In his 17 years with Starve Ups, Executive Director John Friess has seen the number of startups grow each year and shift from predominantly high-tech companies to consumer products companies. Starve Ups was the state’s first startup accelerator, and is its only "scalerator," taking its member companies from inception to acquisition.
To get a better sense of the startup scene in Portland and throughout Oregon, Crain’s spoke with Friess.
Crain’s: How would you characterize the startup landscape in PDX? And the overall startup situation in the state?
Friess: I would characterize it as advancing pretty rapidly. It seems that four times as many startups are starting in the Oregon market every year. Many are high-growth, innovative businesses that possess the ability to scale. From when we started 17 years ago, there’s been a massive shift from all of the startups being tech-focused to consumer product companies being very en vogue and successful today. They’re getting much-needed financial attention and capital talent.
Historically, in Oregon, our companies have been about one-third consumer-oriented businesses at Starve Ups – those in the food, beverage, retail and apparel industries. But in the last six years, those companies have jumped to represent about 50 percent of starveups.
Crain’s: How does Portland, and Oregon, compare nationally?
Friess: It’s burgeoning. It’s getting better. We’re considered a Tier 2 state. We’re sandwiched between two of the leading states, Washington and California. Nationally there are more consumer products being launched because of big shifts of things like artisan good and natural foods being so popular. Oregon is a mecca for that. We are a maker state.
Jacobsen Salt. Blue Star Donuts. Looptworks. All of these businesses are on fire because they are based here. Of course, we also have the three largest footwear and apparel companies in the world with Nike, Under Armour and Adidas based here. It makes sense apparel and footwear is so big. This is also the place where people live a balanced life and support their communities. If you’re into making something, you can build a life here.
Crain’s: What are some of strengths and weaknesses for startups here?
Friess: I would couch strengths as the three Cs. The first is community. Everybody wants to be part of a community here.
Two, it’s a very collaborative or cooperative environment. People will do partnerships together. People enter joint ventures together. They will work with each other and share costs and resources that is something you don’t see as readily throughout the country.
And the last C is that people here want to create. People don’t start their business here for monetary gain. At Starve Ups, we want men and women who would be incomplete if they didn’t do this business. In Portland and Oregon, our entrepreneurs are very purposeful. They create businesses to solve a problem. They start businesses to leverage a skill. Winning over customers and turning a profit faster is not the reason they move here. I would argue that is not necessarily the case for other markets.
Our weaknesses? The No. 1 is access to capital – the amount you can get and how quickly you can get it. There are seven significant funds in Oregon, deploying tens of millions of dollars each year. And there are many, many, many companies in need, in situations where $10,000 can completely change their business, and they can’t raise it to save their lives. We have a few members who are doing well, and are loaning money to their fellow entrepreneurs and investing in their startups.
The second weakness would be a lack of co-founders. All too often, people try to start their companies with one founder, and it’s very difficult to make a startup succeed with just one. It’s too hard, too lonely of a process. There is a lack of talent for early stage co-founders.
Fatigue sets in faster when you don’t have money and talent. Just like your personal life. If you’re financially strapped and have no partner, the situation can be difficult. The fatigue sets in, and we find that to be a big issue, the primary reason startups fail.
Crain's: What are your thoughts on social capitalism and the companies that seek to affect positive change? Would you describe PDX as having more of these types of startups than elsewhere in the country, or is that also a national trend?
Friess: Social entrepreneurship is really ramping in a very positive way. Those companies are finally getting some of the financial support they deserve. If you want to be successful in making an impact in the world, you can do three things: create a nonprofit, a cause, or a business. Business is the most effective way to create change. You think of the Tom’s and the Ben & Jerry’s of the world; they’re leveraging their great product offering.
We have businesses like that in Starve Ups, and we encourage that for sure. If social entrepreneurship is not inherently built into their business model, we encourage other ways of paying it forward. Even they’re just selling chocolate bars and there’s not this mission, we ask people to mentor other founders, become an angel investor or pay it forward in some way.
Most of our companies that try to do something that social driven have been quite successful. Spark Grills – they make an eco-friendly grill that gives you the flavor of charcoal with the convenience of gas. A portion of each sale will also benefit regions in Africa to help them buy cooking stoves to support their local community. We have more of those companies.
Crain’s: Are there additional attributes that you would say make an entrepreneur uniquely a Portlander or Oregonian?
Friess: I’ve heard from investors outside the state. Oregon startups get more done with less money, and have a level of perseverance that’s very high.