JumpStart: IdeaExchange Blog

Some of the most exciting days at JumpStart are the days when the wire is sent to a new or existing company in which we are making an investment. They’re days where the energy is a little bit higher, there’s more constant checking of email to read the news coverage, and people hover closer to the JumpStart Ventures’ office area to hear the celebratory bell we ring for good news.

We had a day like that last week with our investment in Catacel. If you didn’t see the media coverage of it (thank you, media partners!) or hear about it on Twitter, you can learn more about the investment on our website. This investment in Catacel was particularly exciting because it was JumpStart Ventures’ 52nd investment in its 40th company, our first investment in a Portage County company, and another investment in a clean energy company.

This one investment delivered on many factors we at JumpStart (and in this region) find substantially helpful in the development of an early-stage company. Catacel is led by a world-class entrepreneur with an idea and technology that promise to be venture-fundable, operating in a clean energy cluster that is second to none nationally, and receiving the seed capital and technical assistance necessary to accelerate its growth.

We are very excited to continue to work with this promising company.

The investment closed on what seemed to most, a ‘regular day’. It was a day without much pomp and circumstance, not a holiday, not a special anniversary of a founder, not even a Friday! But, this is the world of early-stage entrepreneurship…every day, companies attain milestones and grow. Every day, someone is closing a new investment, gaining  a new customer, completing a clinical trial, hiring a critical new addition to the team, or finishing their product’s development. Many times, these seemingly small things happen without many people noticing, but they are really the things that matter to growing, early-stage companies. Here at JumpStart, we make it a point to celebrate each and every one of these milestones of growth.

Congratulations, Catacel, and welcome. We can’t wait to celebrate many more ‘regular days’ on your high growth path.

Cathy Belk is the Chief Marketing Officer of JumpStart. She specializes in branding, marketing communications, and business management. She brings 16+ years of experience in a variety of marketing and business roles, but gets her energy from working daily with entrepreneurs and their growing companies.

I might never get used to our year-end being in June, but here we are wrapping up our fiscal 2009 and moving into 2010.

2009 was a year of significant challenges for much of our business but also a year of a lot progress. Here are a few of the most important outcomes that we take great pride in from the past year:

• JumpStart Ventures made 13 investments — helping to keep JumpStart as one of the most active founding-equity investors in the country
• The companies that comprise the JumpStart Ventures portfolio raised over $23 million in follow-on funding
• Our partnerships with the North Coast Angel Fund and the North Coast Opportunities Technology Fund led to an additional 8 new investments in local companies
• We successfully integrated TechLift into JumpStart’s operations and delivered its services to over 400 companies
• We have helped to launch a new venture fund focused on women, minority and inner city entrepreneurs called the Emerging Market Venture Partners Fund
• And finally, we have successfully raised over $10 million in resources that will enable us to support and invest in more entrepreneurs through 2010 and 2011.

If you would like to learn more about all of our 2009 goals and meet over thirty companies that JumpStart has provided direct support and/or investment to throughout this past year, I invite you to attend our Annual Community Meeting on Friday, October 9th, 2009 at the John S. Knight Center in Akron. This meeting promises to be a great way to learn about all that is happening at JumpStart and give our stakeholders the opportunity to engage with the JumpStart team and the companies that embody the promise of our work. We look forward to seeing you in October!

Ray Leach is CEO of JumpStart and brings his energy and leadership experiences from founding five high growth entrepreneurial and intrapreneurial endeavors in the last 20 years. Ray is a Sloan Fellow and earned an MBA from the MIT Sloan School of Management. He also earned a BA in Finance from the University of Akron.

JumpStart Ventures exists to serve entrepreneurs with high growth business ideas located in Northeast Ohio who want to raise additional growth capital. And while entrepreneurs are our primary “customers”, I like to think that we have two additional types of “customers” as well:

1. Investors (angels, VCs and other sources of risk capital), and
2. Funders (primarily government entities and foundations). 

