Sacramento’s business and political elite on Thursday celebrated the arrival of a 5-year-old technology startup from Santa Clara.
SupportPay, an automated child-support payment app, moved into The Cannery in East Sacramento two weeks ago, after a year of lobbying by business and city leaders. The city of Sacramento gave the company a $100,000 subsidy from an “Innovation and Growth Fund” to relocate.
Officials gathered at the Crest Theatre for a news conference and hailed the 13-person company’s arrival as heralding a new era.
“California jobs matter,” said Pat Talamantes, board chairman of the Greater Sacramento Area Economic Council.
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Talamantes noted that Sacramento was well-positioned to attract more tech startups because it has “talent, affordability and access to capital.” Talamantes is president and CEO of the McClatchy Company, owner of The Sacramento Bee. The council and Mayor Kevin Johnson were instrumental in bringing SupportPay to town.
In an interview, SupportPay CEO Sheri Atwood said the word “Sacramento” initially conjured up images of vast farmland, particularly the stretch along the Interstate 80 causeway.
“I grew up in urban areas. I thought there was no way I am moving to Sacramento,” Atwood said.
But after several trips to the city, Atwood said she was impressed by the recent growth of areas like midtown. The financial incentives that officials dangled and reduced operating costs clinched the deal.
In the Bay Area, “salary expectations were out of this world,” Atwood said. “The cash-rich companies can throw a lot of cash. I was right down the street from Google, Facebook and LinkedIn.”
Her employees were also leaving her company in droves for other startups or “the next shiny object,” as Atwood puts it.
SupportPay’s acceptance of the city’s $100,000 subsidy means it must create 10 full-time jobs within two years. The City Council in July approved $10 million to attract high-tech firms. SupportPay was the first to receive a payout.
Critics of these public subsidies have likened it to a risky bet.
“Nine out of 10 of these things fail,” Scott Shane, a professor of entrepreneurial studies at Case Western Reserve University in Cleveland, told The Bee in July.
The company’s app simplifies child-support payments between parents, allowing them to take pictures of receipts and share expenses.
The app was released 1 1/2 years ago, but SupportPay started charging users $9.99 or $14.99 a month for a subscription this summer. About 40,000 parents use the software, with revenue on pace to hit $2 million in 2016, according to Atwood.
Mayor-elect Darrell Steinberg, who attended Thursday’s event, said he will be making frequent trips to the Bay Area to entice more tech companies to relocate. Johnson was traveling to Washington, D.C., for the opening of the National Museum of African American History and Culture and was unable to attend.