- Published on Wednesday, 26 March 2014 02:05
- Written by Eliza Ridgeway - Staff Writerfirstname.lastname@example.org
When Sandra Oh Lin started a children’s craft business in her Los Altos garage in 2011, neighborhood children turned up as a first round of product testers. Her company, Kiwi Crate, has grown up and out of town, but its roots remain in investor relationships and on the product itself - four Los Altos children’s faces grin from the boxes now lining shelves at local Target stores.
A seldom-seen startup ecosystem buzzes behind the scenes in Los Altos, a longtime bedroom community for Silicon Valley. But innovation in the city of apricots has a distinct flavor, top-heavy with angel and venture investors and low on modernist offices loaded with startup perks.
Michael Yang, a Los Altos resident and managing director of Comcast Venture’s Silicon Valley office, sees the city as an incubator for later-in-life startups that defy the stereotypical clubhouse filled with 20-something male techies.
"You have a lot of interesting technology types who are building roots and raising families here," Yang said. "They choose it for their personal family reasons - it’s not a professional reason why you pick Los Altos, at least not until now."
Lin, for example, worked at Procter & Gamble, PayPal and eBay and began raising her children in Los Altos before launching Kiwi Crate. The subscription-based delivery service ships boxes loaded with art, craft and science projects. An e-commerce startup with physical goods, over time Kiwi Crate had to locate enough space to accommodate office and warehouse use and offer accessible transit options for employees. Mountain View won its business.
Starting in Los Altos included more than just recruiting neighborhood beta testers. Lin met with collaborators at local coffee shops and bonded over shared school communities. One partner ran her own paper products business from home. Lin noted that while such businesses operate invisibly in the community, "it just makes you wonder who else might be doing this."
The city of Los Altos doesn’t track entrepreneurs originating in Los Altos, but a survey of the 230 businesses registered in the past year includes more than 50 outside the professional services sector in private homes or rental office space.
It’s impossible to predict how many will graduate into the fraternity of scalable, "disruptive" companies that earn or seek the "startup" moniker. But AngelList, an inventory of startups and their backers, provides a nonscientific tally of self-identified members of this ecosystem. Los Altos boasts a similar number of investors, nearly 13,000, as those listed in Mountain View and Palo Alto, cities twice its size. But turning to startups, Los Altos lists 48 - compared with 543 located in Mountain View and 883 in Palo Alto.
We’ll always have Rick’s
Lin said most of her important connections for the startup derived from professional contacts but noted that "close linkages" exist across the city. She recalled running into one her earliest funders, Michael Yang, at an after-hours pickup soccer game at Santa Rita School.
Yang had provided seed funding for his neighbor Lin’s business.
"We joked that I could walk from my house to her house if we wanted to have a meeting," he said.
Yang keeps a loose count of the office parks along El Camino Real and tucked away in downtown Los Altos that house new ventures. Shop-talk does find a home in town.
"You remember Buck’s of Woodside in its heyday? I’d say Rick’s Cafe is Los Altos’ Buck’s," Yang said of the State Street restaurant. "I do my meetings with Sandra or my CEOs there, and I see other venture capitalists in there with executives or founders."
He recently met with Los Altos resident Anita Rehman about her plus-size apparel company PHIREN and learned that yap.TV founder Trevor Stout lives in town after hearing him pitch the business. Like others found on the startup circuit in Los Altos, Rehman and Stout had careers in investment and technology before basing their new ventures here - for now.
"All of the development I hear is mixed residential and retail. When we fund companies, we don’t expect them to be in Los Altos in a year’s time, because they outgrow it," Yang said. "I think all the investors in Los Altos would love to see more entrepreneurs raise their hand. If they can stay in town longer, that’s great."
Los Altos resident Ravi Chiruvolu fits the type - he worked as a venture capitalist for eight years, investing in companies around Silicon Valley but never in Los Altos. When the day came he wanted to start something new, however, he began it here.
"I’ve always loved coming down Main Street - it reminds me of the towns of yesteryear. To have a startup here is such a juxtaposition," he said, describing the hyperkinetic energy of a new company embedded in the country feeling of an old town.
His company Slingshot Power, 164 Main St., uses local "ambassadors" to pitch clean energy services to small businesses and consumers in the community. They created a showroom on Main Street to build consumer familiarity with the chargers, light bulbs and other products that have yet to really arrive on the mass market - and provide a natural segue to talking about solar power. Unusually visible for a Los Altos startup, Chiruvolu said his venture’s pedestrian-friendly location reflects the company’s hypothesis that clean energy can succeed as a local effort without relying solely on top-down governmental initiatives.
"Everything about doing a startup is a risk," Chiruvolu said. "We made a bet, and we wanted to bet on this community,"
Startup culture, social goals
Los Altos’ relative abundance of well-established investors may mean fewer pubescent founders launching their first company, but it has also created a new startup genre entirely. A band of local philanthropists formed the Silicon Valley Social Venture Fund (SV2) in Los Altos 15 years ago as an investment vehicle for nonprofit projects based on the structures of the business world. When Laura Arrillaga-Andreessen spearheaded the project 15 years ago, only one other partnership of its kind existed in the country.
From their office suite (in one of those office parks dotted along El Camino Real), SV2 donors experiment with how venture capital culture works in the social sector.
"It’s a place where people can explore what is at the edge - where is the innovation and the invention?" said Lisa Van Dusen, who directs partner engagement at SV2.
Like early-round funders in the tech world, SV2 investors sit on startup boards and offer resources to their portfolio of nonprofits. They’re still inventing the model for doing this work in the philanthropic world. The group is determining which skills and practices transfer elegantly from business to philanthropy, and which need to be restructured entirely.
"Sometimes it’s board governance or strategic planning or alternative business models that bring them together - maybe it’s a skill set or an interest area," Van Dusen said. "It’s a dual mission of building the philanthropic capacity of our partners and building the organizational capacity of our grantees.
"There’s a lot of moving around. That’s one of the things that makes a startup ecosystem thrive - it’s really the human capital. We’re looking at how we can push the envelope and ultimately extend our impact given today’s toolkit."
SV2 has grown from a few dozen initial investors to a group of approximately 280 partners who join via an open application process. Anyone with expendable income can get in on the game.
"Everybody can be a philanthropist, as long as you have at least $6,000 a year to spare," Van Dusen said. "For some people, this is a drop in the bucket - some people scrape it together."