JumpStart: IdeaExchange Blog

Entrepreneur magazine’s August 2010 edition featured a story “50 really cool cities to start your business,” or as they further detailed, “the 50 cities and 10 lifestyles energizing businesses of all shapes and size.” These types of lists are always fun to read for the selections that are surprising, or redemptive, or just plain right. I never thought of Jackson, Wyo. as a great place for entrepreneurship (it’s under the “great outdoors” category). Great to see Pittsburgh was the leader on the list of “recovery and rebirth;” the collective leaders there deserve it. And while San Diego was on the “living in paradise” list (it really is paradise there, for entrepreneurs and residents alike), I was surprised to see Albuquerque.

But as I skimmed the list, I realized it quickly: not a single community in Ohio was on the list. Clearly, I have my media relations work cut out for me. But just to make sure that the Entrepreneur folks don’t have to work too hard to learn about the assets of Ohio — or Northeast Ohio in particular — I thought I’d go ahead and list my contributions here. (And please be sure to let me know what I’ve missed)!

• The great outdoors: “…where peaks and valleys are more than just points on the graph”
  Northeast Ohio actually does have peaks (such as in Summit County) and valleys (such as the Cuyahoga Valley National Park, ranked as the eighth most visited national park in the country alongside parks like Yellowstone and the Grand Canyon), but it may be less well-known that Northeast Ohio is actually an outdoorsman’s dream, with lakes and rivers (as well as one of the Greats - Erie) for fishing, thousands of acres of parks nicknamed the Emerald Necklace, and hundreds of thousands of acres for hunting. Lorain and its larger western neighbor, Sandusky, not only offer several of the best trout fishing clubs but also has the GLIDE incubator and the Lorain County Community College Innovation Fund, a pre-seed fund investing $25,000 and $100,000 grants in promising entrepreneurial companies from across Northeast Ohio.
• City life: “higher costs, higher stakes but even higher visibility”
  There are not really any places in Northeast Ohio where “higher costs” is a reality; cost of living in this region indexes 93 relative to the national average. But obviously, the biggest city here with the biggest visibility is Cleveland itself, and almost 50% of JumpStart Ventures’ 48 portfolio companies are located in the city of Cleveland. When you consider all the ecosystem elements in Cleveland — from CWRU to Founders’ Café and Gorilla Group, from JumpStart and MAGNET to Cuyahoga County’s Opportunities Technology Fund — Cleveland should make the list.
• Recovery and rebirth: “cities on the mend, where even the smallest business can make a big difference”
  I’m always very impressed with Akron. With its own incubator (the Akron Global Business Accelerator), an investment fund for Israeli companies looking to expand in Akron, and the reinvention of the downtown area (including the minor league Akron Aeros, new restaurants, and early-stage companies such as ECHOGEN Power Systems), Akron has really transformed itself from the former “Rubber Capital of the World” to the new “polymer capital of the world” (so to speak).
• Living in paradise: “why wait until retirement to enjoy a life of sun, surf, and sand?”
  Aside from golf courses, there’s still plenty of sand and sun (at least in the summer months) up on Lake Erie, with some of the most beautiful beaches in some of the eastern suburbs of the city. Also on the eastern side of Cleveland are the communities that get the most snow in the winter (in case that’s your version of paradise). The eastern suburbs of Cleveland - including Mentor, Mayfield, and Willoughby, — are home to some of the fastest growing biotech companies in the area, such as STERIS, QED, and Neuros Medical. The area’s proximity to Cleveland Clinic and other healthcare cluster participants, along with very pleasant places to live, make it worth noticing.
• Creative centers: “…where creativity and capitalism make sweet music together”
  Oberlin is one of the most creative places in the country, with its brilliant, quirky counter-culturalism embraced by both its students and its residents. Oberlin College’s unique entrepreneurship programs (which include funding for student-run businesses) have not only created a few student-run startups, but attracted other companies — such as Greenfield Solar — to savor the culture. And don’t forget the Oberlin Conservatory, which really is generating sweet music.
• Family-friendly: “…where company and family can both grow up right”
  Everywhere in Ohio is family-friendly, but nowhere more so than Northeast Ohio. One of my favorite thriving entrepreneurial centers for families is Chagrin Falls, nestled in the rolling hills 30 miles southeast of Cleveland. Good public schools, a charming town center complete with natural waterfall, and a burgeoning entrepreneurial community including standouts such as CerviLenz make this one worth the list.
• Off the grid: “…where entrepreneurs have the latitude to forge their own paths”
  Youngstown offers one of the best examples of this I’ve noticed for years. With its location halfway between Cleveland and Pittsburgh, the YBI, and focus on B-to-B software development, Youngstown State and its student community, and the revitalization of various parts of the city, it’s an area ripe for entrepreneurs desiring to make their own way.
• Green scenes: “where capitalism meets eco-consciousness”
  Wooster, in the heart of Wayne County 45 miles west of Akron, is the home of ABSMaterials, one of the companies providing solutions to BP to clean up after the gulf oil crisis. The technology came right out of the College of Wooster’s chemistry lab, which isn’t a surprise given the initiatives run by the Center for Entrepreneurship at the college — whether they include brainstorms on Thursdays (complete with popcorn) or entrepreneurship programs for the area’s incarcerated.
• College towns: “start a business, and learn a thing or two”
  As if Wooster and Oberlin weren’t enough, there are a host of other college towns in the area all fostering entrepreneurship individually and together — from Berea (Baldwin Wallace College) to Hiram (Hiram College), from Ashland (Ashland University) to Painesville (Lake Erie College), and many others. But one of the best examples is Kent, which balances a quaint college town feel with the resources and heft of the state’s third largest university, Kent State. The University’s Center for Entrepreneurship has led to office hours for entrepreneurs and the start of the region’s own incubator, in addition to local entrepreneurial superstar Kent Displays.
• Small towns, big opportunities: “small ponds where your business can be a big fish”
  Have you been to Canton? Besides the Football Hall of Fame, this small city has a historical legacy of entrepreneurship. The three largest private employers there of the last 100 years — Timken, Diebold, and Hoover — were all started by entrepreneurs who found a community more than excited to embrace their ideas. The city’s leaders are energizing entrepreneurship again, and entrepreneurs interested to start high-growth businesses will find themselves more than embraced.

