So Cal Accelerator Launches

A group of veteran Southern California angel investors want to fund 1,000 new companies over the next five years using the Y-Combinator accelerator model that’s proven so popular in Silicon Valley, as well as other parts of the country.

The Irvine, Calif.-based group—which named itself K5Launch—said in a news release issued Oct. 18 that they will invest up to $25,000 each in very early stage ventures throughout Southern California, and then serve as mentors for the first three months.

“We’re underserved,” said Ray Chan, one of the investors involved and a former IBM Corp. employee who later started and sold his own startup. “Everyone is going to Silicon Valley and New York for funding, and we want to keep them in our own backyard.”

They’ll be looking for companies in the cleantech, Internet, mobile, social media and software sectors.

“We’re 20 years behind the Bay Area in providing capital to our new companies,” he added. “We want our entrepreneurs here do what they do best, and that is develop products.”

In addition to Chan, the other three known investors in the group include Amir Banifatemi, founder and partner of Bayspring Ventures, an Orange County investment firm; David Cheng, former founder and CEO of a health care Internet service business that IBM bought; and Kai Tao, managing member of Park One Capital in New York.

Chan said there is a fifth partner, but he wants to be silent for the time-being.

Banifatemi, Chan and Cheng are active in the Irvine, Calif.-based Tech Coast Angels, one of the largest angel investing network in the nation with more than 300 members.

Although TCA has a high profile in Southern California, with five branches, including Los Angeles, Orange County and San Diego, where members regularly invest in seed stage companies, the four said they feel more needs to be done to keep entrepreneurs in the region.

Chan said the best way to do that is to find those who have good ideas, but who haven’t reached the point where they can seek angel funding to move ahead.

The group will provide such resources as funding, legal and financial advice as well as helping with product development and market feedback, and then prep the entrepreneurs to the point where they can pitch early stage investors for their next round of funding.

Banifatemi said he’s received 65 applications via the website, and that K5 will select up to 10 of those for possible funding for the first three-month class.

Chapman College is providing limited incubator space on campus when it opens E-Village in December or January.

“We’re trying to fill the void that angels and VCs haven’t been able to fill in the current economy,” Banifatemi said. “The entrepreneurs are here, so we just have to find them and nurture them.”

The organization’s website is at http://www.k5launch.com.

Tom York is a San Diego-based contributor. He can be reached at tom.york@gmail.com.