County Earmarks Cash for Tech Start-Ups

The Los Angeles County Community Development Commission has set aside $1.5 million to make loans to early-stage technology firms that are members of the Los Angeles County Innovation Network of high-tech business incubators.

The loans are designed to provide seed capital to young start-ups that are not yet ready to seek funding from venture capitalists, said Robert Swayze, manager of regional economic development for the Community Development Commission. Every dollar loaned by the commission must be matched by 50 cents from the incubator where the company resides. The first loans, announced last week, were for $100,000 and $34,000.

“The biggest problem with start-up companies is sources of capital,” Swayze said. “This is not an enormous source of capital, but combined with money from the incubators, it grooms them for a venture-capital injection.”

The loans, which can last up to seven years, will be made at one point below the prime rate, with a loan fee that is 2% of the total size of the loan. If the company proves successful after three years, the Community Development Commission can exercise an option to receive a payment of between about 0.1% and 0.5% of the company’s total value, Swayze said.

Additional information about the loan program is available online at https://www.lacdc.org or by calling (323) 890-7042.