Proposal could give new businesses a financial boost

Entrepreneurs looking for a start in Pittsburgh could get a hand from the city.

Councilman Corey O’Connor will introduce legislation Tuesday that would foster an Entrepreneur Support Fund, with grants, loans or other help available to qualifying new businesses. The city Urban Redevelopment Authority would maintain the effort with seed money, according to his proposal, although a funding source has yet to identified.

Mr. O’Connor said he envisions beginning with a pot of $75,000 to $100,000 — preferably in grants — and seeing “what that gets you.” Encouraged by the city’s Advisory Board on Entrepreneurship and Start-ups, the support could go toward permits, licenses, software and other nonpayroll costs of launching a business.

“The goal here is to start as many businesses as we can so that they thrive and hire more and more people, and obviously you get more and more people employed in Pittsburgh,” Mr. O’Connor said.

Advisory board member Bobby Zappala, CEO at East Liberty-based Ascender, said owners of new small businesses can face hurdles securing bank loans before they begin generating cash flow. Many upstart entrepreneurs are “Main Street cash flow businesses” without any venture capital at hand, he said.

“Those are the ones that can really benefit from this type of fund,” said Mr. Zappala, whose firm helps grow new businesses. He said a support program would offset unavoidable fixed costs such as registration fees.

At the Brookings Institution in Washington, D.C., fellow Scott Andes called capital a constraint for Pittsburgh entrepreneurs. He

has studied local conditions for forthcoming businesses.

“Just looking at overall funding dollars and the rate of change, there hasn’t been enough in-flowing to match thedemand,” Mr. Andes said.

He said the extra money is necessary, but “I don’t think that it alone will lead to the outcomes the city needs.” He said Pittsburgh entrepreneurs also need appropriate mentors, access to talent and relationships with initial customers.

Other communities have seen “seed funds” financed through a variety of public sources, philanthropies and other institutions, Mr. Andes said.

“The difficulty seems to be, how do you make sure the benefits stay in the city? What you don’t want is to spend a bunch of money on a company that then leaves,” he said. He advocated a “risk portfolio” perspective that acknowledges some startups may fail or move.

At the URA, board members on Thursday should receive proposed guidelines for “micro-loans” to support qualifying entrepreneurs, said Thomas Link, director at the authority’s Center for Innovation and Entrepreneurship. He said that plan, while separate, generally aligns with Mr. O’Connor’s proposal.

He expects conversations with council about whether the two concepts could merge somehow. Tentative guidelines would allow URA loans of $5,000 to $20,000 for entrepreneurs in their earliest stages — a complement to the authority’s current loan offerings for business expansions, Mr. Link said.