What Makes Sacramento Different: A Conversation with the Winners of the Sacramento Region Innovation Awards
Stoel Rives LLP launched the Sacramento Region Innovation Awards in 2016 to bring visibility and recognition among the leaders of the local entrepreneurial and innovative community. The fourth annual awards program celebrated seven winners and 11 finalists during a reception held at the historic Crest Theatre in downtown Sacramento.
The winners of the 2019 Sacramento Region Innovation Awards joined together for a roundtable discussion about the region’s innovation ecosystem and how it helped them achieve success. In a wide-ranging conversation, the winners covered talent, funding, why innovators find success in Sacramento and how the region can continue to foster successful innovations.
To begin the conversation, the winners were asked if they had found the Sacramento region to be a successful place to launch an innovative venture, and the response was a resounding yes.
Jeff Gray is the CEO of Gluware, the 2019 winner in the Software category for its intelligent network automation platform that allows for improved enterprise security at lower costs. Gray said, “It’s worked out very well for us. Our development team has probably been together for about 16 years and has built and launched a product that turned into a billion-dollar company that went public and was acquired. We have a world-class team here in Sacramento.”
“We don’t have a billion-dollar company yet and we’re hoping to get there someday. But we have been able to take advantage of the unique resources that have been provided by UC Davis,” added Bill Schmidt, Vice President of Clinical Development of EicOsis, the 2019 winner of the Medical & Health – BioPharma category. EicOsis won the category for its development of a first-in-class therapy of a once daily, non-opioid, oral treatment for neuropathic and inflammatory pain in humans and companion animals.
EicOsis was able to test its product on real animal pain patients, not just lab research animals, through its relationship with University of California, Davis. In that research, EicOsis was able to prove that it was relieving the pain of these animals. “What happened here in the Sacramento Valley may not have happened anywhere else because it just wouldn’t have the same confluence of resources we have here,” said Schmidt.
EicOsis founder Bruce Hammock echoed his sentiments, adding that the local colleges in the area provide an impressive talent pool. In addition, Sacramento continues to be a desirable place to live, which encourages longevity among employees.
“The employees here tend to be more loyal,” said Chris Galloway, President of US Hammer and winner of the Advanced Manufacturing category for its post drivers and jackhammer products. “The cost of living here is significantly less than the Bay Area.”
Zach Denning, CEO of Sustainability category winner Hank, added, “There is a scarcity of startups or companies that want to refer to themselves as startups. Companies are springing up here and there is a bigger ecosystem, but there are tons of young people here that are smart and want to be part of something. They want to be valuable.”
Talent is key for the success of an emerging company, but another huge factor that drives success is capital. The Sacramento innovation economy rests on connections. Many of the innovators cite Mark Haney and HaneyBiz activities as important for fundraising success. Hank used connections from HaneyBiz to complete an angel round during last summer for its virtual building engineer product. Denning said, “When you hone your pitch and when you do it right, the money is there.”
“Sacramento does a good job of putting events on for capital, too,” added Matthew Magno, CEO of Japa, Inc. and winner of the Government & Civics category for its solutions for smart parking. “5 Star Bank had Bank Tank recently which had a bunch of investors come out and my company received a lot of interest after that. Startup Sac has events too, and they put it together to make it easy for the investors to find you.”
Sacramento recently strengthened its commitment to fostering innovation with Mayor Steinberg’s creation of the Office of Innovation. Similar to the events for investors, John Ralston, CEO of Protxx and winner of the Medical & Health-MedTech category, mentioned to the group how important innovation showcases such as the Sacramento Region Innovation Awards are to supporting entrepreneurs in the region.
“If you look at the Silicon Valley, Austin, or the Greater Boston area, there are a lot more of those showcase events and it helps innovators bubble up,” said Ralston, who won an innovation award for Protxx’s Precision Balance PaaS product. “They stop being shy talking about themselves. It gets them up on stage to expose themselves to potential investors, customers, and development partners.”
Other innovators talked more about improvements that the Sacramento Region can make to encourage innovation. Schmidt spoke at length about the need for a research hub that would allow biotech companies to have access to tools that they can use or share amongst themselves. Additionally, Gray emphasized the importance of a bridge between companies and California state government, especially because California has one of the largest governments in the world. Denning added that Sacramento needs more startup accelerators: not just incubators or working spaces, but true accelerators that cement the relationship with investors, development partners, and the emerging companies.
After fundraising and building their teams, it was time for each of these innovators to commercialize their product. For EicOsis, they have a longer timeline than most of the other winners. The pharmaceutical industry has a longer timeline before products can hit the market, and the team at EicOsis is looking at six to eight years of work before they can commercialize it. Ray Stoner and Galloway, the innovators at US Hammer, said that it took them six years and many iterations before their product was viable. Denning added that after two and a half years, Hank was a viable, commercialized artificial intelligence product on the market.
Hammock added that he hopes that investors realize that technologies are very different. The timelines for biochemistry, software, or real products will range due to the needs of the industry. Ralston suggested that education plays a big role in helping investors reach their goals and make deals that work. He cited how corporate law firms, such as Stoel Rives, can help investors learn more about how deals with various industries work.
“When you are doing deals as a corporate law firm, you have insights that most investors simply do not have,” said Ralston. “And until they get them, they’ll never be very effective investors.”
Regarding ways to work effectively with investors, Denning emphasized finding investors with a mission that is aligned with your company. Targeting investors this way will increase efficiency and fundraising success.
The innovators ended the conversation with offering some advice for future entrepreneurs.
Galloway: “Don’t stop. If you have a good product, don’t give up.”
Magno: “Take advantage of all the resources that the community provides. Elk Grove even has a $150,000 grant to move your company there. Myself and my cofounder are fortunate enough to not put a dime in our company yet. We won competitions, used all the resources we could to get to where we are today. And we were just students, so if we could do it, anyone else can too.”
Schmidt: “You have to be able to ignore the people who say no who don’t understand the technology or maybe those who don’t have friends who are invested in it. And, find the resources that will help you move forward.”
Gray: “One, do your very best to build an MVP product. If you can’t do that, build a prototype. Two, read ‘The Boy, the Man and the Donkey,’ the Aesop Fable. The moral of the story is that you can’t please everyone. Three, get a good attorney.”
Ralston: “Build your prototype, and get it in front of someone you think is a potential customer, and hear what they say about it. At the end of the day, you’re only a business once you have paying customers and the sooner you engage with them, the better.”
Denning: “People who have been there, done that, they are the people I value the most. Sit in a room with them and learn a ton.”
Stoel Rives congratulates the winners of the 2019 Sacramento Region Innovation Awards and looks forward to more success from each of the winning companies.
Stoel Rives has been working to foster innovation across industries for nearly two decades. The firm launched its first Innovation Awards program in Salt Lake City in 2002 to celebrate innovative companies and their accomplishments. Each year since, the law firm has honored groundbreaking advancements from all manner of businesses, from emerging companies to long-established organizations. In its commitment to foster the innovation ecosystem across its footprint, Stoel Rives expanded the program to Idaho in 2006, and the firm partnered with the Puget Sound Business Journal to bring the program to Seattle in 2017.