Funding Forecast Brightens
Tomato Battle does not fit the traditional financial model of a startup. The Seattle company, which produces daylong events in cities across the country that involve beer, bands and, yes, an enormous tomato fight, needed money to fund its growth. It received support from Seattle-based Lighter Capital, one of a number of new institutions that have emerged to assist small businesses in getting through tight credit conditions.
Since the trough of the recession in 2009, Washington businesses have made slow, but steady, progress toward recovery. In 2009, 1,477 Small Business Administration loans were made in Washington, totaling $398 million, down sharply from 2,762 loans for $594 million in 2007. By 2011, however, with help from the American Recovery & Reinvestment Act of 2009 and the Small Business Jobs Act of 2010, those figures rebounded to 1,677 loans totaling $793 million for the fiscal year.
According to data from the National Venture Capital Association, Northwest companies received nearly $693 million in funding in 2009. That total rose to $853 million in 2010; 2011 looks likely to beat that total, with $638 million invested through the third quarter.
All of the figures suggest an economy moving in the right direction. “I would call [the funding climate] warm, alive,” Lighter Capital founder and CEO Andy Sack says. “I would not call it hot, but definitely deals are getting done. I tend to see doom and gloom, but now I’m thinking it might actually be OK.”
During the worst part of the recession, lenders and borrowers were reluctant to pursue financing. That situation might finally be changing. Lending giant Wells Fargo and the Seattle office of the Small Business Administration (SBA) both note a modest increase in the number of customers asking for small loans. “We’re seeing an uptick in the number of applications,” says Matt Fitzgerald, regional business banking manager for Wells Fargo. “Business owners are keeping their decisions modest at best, but there are definitely folks dipping their toes in the pool.”
Nancy Porzio, Seattle district manger for the SBA, says the construction industry has been particularly slow to recover, but there are signs of progress. She notes more business owners have checked SBA resources and explored the possibilities of rehiring staff.
One important legacy of the recession has been the creation of new sources of funding for early-stage companies. Sack founded Lighter Capital, formerly Revenue Loan, as a “middle ground” for early-stage startups that are “inappropriate for venture
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