It may take a revolution to kick-start more tech investing in Orange County, and that’s just what OC4 Venture Studio co-founder Kyle Kamrooz has in mind.
“Orange County is where you go after you sell your company. That is sad,” said Kamrooz, best known for being the guiding force behind Irvine mortgage software company Cloudvirga, one of the area’s better-funded technology companies over the past few years.
He and business partner Carey Ransom’s new business, OC4 Venture Studio, aims to fix that. The Costa Mesa-based firm is designed to harness the county’s technological potential that needs funding, guidance and the will to stay here.
They’ve set up a pair of funds planned to total up to $20 million for now to seed new businesses.
West Side Location
The OC4 Venture Studio office, along Placentia Avenue in the city’s west side, has a light and trendy look, all aimed at promoting collaboration and, ultimately, tech success.
“This is a new way of thinking in Orange County that we’re bringing—new model, trying to make it more hip and cool, relatable to people who are building technology companies,” said 39-year-old Kamrooz.
“We think there’s another revolution that’s happening and there’s a huge technology aura of talent and the people who want to stay here.”
Four weeks into its existence, the firm had invested in three companies ranging from $100,000 to $750,000 in seed money.
One or two of those companies will be part of the startup-nurturing studio.
The three-person company, including Chief of Staff Michelle Drucker, is meeting with investors and expects to close more deals by year’s end.
The firm offers a host of services including legal, accounting and administrative in addition to providing space and guidance. They see the studio itself as a for-profit, revenue-generating business as a distinct entity alongside the funding activities.
“The vast majority of our early capital commitments are coming from outside Orange County,” said company co-founder and President Ransom, whose résumé includes technology and medical technology accelerator OCTANe board membership and fintech Happy Money in Costa Mesa, where he was an investor and former chief experience officer.
Both he and Kamrooz have plenty of experience in attracting funds for new companies; Cloudvirga has raised more than $77 million from investors since its 2016 founding, while Happy Money this year raised $70 million, nearly doubling the firm’s total since its founding 10 years ago under the name Payoff.
The company has set up two funds, written up to $10 million each and both with tax incentives in addition to expected gains on investment, with money coming from various investors and the co-founders themselves.
One is a standard small business fund, while the other takes advantage of the company’s location within a federally designated “opportunity zone’” created by the 2017 tax overhaul.
The latter fund provides huge tax benefits for those who reinvest their money after selling property, stock or a company.
“Both funds will invest in high potential technology startups with a goal of significant value creation,” Ransom said. “Most of the companies will initially operate out of the OC4 Venture Studio.”
One of the company’s slogans is “dent the universe,” which OC4 plans to accomplish with its trademark four initiatives, each starting with the letter C: capital, collision, community and coaching.
The OC4 co-founders say the quartet of C-words illustrate the need to go beyond just raising capital as they tap into the county’s strong entrepreneurial spirit.
Kamrooz, a winner of the Business Journal’s Innovator of the Year award in 2018, sees a “lack of connectivity’’ with capital funding in the tech sector in OC.
“Technology is a different beast. It’s not a typical kind of a company,” Kamrooz adds. “We know that it’s just more than capital. If it was just capital, then you’d see a million companies being super successful.”
He remains chief strategy officer at CloudVirga.
OC4 isn’t the only group pointing to a need to motivate the OC tech industry.
Chapman University economists led by president emeritus Jim Doti said last week the number of computer-related, electronics and scientific jobs in OC has been “stagnant” at about 60,000, falling behind robust growth in Silicon Valley to the north.
Aliso Viejo’s OCTANe has a stated goal of adding some 55,000 high-paying technology jobs to the region by 2030.
Chapman experts also warned about a potential “brain drain” from Orange County caused by the departure of university graduates in science, technology, engineering and math.
The OC4 studio aims to foster an open and collaborative by providing space, support and events for startup entrepreneurs, while letting them focus on what’s best for the business.
“We’re going to do everything for you. You focus on three key things—build a great product, know your market, have a great go-to market strategy and get customers in the door,” Kamrooz said. “Show that this works, is there a need, are you solving a problem that really matters?”
“We know we’re not going to be able to invest in everyone, but we want to try to help everyone,” said 45-year-old Ransom. “I think six months from now things will look very different.”