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The next Silicon Valley? How Sacramento is trying to compete as a home to tech companies

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Selling the greater Sacramento region as a place for technology companies to locate and create new jobs means dealing with the elephant in the room.

So, Lucy Lu Roberts got to the point quickly on Friday.

“We often get painted here in California as a really costly, expensive place to do business,” she told 16 entrepreneurs from Thailand, who were taking a tour of the Sacramento region.

Roberts, the business development project manager for the Greater Sacramento Economic Council, did not deny California’s high costs. Instead, she went straight to pitching the Sacramento area and its lower costs.

The reality, she said, is that business operating costs in Sacramento are in line with Austin and Phoenix, (two cities known for attracting new businesses) and less than San Francisco, Los Angeles, San Jose and Silicon Valley.

San Francisco was singled out specifically with Roberts saying that operating costs in Sacramento are 30% less.

The entrepreneurs sat quietly and listened at the first stop of their day-long tour at University of California Davis Robert Mondavi Institute for Wine and Food Science. They then visited the institute’s food processing plant, observing silent fruit processing fruit machines that won’t be humming with activity until the summer.

Everyone got a peek, through closed doors, at the university’s brewery and its winery, which were also void of activity.

The business group also visited AgStart, an incubator for new food and agricultural companies in Woodland; Zennify, a technology consulting firm in Sacramento; and The California Mobility Center, a non-profit designed to help mobility, electrification and other startup businesses get off the ground.

Tours part of a long-game process

The tour is one of 10 a year that the economic council, a public-private partnership tasked with bringing new businesses to the Sacramento region, hosts each year for delegations from different countries.

At the end of the day on Friday, which finished with a cocktail reception for the tour group, the entrepreneurs said in interviews with The Bee that they were impressed with the Sacramento region.

But no one was committing to an investment in the Sacramento area, as of yet. It was an exploratory tour for the group, and bringing new companies to Sacramento or investing in startups could take months or years if it happens at all.

In the economic development game, it’s a matter of numbers, say economic council representatives. Engage enough people and the theory is someone is going to bite and create a new business in the Sacramento region.

“You have to be constantly telling international groups why you should invest here. If you’re not, there’s other places like Salt Lake City, Oregon, Phoenix and Los Angeles that are doing it,” said Michelle Willard, chief public affairs officer for the economic council. “And if you don’t, you’re not going to get the investment you want.”

In the last 12 months, economic council statistics show 3,006 new jobs were created in Sacramento. It’s unclear how many were created from the international trips that are held yearly.

Sure enough, greater Sacramento was not the only stop for the 16 persons from Thailand in the competitive world of economic development. The group also met with business people from throughout Northern California.

They toured a host of companies in the Bay Area including Google, Facebook and Nuro, a self-driving delivery truck startup during their week visit.

Positive feedback but no commitments

One of the entrepreneurs on the tour, Rauangroj Poonpol, who runs a $50 million tech startup investment fund, was so impressed with Nuro and its self-driving delivery trucks that don’t have pedals or steering wheels, that he was considering writing out a multi-million dollar check to take a small stake in the company.

As for Sacramento, Poonpol said he saw investment possibilities, but they would require future investigation. He is hoping to learn more about the mobility center and some of the startup companies that have used the center to help develop electric vehicles and other projects.

None of the companies were present on Friday at the mobility’s startup factory, which sits in a large warehouse building in a Sacramento industrial park. The space is mostly vacant except for auto lifts and other equipment to work on developing electrical vehicles.

Instead, two officials of the mobility center talked to the Thai delegation about the center and its mission of helping startup companies.

“I would love to find a way to collaborate with a mobility company,” said Poonpol.

The businessman, who also is the president of technology for Kasikornbank, a major bank in Thailand, graduated from Stanford. After graduation, he worked at Google, directing marketing for Google Earth.

He said a major advantage for Sacramento is lower costs and not just for businesses. Poonpol said he would definitely live in the Sacramento area if he moved back to the U.S.

“I couldn’t afford San Francisco,” he said.

Poonpol also hoped for potential investment possibilities among the several dozen startup companies at AgStart, but Friday’s visit did not result in any introductions to the actual companies. So that, too, will require more research.

Selling Sacramento as the destination

The old joke about Sacramento is that the best thing about the area is it’s not that far from San Francisco and Lake Tahoe. That’s not the message the Thai business people received on Friday.

Instead, they were told by Roberts and later at the reception by more senior economic council officials a different story about a vibrant region that’s growing despite population declines in other parts of California.

The Sacramento area was touted as a secret find, but not for long, because its on the cusp to be discovered on a wider basis as the next great place in the U.S. to open a company.

Also stressed was a highly educated labor force, around one third that are college-educated and cheaper utility costs, with power being supplied by the community owned Sacramento Municipal Utility District.

Oranuch Lerdsuwankij was a believer, just the kind of reaction greater Sacramento economic development officials hope for. The only thing better would be an actual investment, but economic development can be slow moving.

“I think that it may be too soon to tell, but I believe that from what we see today, that Sacramento could be the next Silicon Valley,” she said. “And because of the food scarcity and because UC Davis is very good at agriculture, I think the Sacramento area could be a leader in this area.”

Lerdsuwankj, who runs Techsauce, a tech conference sponsor and tech news service in Thailand, said she was impressed with the mobility center and the AgStart incubator, though it might be too early to invest in the startups affiliated with the centers, some which are in the early development stages.

At various stops on the tour to visit companies, the Thailand entrepreneurs repeatedly heard platitudes about the Sacramento area from local business people.

At technology startup company Zennifly, CEO Manvir Sandh related how everyone in Sacramento is supportive of business, from the mayor to the greater Sacramento Economic Development Council.

Sandh, who co-founded his business in 2013 with two other partners, said of the Sacramento business culture, “it’s an undiscovered gold mine.”

Jesdakorn Sammittiauttiauttakorn liked what he heard all day. The CEO of a Bangkok artificial intelligence startup, Datawow, however has no immediate plans to open an office in the U.S.

But the CEO said he liked the support offered for businesses in the area.

“I’m thinking one day if I have a chance,” he said, “I might come over and open an office in Sacramento.“

 

This article is written by Randy Diamond from The Sacramento Bee and was legally licensed via the Tribune Content Agency through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

The information above is provided as a convenience, without warranties of any kind and MUFG Union Bank, N.A. disclaims all warranties, express and implied, with respect to the information. You are solely responsible for the location of your company and any decisions about office space.

 

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