Based on the results of the 2017 Program, we offer nine recommendations for improving the program in 2018:

  1. Align applications and program with the Sacramento Urban Technology Lab (SUTL) framework and allow startups to receive funding.

  2. Leverage grants to drive an inclusive economic development agenda.

  3. Dedicate 30 percent of total grant awards to prior year grant recipients.

  4. Raise Leadership grant category floor from $10,000 to $20,000.

  5. Require a minimum 1:1 funding match for grants above $100,000.

  6. Elevate role of the Mayor’s Tech Council to review, judge, and recommend grantees to Mayor and City Council.

  7. Invest in a rigorous program evaluation to align program outputs with long-term outcomes.

  8. Work more closely with grantees to better define success and facilitate collective impact.

  9. Encourage development of an ecosystem that supports social innovation and entrepreneurship.

Recommendation 1: Align grants with the Sacramento Urban Technology Lab (SUTL) framework and allow startups to receive funding.

During the application period for the City’s inaugural 2017 cohort, we received feedback regarding the ineligibility of startups to apply for funding through the program. Since that time, MOFIE launched the Sacramento Urban Technology Lab (SUTL). SUTL is a framework that embodies the “Triple Helix” model of economic innovation, where government, academia and industry collaborate to transform Sacramento into that of a “living laboratory” for entrepreneurs, advanced technology businesses, and academic institutions to test, develop, and scale their ideas, products, and services. Just as important, the SUTL framework aligns the City’s innovation and economic development efforts with the imperative to accelerate quality of life improvements for all residents. Because of these public benefits, we recommend that startups working within this framework be eligible to apply for a 2018 RAILS grant.

Recommendation 2: Leverage grants to drive an inclusive economic development agenda.

Growth of the technology sector must support the City’s commitment to diversity and inclusion to ensure that all communities benefit from changes in the economy. In 2017, the Sacramento Metropolitan Arts Commission (SMAC) created a Race and Cultural Equity Task Force to ensure that SMAC’s grant awards reflect the rich diversity (demographic, disciplinary, and cultural) of the population of Sacramento. After six months, the Task Force’s work concluded with the adoption of the Arts Commission's new Cultural Equity Statement. We recommend that the City build on this work to adopt a Statement of Inclusion that would apply to economic development grant programs such as RAILS.

Recommendation 3: Dedicate 30 percent of total grant awards to prior year grant recipients.

In an effort to continue shaping the innovation ecosystem, it is imperative that the City continue to practice good economic farming through RAILS. This can be accomplished by seeding new innovators, entrepreneurs and leaders while giving limited additional support to RAILS alumni that believe they have a path to sustainability. We recommend dedicating 30 percent of total grant awards to extend the runway of the most promising prior year grantees.

Recommendation 4: Raise Leadership grant category floor from $10,000 to $20,000.

A 2017 RAILS grantee received a grant award of $10,000 – the minimum amount in the Leadership grant category and in the overall program. In retrospect, this grantee could have achieved a greater impact with additional funding. In order to increase the ability of grantees to leverage funds, as well as raise the odds of grantee impact, MOFIE believes it is crucial to not dilute the funds. By increasing the floor to $20,000, MOFIE believes that the quality level of applications recommended by the Mayor’s Tech Council will be higher.

Recommendation 5: Require a minimum 1:1 funding match for grants over $100,000.

To guarantee that the City’s larger RAILS investments are leveraged, we recommend that the City require a minimum funding match of 1:1 for grants above $100,000. The required match should comprise direct investment from the grantee or another third party and in-kind support should not count toward the match requirement. This approach will help de-risk larger grants by ensuring that risk is shared across parties.

Recommendation 6: Elevate role of the Mayor’s Tech Council to review, judge, and recommend grantees to Mayor and City Council.

The Mayor’s Tech Council was convened at the end of 2017, at which time it was expanded from six to 21 members. MOFIE asked 2017 RAILS grantees how to improve the program. The grantees were unanimous in the belief that the applications should be judged and reviewed by parties outside of City Hall in order to add objectivity to the process.

Recommendation 7: Invest in a rigorous program evaluation to align program outputs with long-term outcomes.

The insights provided by grantee data would be more meaningful in the hands of an expert evaluator with the capacity to delineate leading versus lagging indicators of success. As the RAILS Program continues into future years, it is critical for the City to understand the impact of its investments. Therefore, we recommend that a minimum of $50,000 (5 percent) of the 2018 RAILS Program budget be allocated to a third party expert evaluator to help develop a more comprehensive evaluative model.

Recommendation 8: Work more closely with grantees to better define success and facilitate collective impact.

As a new City program, the overall success of the RAILS Program would be strengthened by more proactive engagement with grantees. This would provided value to both the City and grantees themselves. Specifically, performance metrics should be agreed to in the early phases of the grant period so that success can be monitored more regularly. Moreover, as the only entity with a deep understanding of the work of all grantees, the City is well-positioned to facilitate collaboration among grantees as opportunities emerge.

Recommendation 9: Encourage development of an ecosystem that supports social innovation and entrepreneurship.

Only one of the 2017 RAILS grantees explicitly focused on social entrepreneurship. Through the recent Creative Economy Pilot Project application review process, the City observed significant interest among the grant applicants in using creative approaches to address community challenges, such as poverty, homelessness, and social equity. An explicit call for RAILS applicants focused on these issues could help broaden Sacramento’s innovation and entrepreneurship ecosystem to be more inclusive of programs that take an entrepreneurial approach to sustaining social impact.