Westside Startup Fund

---

The Westside Startup Fund  7 LLC has been created to provide the investment vehicle for the 2022 Beaverton Startup Challenge.  OTBC invests $50,000 in the fund (funding provided by a grant from the City of Beaverton).  OTBC, the fund manager, is seeking to raise at least an additional  $80,000 from investors to reach a total fund size of at least $130,000, in order to make five investments of $25,000 in five Beaverton Challenge winners, with $5,000 left over to cover the fund's annual out-of-pocket costs (accounting fees, etc.)

Investors in the Westside Startup Fund 7, LLC are welcome to participate in the selection of the final five participating startups.  An option indicating an interest to  participate in the selection process is included on the Subscription form.

How the Fund Works

Investors in the fund invest either $5,000 or $10,000.  That is pooled into a $125,000 fund. The investor group selects five startups who each receive a convertible not investment of $25,000 from the Fund.  We solicit startup applications in parallel with raising the fund each year.  Company applications are typically accepted from the beginning of September until early October.  OTBC staff shares all the applications with the investor group and vets the applicants (with investor input) down to a group of 10 to 12 companies.  Those companies are scheduled for presentations to the investor group in late October.  We then complete any additional due diligence the investor group decides is needed, and the investor group selects winners in early to mid November.

We have the selected companies sign the convertible note documents in the second half of November and announce winners in early December.  The 5 companies move in to OTBC office space from late December into early January.

Through the calendar year, OTBC schedules reviews (at least quarterly) where the companies present to the investor group.  Reviews are preceded by distributed written updates from the companies.  The review process is partly for accountability, but also is an opportunity for investors to engage with and mentor the companies.

Background

Each Westside Startup Fund has in a Beaverton Challenge class, starting with the class  of 2016.   Each class consisted of 5 startup companies who received an investment ($20,000 in the first fund, and $25,000 in the following funds).  

As of August of 2021, the 30 companies in our 6 Challenge classes have closed more than $50 million in follow-on funding, consisting of mostly investment dollars plus some government grant (SBIR/STTR) funding.

Fund Performance

The fund invests in startups at a very early stage, and we expect it to take multiple years before a portfolio companies has a liquidity event that provides a return to investors. However, that has begun to happen.  Our first fund, for the 2016 Challenge cohort, has had a liquidity event for one of the companies in that portfolio which has provided more than a 100% pay-back to the investors in the fund.  We expect additional liquidity events from companies in that fund which should result in a return of a multiple of the amount invested.

Investment Mechanics

Only accredited investors may invest in the fund.   Investors sign 3 legal documents:

        An accredited investor questionnaire

  The Subscription Agreement

  The fund Operating Agreement

The Subscription agreement is used to document the size of the investment in terms of units in the fund, each unit being $1,000.  Investors select either 5 or 10 units (an investment of $5,000 or $10,000).  Document signatures are done digitally using DocuSign.

To learn more about the Westside Startup Fund 7 LLC, please contact us using the Contact form