Part of my responsibilities is communicating (along with our talented Vice President of External Finance, Kerri Breen) with our investor customers about all of the terrific investment opportunities available here in Northeast Ohio. To this end, we have taken numerous marketing trips where we meet with investors, introduce JumpStart, describe its focus on venture development and, hopefully, generate interest in our portfolio of high growth companies.

As part of our “pitch” to these investors we tell them about the non-financial assistance that our team provides in addition to the cash we invest. Basically we describe all the “stuff” we do to help the entrepreneurs and their companies get “venture-ready” which is usually followed up by comments like “Really?” or “That’s terrific” or “Wow, very helpful.” We highlight this fact because it sets JumpStart Ventures apart as a source of high quality deal flow, a group that “gets it” and understands what VCs want.

So, just what does it mean to get a company (and an entrepreneur) “venture-ready?” We like to think of it as an on-going boot camp of sorts, where we try to de-mystify the world of venture capital for the entrepreneur and help them to understand a VC’s motivations so they can properly navigate the waters. Some of the things we encourage entrepreneurs/companies to do in order to set themselves up for a venture investment are as follows:

1. Instill proper governance. Set up a proper board of directors (generally 3 or 5 people) that contains industry and business experts. Give the board the right to hire/fire the CEO.
2. Set up the proper legal structure. This will most likely be a C-Corp although some angels may invest in an LLC. Make sure all of your company’s legal and financial documents are complete and easily accessible.
3. Understand your company’s “capitalization table” (i.e. the spreadsheet that shows ownership percentages), what “dilution” means (i.e. when someone buys stock in your company, your ownership percentage will drop) and all about “preference stacks” (i.e. who gets paid out first in the event of a sale).
4. Understand an investor’s motives. VCs are in business to generate returns for investors. Angels are in business to generate returns for themselves. Both want to see a return on their investment at some future date (generally starting in year seven post-investment). So, when they start bugging you in year five or six about selling the business, they are not being annoying or greedy — they are just doing their job.

Preparing entrepreneurs to successfully raise outside capital is a big part of what we do and why we exist. We hope that our entrepreneur customers appreciate the education and that our investor customers see us as a trusted source of high quality, “venture-ready” deals.

Lynn-Ann Gries is the Chief Investment Officer of JumpStart Ventures. She previously worked in the investment banking departments at both McDonald Investments and Smith Barney (now part of Citigroup), and in the sales and trading area at Morgan Stanley. She received her MBA from New York University’s Stern School of Business and her BA in Economics from Smith College. She currently serves on the board of the Fund for the Future of Shaker Heights, the Great Lakes Science Center and Summer on the Cuyahoga (SOTC).

Springboard Enterprises is a great organization whose goal is to help female entrepreneurs achieve greater access to venture capital. The team at Springboard runs various boot camps and venture capital forums that have been very successful. In fact, since 2000, they have run 18 forums with 383 companies presenting. Those companies — all led by female entrepreneurs — have raised $4 billion in capital, and seven of the companies have gone public. 

Springboard’s next “forum” is a series of investor/entrepreneur events for women-led life sciences and healthcare companies, AllThingsLifeSciences. What most intrigued me about these was that of of the 31 presenting companies selected from a very competitive pool of applicants, the largest portion is from the Midwest. There are nine from the Midwest (Wisconsin, Minnesota, Ohio, Michigan, and Indiana). The Mid-Atlantic has eight. The West Coast has seven. And the Northeast has two (not sure why that number is so small). 

I think it’s great that Midwestern women healthcare entrepreneurs are so well represented in this. Historically, the statistics for women raising venture capital have been disappointingly low (Diana Project), and for Midwestern women they’ve been even lower — see page 14 of this SBA report. So, here’s to encouraging numbers! May they enjoy an ever upward trajectory.

Becca Braun is President of JumpStart Ventures. She founded and led a number of early-stage companies and organizations, as well as worked as a private equity investor and management consultant. She received her MBA from Harvard Business School and her BA in Linguistics from Harvard University. She is keenly interested in the intersection of wealth creation and broad-based regional economic growth.