
While startups say they like the Richmond region, some concede that finding capital here is difficult, so raising money often means hitting the road.
“I have been knocking on a lot of doors,” said Matt Donlon, co-founder of Uzurv, which developed a mobile app that enables people to make reservations for ride-hailing services such as Uber and Lyft.
The Richmond-based company has expanded its service to 114 cities and has about 20,000 drivers using its app, but when it comes to finding willing investors, “we are either too new, or too uncertain,” Donlon said.
“There are a lot of folks that love what they see, but to come and write a check is very tough in this town. Getting money out of D.C. seems to be a lot easier.”
“What I do like about the Richmond market is there is a lot of good technical talent here at a much more affordable rate for a startup,” he said. “There is a network of business people in the area who are good people and they really want us to be a success.”
Hailing Yang, the president and chief executive of Zynnovation LLC, said she would start her company in the Richmond region “even if I had another option.”
The company has developed a way to recycle disposable diapers to make “tree diapers,” which can be used in landscaping to absorb water around trees or plants and then gradually release it over time, saving water and labor costs.
Yang said Zynnovation benefited from being a tenant at the Dominion Resources Innovation Center, a business incubator in Ashland, before moving to a new space in 2015. Yang describes the local business and government environment as friendly and supportive.
“The investment environment could be improved,” she said, particularly when it comes to incentive support from state-level agencies. The company is just starting to seek outside investments, she said.
“We were pitched by several small business innovation centers and economic development agencies around the country for their programs,” she said. “Comparing to those, there is a lot to improve in the commonwealth of Virginia and Richmond area to make it competitive with them.”
She said finding talent in the region is not a problem. “We do not have plans to move to anywhere else,” she said. “As the company grows, we need to set up locations outside this area to better serve our customers, but we will definitely keep the headquarters (here).”
Isaiah Ham, the founder of Ivy Oaks Analytics, also said the funding environment has been challenging for his startup company, which provides comprehensive control of poison ivy and pests such as ticks and mosquitoes at summer camps and recreational sites. The company has been able to find help such as office space at the Dominion Resources Innovation Center.
Ham said he has looked at various sources for capital, but has only been able to secure a $1,000 prize from last year’s business pitch competition held by SCORE, a local organization of retired business executives who mentor small businesses. So Ham started his business on “personal credit.”
“Fortunately we had a successful first year ... so this credit is not as much of a burden as it could be for other startups,” he said.
Staffing can be difficult for a startup company, he said. “It is challenging to find people to work for a startup with no long-term guarantee versus having job security at a large company,” he said. “I would not say that is because of Richmond, but in general people tend to not like risk.”
He also would like to see more education and training opportunities for new entrepreneurs.
“A lot of startups are run by young adults with little to no business experience or formal business education,” he said. “It’d be nice if there was a program or course available for startup founders to fill the gap in knowledge. I have to rely on my mentors’ advice in certain scenarios, which isn’t bad, but I’d rather be knowledgeable in advance.”
Many entrepreneurs start their companies in the Richmond area because they attended college here or have local roots.
Ham started his company while attending Virginia Commonwealth University.
That’s also the case for Wealthforge, a Henrico County-based firm that was founded by two University of Richmond students originally from New York and Boston. The company operates an online platform that connects investors with businesses seeking private placement capital.
“We saw a sign for really inexpensive incubator space downtown, so we opened our first office in RVA upon graduating,” said co-founder Mat Dellorso. “Professors from the University of Richmond and VCU, the local community of investors and mentors were supportive in that they wanted our early stage, high-growth business to remain in RVA, so we never looked to leave.”
The company now has 30 employees, with plans to grow to 40 this year. Most are hired locally, but Wealthforge has recruited some from Northern Virginia, New York and even one employee from Silicon Valley.
Research Unlimited started here because of its co-founders Michell Pope and Jasmine Abrams earned doctoral degrees in health psychology from VCU.
The startup company could be described as a for-profit “matchmaking” service with a civic mission. The company helps its clients, including university, corporate and nonprofit researchers, connect with people in historically underrepresented communities for research studies, primarily focusing on health.
Pope said Research Unlimited received a lot of support as one of the many startups that have participated in Lighthouse Labs, an accelerator program.
Since finishing that program, Research Unlimited has been “bootstrapping it,” Pope said. The company has not sought investors, but Pope said it has picked up clients in other states such as Illinois.
“The cost of doing business here is a lot cheaper than other places,” she said. Still, Pope said she would like to see more support for startup businesses once they have left the nurturing environment of an accelerator.
Blue Crump and Jordan Jez founded Glass Smith, a startup that partners with business clients to provide on-demand repair service for smartphones and tablets. They started in Richmond because they are both natives of the area.
“We found ourselves drawn back to Richmond after travels and honestly cannot imagine building our business anywhere else,” Crump said. “I’ve built businesses in San Francisco, but home is where you feel most like home — and that’s Richmond for us.”
Glass Smith also is a graduate of the Lighthouse Labs accelerator program. Coming out of that program last year, Crump said he was worried about not being able to find capital, but more than half of its investors have come from Richmond, with the rest in the Washington, D.C., area.
“It would be our preference if all of our seed stage investment came from Richmond, but we’re committed to closing the round no matter where we have to travel,” Crump said. “Richmond is still defining how it will work with and fund early stage startups, but the climate has been really great for building a new Richmond company.”