Fairfax County supervisors on June 28 appropriated $1 million to establish the Fairfax Founders Fund, a grant and technical-assistance program that will bolster promising startup companies in the county that are focused on emerging technological industries.
The moneys, which will come from the county’s Economic Opportunity Reserve Fund, will address under-capitalization of innovative businesses in the early stages of development and link those companies with technical assistance and other area partnerships.
Grant recipients will be eligible for up to $50,000 in funding, but must provide a 50-percent match in the form of capital or sweat equity. The county expects to roll out the program this fall.
The grant program also will foster economic development and job growth, and promote the county’s economic advantages, boosters said. The program also will “marketed broadly so as to ensure its availability to a diverse population of founders,” they said.
“Female and minority businesses have historically had less access to capital and diverse founders have traditionally been underrepresented in equity funding,” supervisors said in a July 2021 board matter.
County Executive Bryan Hill or his designee now will sign a memorandum of understanding with the Fairfax County Economic Development Authority (FCEDA), which will oversee the fund. FCEDA developed the fund’s concept with the Department of Economic Initiatives.
Supervisor Patrick Herrity (R-Springfield) supported having the county be a partner and resource for startup businesses, but said he opposed taxpayer-funded private equity.
“The fund would be picking winners and losers in the market with taxpayers’ money,” Herrity said, citing the need to encourage “angel” investors.
“I really think businesses and taxpayers win in the long run if the county plays a role in providing a forum to connect and pull those investors and businesses together to form partnerships instead of directly funding only certain businesses,” he said.
Supervisor John Foust (D-Dranesville) responded that the investment involved was on “modest and has the potential for leveraging a lot of positive things in Fairfax County.”
“I don’t think we’re picking winners and losers,” Foust said. “We’re investing in economic development that is going to make us all winners, hopefully, if this works.”
Grantees will be required to have their principal place of business within Fairfax County for at least two years and must provide commercial-progress reports over five years to track their success, said Board of Supervisors Chairman Jeff McKay (D).
“These are direct investments in entrepreneurs who are underrepresented in Fairfax County who have an idea and want to launch an idea in our county,” McKay said.
Supervisor Rodney Lusk (D-Lee) called the fund a “tremendous idea” that will make the county more competitive with other regional jurisdictions.
Women- and minority-owned companies traditionally have had access to only a small portion of “angel” and venture-capital funding, he said.
“We’ve got to position them to be stronger, more effective companies to sell themselves to those entities,” Lusk said.
Angel and venture-capital investment in the county has been trending toward later stages in companies’ development because of reduced risk, Lusk said. Earlier investments are riskier, but could prove bountiful if the firms prove successful, he said.
Lusk, who worked in economic development for 21 years before being elected to office, said he understood the difficulties startup companies encounter when trying to access such investments.
“I think what we’re doing is going to help solidify their ability to get funding in the longer term,” Lusk said.
“If it’s good enough for Amazon, it ought to be good enough for people in Fairfax County and smaller businesses,” said Supervisor Daniel Storck (D-Mount Vernon).
“Amazon got a huge amount of money – not from Fairfax County, but from a lot of folks – and darn it, we ought to be able to support those folks who are trying to become, if you will, the next Amazon,” Storck said.
The fund shows a “new entrepreneurial attitude” in the county to cultivate and support small businesses, McKay said.
“We often talk about small businesses being the heart of our economy in Fairfax County, and I think we’ve all noticed that those come in all different shapes and sizes,” McKay said. “We have a very innovative community here of people with great ideas that just need that one chance [and] could be extraordinarily successful right in our back yard.”
Supervisors approved the fund’s establishment on a 9-0 vote, with Herrity abstaining.