City of San Jose launches venture capital fund

“Can venture capitalists spark an entire city? San Jose is about to find out. In December the city launched a $3 million venture capital fund to invest in local businesses. The fund will be managed by Pacific Community Ventures, the investment arm of a nonprofit aimed at helping low-income California communities, and will target businesses with annual revenues of $3 million to about $15 million. The idea, according to Jeff Ruster, deputy director of San Jose’s Office of Economic Development, is to create jobs and enhance the city’s tax base, and make money in the bargain. ‘This isn’t just about making a 16 to 20 percent profit, but also a social return on investment,’ he says. PCV will put up $5.70 – culled from its own funds and from other investors – for every dollar that San Jose invests. The city’s fund will make ten to 12 investments of as much as $500,000 each, says Eduardo Rallo, PCV’s managing director. At presstime, San Jose was about to make its first investment.”