JumpStart: IdeaExchange Blog

Two weeks ago in Columbus, 500+ venture capitalists, entrepreneurs, and government leaders gathered to hear about the accomplishments of The Ohio Capital Fund (OCF) and our State’s growing venture capital community. (For those of you not familiar, OCF provides incentives for investors from outside Ohio to invest in companies based here). Due to the work of many, including the OCF, the Ohio Department of Development, and all of the other members of the venture community - Ohio has earned some serious bragging rights! Among the many great accomplishments shared at the OCF Summit, here are some of the most compelling:

• 196 companies received $446 million in equity investment in 2008. Of this, 73 companies (37% ) and $259 million (55%) were from the Northeast Ohio region.
• Total investment dollars ranked Ohio as 13th in the U.S. for venture investing.
• Early-stage funding (which represents the type of dollars that would be invested in a company after a JumpStart Ventures investment) was up 67% from 2007 ($238 million in 2008), compared to a decrease nationally of 20%.
• Organized angels invested $45 million in 107 companies in 2008. I have to believe this is one of the top levels of investment and broadest reach of companies of the last decade, if not longer.

*Read the rest of the 2008 Ohio Venture Capital Report from Ohio State for the rest of the details

Relative to The Ohio Capital Fund itself, its success is also evident with these stats:

• The fund has invested $111 million in 21 funds, which have deployed that capital in over 35 companies.
• These companies receiving investment have created 1400 jobs, and not one of those jobs has gone away in the last 12+ months.

Some of the other information shared included the impact of Ohio Third Frontier, as reported by the Stanford Research Institute’s report released last month. Consider this data regarding VC investment in the state:

• Venture capital investing has grown over 13% per year over the last five years in Ohio, more than double the national rate of VC growth
• Total seed and early-stage VC has actually grown at 18% per year over the last five years

Ohio Third Frontier and the Ohio Capital Fund have played an instrumental role in this growth, but not the only role; this success is also due to the entrepreneurs of our region, who have identified the ideas, pursued their growth, and grown the businesses that are attractive and competitive investments for investors within and outside of the region.

John Dearborn is the Chief Development Officer of JumpStart and brings experience as an entrepreneur, founder and CEO at companies across the US and Europe over the last 25 years to the pursuit of economic transformation in Northeast Ohio.

I read a great blog the other day related to a subject that I am a fan of — the notion that Internet-based, consumer focused offerings need to be lightweight, cost efficient and prove themselves prior to seeking investment. You may see a particular bent regarding VCs in this blog posting, which I am less inclined to agree with, but the major takeaways are still valid.

This site, meebo.com, was a true garage startup and has really taken off, as you see from the graph below (4 million unique visitors — and this is only ~1/3 of their traffic)! They allow you to log onto multiple instant messaging accounts in one place from a browser — no clients to download and it allows you to stay connected on multiple fronts.

You could say Seth’s approach is “extreme” but I do believe he makes some very valid points regarding focus early on and putting the right mix of folks together. He seems to have used a bit of Andy Grove’s “only the paranoid survive” in this statement:

“One of the things I do as a founder of a later-stage startup is to meet with early-stage entrepreneurs to help them get their companies going. Nine times out of ten, the meeting ends with them asking me for introductions to VCs. Little do they know that, even if they could raise VC, it’d start them down the wrong path. So, this is what I tell them:

At the exact moment you had your idea, ten other people had the exact same idea. There was just something in the environment that made it the right time for folks to think that one up. The race has already begun! Who’s going to execute first? Who’s going to execute best? If you want to waste nine months trying to raise VC money for that idea, great. But six months in, you’re gonna cry when you see someone else put out that same product you’re pitching me right now. Like I said, forget everything else and just get your product out the door. Now.”

So, while not every idea is going to be “lightweight” enough to be able to get to market validation without any funding, Seth gives some valid advice on what to focus on in terms of team, product and mentors. Give it a read, I’m sure you’ll enjoy it and I can assure you that it’s timely advice!

John Dearborn is the Chief Development Officer of JumpStart and brings experience as an entrepreneur, founder and CEO at companies across the US and Europe over the last 25 years to the pursuit of economic transformation in Northeast Ohio.

There is no doubt our entrepreneurial ecosystem has fundamentally changed here in Northeast Ohio. What recently reminded me of this fact was a special event we had for our key supporters and how it reflected these significant changes in a very real and personal way.

Seated in front of about 40 of our supporters from foundations, corporations and others were an entrepreneur (Dean Koch, CEO of CerviLenz), the Venture Partner who has worked with the company since applying to JumpStart (Kevin Mendelsohn), and the two VCs who have since funded them (Koleman Karleski of Chrysalis Ventures and Tim Petersen of Arboretum Ventures).

Think of the timeline for this. In less than two years, this company got funded from a local non-profit that didn’t even exist five years ago, received technical assistance from an experienced entrepreneur for free, raised an angel round from the North Coast Angel Fund, and a Series B venture capital round from Arboretum Ventures and Chrysalis Ventures, who have offices here in Cleveland (both opened within the last three years), with one of them here in the same building as JumpStart.

Not only did our operations not exist five years ago but neither did an angel fund in our region. And what we have now is not just any angel fund; it’s a fund that is organized, professionally run, and is making a significant number of investments. This entire ecosystem is relatively new, yet it’s working very collaboratively and, as you just read, making a real impact.

Sometimes, with all that is going on, it’s worth taking a step back and doing an inventory of what is so different today than just a few short years ago. Even with the slowdown in VC investments, there are deals being done and attractive companies are receiving funding right here in Northeast Ohio!

John Dearborn is the Chief Development Officer of JumpStart and brings experience as an entrepreneur, founder and CEO at companies across the US and Europe over the last 25 years to the pursuit of economic transformation in Northeast Ohio.

A while back, our CEO, Ray Leach, wrote a blog regarding podcasts available from Stanford University concerning a wide range of topics for entrepreneurs. For those of you that follow Stanford University’s Entrepreneurship Corner podcasts, you know what a great find this site is. If you haven’t been there in a while or not heard of it, you should check it out.

Many times in my past life as an entrepreneur, I found myself incredibly close to the details of the business I founded. Needless to say, making payroll every two weeks when you’re bootstrapped has a way of keeping you focused!

Sometimes, it’s good to step back and take a look at some broad, strategic issues of a more general nature that can get you to think not only about the world at large, but may even bring a fresh perspective to your own business or situation. These great podcasts allow you to do just that and gives you really interesting perspectives from some of the world’s sharpest minds. For instance, check out the recent lectures from Microsoft’s CEO, Steve Ballmer. The following video podcast, titled “The Future of Microsoft, The Future of Technology,” really got me thinking and it just might get your wheels turning as well.

You may not agree with the almost-always-bombastic Mr. Ballmer, but you have to appreciate his zeal, even after all the years he’s been at it and with how many people want to take down his company!

John Dearborn is the Chief Development Officer of JumpStart and brings experience as an entrepreneur, founder and CEO at companies across the US and Europe over the last 25 years to the pursuit of economic transformation in Northeast Ohio.