Banks take page from 'Shark Tank' to connect with businesses

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Fresno First Bank CEO Steve Miller is nothing if not determined to reach out to early-stage businesses.

Miller, who joined the California bank in 2015, launched an initiative in September 2016 offering to lend to new ventures that succeeded in raising part of their startup capital through equity crowdfunding. Despite Fresno First committing $10 million, the pilot program has led to just one loan, so now Miller is trying something different.

Earlier this month the $410 million-asset Fresno First announced it would serve as a founding sponsor for Valley Innovators, an organization that plans to offer education and networking opportunities to entrepreneurs. It also plans to sponsor an annual pitch contest for startup companies.

Fresno First and other banks that participate in such competitions hope to help small businesses while also meeting requirements for the Community Reinvestment Act and drumming up new customer relationships.

“If we get 1,000 small businesses applying for this program, you’ve got to come to Fresno to play, so now all those eyes are going to be looking at the Valley in a very different way,” Miller said. “That’s positive for all our sponsors, including the bank. … We also want our best entrepreneurs here to compete against the best entrepreneurs in the state and hopefully in the country.”

The continuing success of ABC’s reality show “Shark Tank,” which aired first in 2009, has raised the profile of pitch or elevator contests, where entrepreneurs lay out their business plans for a panel of experts. Fresno First joins a growing number of banks that have sought to capitalize on the trend, with localized versions of their own.

In Treynor, Iowa, for instance, TS Bank has held a pitch competition, called REV, that has grown every year since its inception in 2015.

“We’ve booked bigger venues each year for the number of people that want to come out and experience it,” said Melissa Peterson, director of marketing for TS Banking Group. “The first year it was all about getting the word out in the press and advertising, as well as word of mouth, talking to businesses in town. From there, we’ve seen it pick up.”

HarborOne Bank in Brockton, Mass., has experienced similar success with its Small Business Pitch Contest. Next year HarborOne plans to award $10,000, up from $2,500 the bank offered during the first competition in 2016.

Perhaps the most successful bank-sponsored pitch contest is the LaunchPad event hosted by Gorham Savings Bank in Maine. More than 550 small businesses have participated over the past six years.

A common aim for sponsoring banks is winning CRA credit for their work with entrepreneurs and early-stage companies. While Fresno First is no different in that regard, Miller’s ambitions for Valley Innovators goes further. He is seeking to capture new business, starting with deposits, and then possibly making new loans after a year or two.

Developing this relationship and having two or three years of deposit data to look at for these startup companies should make lending decisions easier later on, Miller said.

“To us it’s just really building the future,” Miller added. “We know that a lot of the young startups don’t have the money right now. They are very similar to the millennials. They don’t have the money, but they will. I have to address all segments of the market. This is one strategic way that we’re trying to address the smaller end of things.”

Miller was introduced to the pitch contest concept in Malaysia, where he worked as senior executive vice president for business banking at Alliance Financial Group for six years, until leaving to run Fresno First. Alliance started an Innovation Challenge in 2013, and now attracts more than 1,300 entries from throughout Malaysia.

“I knew I wanted to do a similar program because there are a lot of benefits to the bank,” Miller said.

The plan for Valley Innovators is to create a foundation which can grant money and provide other resources, such as mentoring, training and education, to participants, Miller said. The ultimate goal is to make sure these companies can get funding to succeed, he added.

TS Banking Group has a similar vision for REV, Peterson said.

“We realize that a community’s success is based on the strength of is small businesses. We really just wanted to ignite small business — that’s our tagline — and give them a boost," Peterson said.

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