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Valley Strong’s second $1 million-plus B3K investment goes to Kern Venture Group | News

Three organizations important to Kern’s economic future have converged with an announcement Thursday that the county’s first angel investor group has received a $1.5 million commitment from Valley Strong Credit Union to push forward with some of the top priorities identified by the B3K Prosperity collaboration.

The money will be pooled with other financial contributions — $5 million in total so far but hoped to reach $10 million by January — that will be doled out as early-stage investments in promising local business startups. Ideally, candidate businesses would be involved in one of the four industry clusters B3K sees as having the greatest potential for creating quality local jobs while producing goods or services for sale outside the area.

Valley Strong’s pledge is its second B3K-related financial commitment so far this fall, and it is the largest investment to date in Kern Venture Group, the 3-year-old angel fund whose first, $2.15 million fund is winding down this year. The credit union’s earlier contribution — $2 million to Bakersfield College over 20 years — targets workforce development in the field of renewable energy.

“We are pleased to make this investment in our region as it fulfills our mission of ‘helping people and communities prosper,'” Nick Ambrosini, the Bakersfield-based credit union’s president and CEO, said in a news release.

Such support for entrepreneurship is seen as addressing what B3K says is Kern’s ironic recent experience with startup activity. That is, the county has demonstrated uncommon enthusiasm for starting new businesses, compared with its peers, but it has racked up a relatively high rate of failures among startups.

“A big reason is the lack of some basic ecosystem supports, including connections to investors with patient capital,” Marek Gootman, a senior fellow at the Brookings Institution who has helped shepherd B3K, said in Thursday’s release.

“This type of fund (KVG’s) is a strategy proven to spur business dynamism and more inclusive outcomes, especially with KVG dedicating a portion to minority and women founders,” he added.

KVG’s first fund has invested in more than 20 startups, a few of them local. Its idea is not only to provide capital at a critical stage but also to support startups’ success by offering different kinds of counseling and helping make connections with other potential investors.

One of KVG’s founders and managing partners, John-Paul Lake, said Valley Strong’s pledge is among nine so far by local general partners, most of whom also contributed to the group’s initial fund. More than a dozen limited partners have made smaller investments to the new fund.

Lake said by phone the credit union’s participation in the second fund adds credibility to KVG’s efforts supporting local entrepreneurship.

“Obviously Valley Strong is a key, our first institutional investor for KVG, which is a really important milestone,” he said.

Lake added that the second fund’s focus will, more narrowly than the first, align with B3K’s vision for economic cooperation in industries seen as having the greatest potential for creating good local jobs.

“That means that we will be more intentional in looking for startups in the areas of the four industry clusters” chosen by B3K, he said: aerospace, advanced manufacturing, renewable energy and remote business services.

Another difference with KVG’s second fund, he noted, will be its work with Bitwise Industries.

Earlier this year the Fresno-based tech hub announced plans for Kern’s first business accelerator, to be located in downtown Bakersfield. Lake said KVG expects to take a close look at what sort of startups emerge from Bitwise’s accelerator program.

“We will be investing in the best of the best teams that come out of the Bitwise Innovation Lab,” he said.

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