For years, the University of California, Davis, has turned out a steady stream of young entrepreneurs, many of whom take their talents, and their ventures, to the startup-rich Bay Area.
Anthony Costello and Andrew Hargadon, two business experts with deep Davis ties, want to see more of those fledgling enterprises stay nearer to the nest.
Last year they did something about it, launching a nonprofit “business accelerator” they called Davis Roots. The goal is to tap into UCD connections and a growing roster of experts and mentors to give young entrepreneurs the help they need to create successful local businesses that contribute to the regional economy.
Davis Roots not only has the blessing of city leaders, it has them to thank for its headquarters in the city-owned Hunt-Boyer Mansion, a 19th-century Victorian at 604 Second St. The Davis City Council late last year approved a three-year lease under which Davis Roots pays $1 a year, plus utilities and cleaning costs.
The lease terms give the city a direct interest in the success of businesses nurtured at Davis Roots. In return for mentoring and other services, the tenants of Davis Roots agree to give the nonprofit a small equity stake to support the program. Davis Roots has agreed that if it sells stock from one of the startups helped during the lease, the city will receive 25 percent of the proceeds.
“Hopefully, it’s just the beginning, with more incubator space and businesses that can benefit from the (UC Davis) campus,” said Davis Mayor Joe Krovoza. “Davis Roots is a way to not only get companies started and incubated in Davis, but get the leadership to live and stay in Davis to raise their families. That’s good for economic development long-term and creating good jobs.”
Costello and Hargadon bring a combination of startup business expertise and academic connections to the venture. After beginning his research career at Genentech, Davis native Costello served as founder and CEO of numerous technology startups, and he is the former chairman of the city of Davis Business and Economic Development Commission. He is also chief executive officer of a 4-year-old clinical trials tech company, Mytrus Inc., which recently moved from San Francisco to Davis as part of an effort to support Davis Roots’ goals.
Hargadon, meanwhile, has a direct tie to UC Davis. He’s holder of the Charles J. Soderquist Chair in Entrepreneurship at the UC Davis Graduate School of Management and director of the Child Family Institute for Innovation and Entrepreneurship.
In his positions, Hargadon said he found himself instructing prospective entrepreneurs who ultimately would end up leaving for the Bay Area.
“There really wasn’t a next step to keep them here in Davis,” Hargadon said. “They weren’t getting what they needed to stay.”
Costello said it was frustrating to watch “talented people right here in Davis” leaving for greener pastures “when an investor showed up and took them away.”
Costello said the Davis Roots concept was bolstered by a new generation of Davis city leaders who welcome homegrown, practical-sized business development. UC Davis has likewise opened new paths, particularly Chancellor Linda P.B. Katehi’s 2011 push for an “Innovation Hub" that would better connect UC Davis research and business training with entrepreneurs and commercial products.
“There’s no reason that (Davis and UC Davis) shouldn’t reap the benefits that these companies can bring here,” Costello said.
After working with the city and moving into the Hunt-Boyer Mansion, Davis Roots started operations in late April last year, even as the co-founders continued their “day jobs” and made extensive in-house renovations in the new headquarters.
Given its own startup status – Costello says Davis Roots has a staff of one, general manager Alex Rossbach – Davis Roots can handle a maximum four companies at a time. It hopes to grow to handle perhaps up to 10 ventures at any one time.
For startups, the process begins with Davis-area entrepreneurs applying online, initiating a screening process that ultimately includes interviews and a hard look at the proposed business plan. Selected businesses can set up shop inside the Hunt-Boyer mansion, embarking on a nine-month launch plan that includes access to Davis Roots’ network of experts and mentors.
Getting space in the mansion is no guarantee of success. Startups falling short of key business goals and funding stand to lose their office space. Those that do succeed get help finding office space in the community.
Davis Roots’ first “graduating class” included two companies with strong UCD ties.
Barobo Inc. was founded in 2010 as a commercial spinoff of technology developed in the Integration Engineering Laboratory at UC Davis . The Davis company aims to develop affordable robotics for education and consumer markets. Barobo was joined by Nuritas, a high-tech nutraceuticals industry company that pinpoints healthy food components. Nuritas was launched by UC Davis postdoctoral student Nora Khaldi.
Graham Ryland, a UC Davis graduate and CEO of Barobo, said that his company’s time in the Davis Roots headquarters was a godsend, because “even though we were grant-rich, we were cash-poor.
“It was critical to have that place. Business accelerator is a good description. Our team was able to come together and have a place to meet and form a culture ... When you are starting a new company, there are so many aspects of business development and strategy. (Davis Roots) really knows a great deal about how to start a company and individuals who can support you, even going so far as introducing us to certified public accountants and attorneys and a patent lawyer.”
Ryland credits weekly communication with board member Joe DiNunzio, a management consultant and startup executive who is also a director of Davis Roots, as key to his company’s growth. “Joe has helped us with critical decisions and with the ins and outs of starting a company” Ryland said.
Hargadon says that for every Barobo there are multiple ventures that fall short of their goals, a fact that he says is not necessarily representative of failure: “Entrepreneurship is a career. For some, it might be their third or fourth try before they have success.”
Niche: A nonprofit startup business accelerator that aims to foster development of new ventures that ultimately will operate in Davis. Davis Roots taps into University of California, Davis, connections and expertise, plus a growing list of business experts and mentors.
Location: The Hunt-Boyer Mansion at 604 Second St., Davis.
Started: April 2012.
Co-founders: Anthony Costello, who has served as CEO of numerous startups and is the former chairman of the city of Davis Business and Economic Development Commission, and Andy Hargadon, holder of the Charles J. Soderquist Chair in Entrepreneurship at the UC Davis Graduate School of Management and director of the Child Family Institute for Innovation and Entrepreneurship.
Current “class” of startups: Fishrock Labs, bio-engineering firm that develops micronutrients, phytonutrients, food and beverage ingredients from natural products; The Gift of Education, an online educational gift registry that lets families and friends contribute funds to their children’s education; JamHive, an online music collaboration platform for musicians; and Fuse Athletics, a sports-laden social platform aiming to connect athletes, coaches and teams.
Support: While it helps other startups get financing, Davis Roots is itself in startup mode and welcomes funding from investors.
More information: www.davisroots.org or (530) 297-6687.
Call The Bee’s Mark Glover, (916) 321-1184.