Dell Creates $100 Million Fund to Help Startups

The Dell Innovators Credit Fund will give entrepreneurs access to much-needed credit, and the vendor hopes also might create some new Dell customers.

Dell is creating a $100 million fund to help startups get their companies up and running and€”hopefully€”to create relationships that will make some of them long-term Dell customers.

The Dell Innovators Credit Fund isn€™t to invest in companies, according to Steve Felice, president and chief commercial officer at Dell. Most of these startups already have venture capital backing or angel investors funding the development of their products. A significant hurdle they€™re facing is the difficult and time-consuming process of getting financing from banks for such needs as IT equipment.

€œIn this economy, we€™re really trying to address a [problem] that these companies are still having€”trouble getting credit,€ Felice told eWEEK.

The goal is to get these startups the fast access to capital they need for technology solutions, he said. Via the fund, these companies and their backers can get up to 10 percent of their funded amount€”or up to $150,000€”wth accelerated and limited credit terms. Those companies needing more financing can get that with a few extra steps, according to Dell officials.

In addition, those companies selected for the Dell Innovators Credit Fund also get the assistance of a dedicated Dell sales team and ProSupport services, giving them access to trained experts and around-the-clock support for their technology needs.

More information about the fund can be found at Dell€™s Entrepreneur in Residence (EIR) Website. Startups can start applying for funding now.

Dell€™s financing efforts are a reflection of how important the small and midsize business (SMB) market is to both Dell and the U.S. economy in general, Felice said. In announcing the fund, Dell officials pointed to a paper put out by the Technology CEO Council (TCC) that says the highest-growth startups create an €œoutsized share€ of new jobs in the country, with 40 percent of new jobs coming from the top-performing 1 percent of companies each year. The TCC cited a McKinsey Global Institute report noting that Internet-savvy SMBs in a number of industries create more jobs than less technologically knowledgeable businesses.

For Dell, which is undergoing a transformation from simply a PC and server maker to an IT solutions provider, the SMB market is increasingly important, accounting for almost a quarter of the company€™s business, according to Felice. In the first three months of the year, while revenue for Dell€™s large enterprise business dropped 3 percent over the same period in 2011 and revenue for its public business fell 4 percent, SMB revenue increased 4 percent, to $3.5 billion.

€œIt€™s a very important segment to us €¦ and growing on a global scale,€ he said.

Dell€™s success with SMBs comes in part from what Felice said is a bond created by the company€™s story arc of growing over the past couple of decades from a business run out of founder and CEO Michael Dell€™s dorm room to a multibillion, multinational company. In addition, Dell has a more open technology platform built atop the x86 products from Intel and Advanced Micro Devices. Dell's competitors, like Hewlett-Packard and IBM, also have their Unix businesses and, in the case of IBM, a mainframe unit.

€œI think we€™re seen as more of a pure-play,€ he said.

SMBs also see the investments Dell is making to buy businesses€”such as Kace and Boomi€”whose technologies will make Dell€™s products easier to manage and implement.

Dell is hoping that through the funding program, some of the successful startups will become long-term customers, Felice said. In addition, there might be some whose products mesh with Dell€™s plans, which could make them attractive acquisitions. However, the primary goal is to get these companies funding, Felice said.

The aim is to help €œWeb-knowledgeable€ startups, whatever industry they might be in.

At the same time, Dell also is expanding its EIR program that will feature information, case studies and advice for entrepreneurs, as well as details about Dell initiatives and products.