The City of Davis announced Thursday that the Davis City Council will grant a loan of up to $100,000 to local business incubator Inventopia to allow it to add specialized space needed by local entrepreneurs and startup companies. The Council voted unanimously at its Oct. 6 meeting to approve a resolution granting the loan and conducted a public hearing at its Nov. 17 meeting for final approval of the resolution.
“Supporting Inventopia and the businesses it houses enables the Davis business environment to expand economic development and capitalize on local talent to create more Davis jobs,” said Mayor Gloria Partida. “We are pleased to contribute to Davis as a burgeoning research hotspot in the life sciences, food and agriculture, sustainability and advanced manufacturing.”
The loan funding comes from community-wide City Enhancement Funds from various development projects. The proposed loan would be repaid over five years at 3% interest. Operating as a non-profit, Inventopia (located at 630 Pena Drive) leases the use of state-of-art labs, specialized manufacturing equipment and technology for startups based on various membership models.
The City loan will allow Inventopia to expand its lease at Pena Drive to add two new suites to the two business suites it currently maintains. The new space at Pena will house a specialized biosafety lab
and an advanced manufacturing machine shop. The expansion adds over 3,900 square feet new maker space.
Startup successes supported by Inventopia include Innerplant, a company that makes plants into living sensors. Founded in the Bay Area, the two-person company relocated to Davis for access to specialized plant biologist and plant geneticist talent. Now graduated to University Research Park office space, Innerplant continues use of Inventopia’s specialized equipment to reduce costs. Peakb, a startup developing naturally derived blue food coloring, is a new Inventopia tenant. This startup was founded by Justin Siegel, UC Davis Associate Professor and entrepreneur.
“With our proximity to the University, Davis is uniquely positioned to cultivate an entrepreneurial business landscape with state-of-the-art facilities and local talent,” said Assistant City Manager Ash Feeney. “Recently, companies like MARS Cocoa, Archer Daniels Midland and MyFloraDNA have headquartered in Davis adding to our business success stories, such as Marrone Bio and Novozymes.”
“We are grateful to the City for their faith in us and the future of Davis businesses. This loan will allow more startups to anchor in Davis, keeping discoveries and jobs within the community, especially at this time where we need the economy to rebound,” said Tim Keller, Executive Director, Inventopia.
Inventopia is affiliated with UC Davis’ Venture Catalyst Engine DRIVE (Distributed Research Incubation & Venture) program. This UC Davis program has launched 122 startups since 2004 with 85 of those businesses launched in the last six years. https://www.inventopia.org/
Support our work – to become a sustaining at $5 – $10- $25 per month hit the link:
Since when is it the job of the City of Davis to loan money to businesses? Isn’t that the job of banks and credit unions? Is there some reason Inventopia isn’t eligible to use the same method as other businesses – such as, can it show that it can pay the money back? If it can’t, why is the City loaning them money? If it can, why not use a bank? Just asking 😐
Are there other examples of the City loaning money to businesses? Have these loans been paid back? Is this a regular practice? Common in other cities?
It is not uncommon for cities to assist incubators. Their funding is “non traditional” and thus more challenging to get traditional business loans. Worth noting that Woodland made a similar loan for the wet lab we covered up in Woodland. Also, it is not General Fund money but rather community enhancement funds from development.
In other words, they are subsidized? Just like the wet lab?
Why are you a cheerleader for subsidized “businesses” ?
No. It’s not subsidized – market rate loan, five year term
I was referring to “their funding” is “non traditional”, not the loan.
What is the definition of “non traditional” ?
In other words, the way these incubators are set up, you don’t necessarily have a projected revenue stream to borrow based on. It makes it hard to get a loan. That was one of the points made when we did the story on Woodland.
Apparently my edit correction didn’t go through:
I was referring to “their funding” being “non traditional”. Most businesses their traditional funding is startup capital followed by profits.
What is the definition of “non traditional” and what is “their funding” source?
You are getting outside of my realm of knowledge here.
Happy to join the conversation to provide some details…
Alan, It is common for cities to invest in business incubators. They do it because making a space for companies to start here means that those companies will eventually pay their sales tax here, they provide jobs here, which means more people frequenting local businessess etc etc.
This is common in many cities, but is incredibly important in Davis because we are host to a research university which generates new technologies weekly. If we want to have an economy the is more than just ‘hosting a university” – then this is our best, highest value path.
As for why a bank wouldnt do this? Banks don’t take any risks. Since inventopia runs under a non-profit model, (which is optimal for the businesses we support ) there is no big pile of cash behind us, which means a bank wont loan to us… unless we signed long-term leases to fill the space ahead of time. – Which isnt how this works.
Hope that helps.
Appreciate the info. It helps, I’m not sure I really understand how this works. I don’t mean to condemn the idea – my years lobbying in Sac for a nonprofit turned me quite cynical regarding politicians and non-profits and how the money flows and how they public is fooled (basically the rumors are true and it’s more f’d then one could possibly imagine). I am not familiar with the incubator concept and perhaps it’s legit – I will keep my ears and my mind open as I learn more.
Why bother? There isn’t anywhere to scale up in Davis if any start up takes off. Any successful start ups will eventually leave town.
Ron, I have “bothered” to invest the last three years of my life on this as a volunteer because it is the right thing to do.
It is the right thing to do for the entrepreneurs who emerge from UC Davis ( like I did 10 years ago)
It is the right thing to do for Davis who has been bleeding its economic opportunity into nearby communities for far too long.
The failure of the DISC project was unfortunate. UC Davis is the only major research university that doesnt have a dedicated place for doing translational development work. But that said, we will continue to try to develop other opportunities that will ensure that businesses that start in Davis can STAY in Davis.