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.

Issue 1 is a statewide ballot measure that would authorize renewal and continuation of the highly successful Ohio Third Frontier (OTF) program. OTF is a visionary public-private partnership created in 2002 with bipartisan legislative leadership and support as well as widespread editorial support.

The purpose of OTF is to firmly establish Ohio as an innovation leader and to fuel long-term economic growth and create jobs in our state. OTF targets state investments to promising industries, technologies, and entrepreneurs. The initiative is directed by a bipartisan, appointed advisory board and commission. Funds are awarded through a competitive process in which independent experts review proposals and assure a base level of excellence for all projects.

With a 10 year initial life and an initial commitment of $1.6 billion, OTF has emerged as the centerpiece of Ohio’s technology-based economic development and job creation efforts. The bond funding mechanism for OTF, approved by Ohio voters in 2005, expires in 2012. On February 3, 2010, the Ohio General Assembly authorized a bond measure on the May 2010 ballot at a level of $700 million over four years. Support for placing the bond issue on the ballot was strong and bipartisan (30-2 in the Senate, 83-14 in the House).

OTF also has proven results including helping to:

• Create over 48,000 jobs.
• Attract or capitalize 571 startup companies.
• Attract $3.2 billion in follow-on dollars (from federal, state, local, private, and foundation funds) on top of the $473 million it has expended (through June 2009) on technology-based programs.
• Produce more than $6.6 billion in total economic impact in Ohio (through December 2008).
• Produce a total return on investment that has averaged 22% per year over the life of the initiative.
• Grow product sales from OTF-funded projects to $440 million per year (through June 2009) and are estimated to total at least $900 million by 2013.
• Double licensing income earned by Ohio’s leading research institutions from 2002 to 2007 it rose from $16 million to $40 million.
• Increase Ohio’s research base, from 2002 through 2008, it increased more than 60 percent, from $1.1 billion to $1.8 billion.
• Increase venture capital investment in Ohio. From 2003 through 2008, venture capital investment in the state grew almost 2.5 times faster than the U.S. average – 20.4% per year compared to 8.6% per year.
• And, 50% of the State’s OTF investment to date (through December 2008) has been repaid through tax receipts. The original investment, now projected to be $1.35 billion, is forecast to be fully repaid by 2014.

Most importantly for JumpStart and the entrepreneurs across Northeast Ohio and the State, OTF provides the opportunity for future potential critical resources which will leverage significant non-state resources for both direct investments into companies and for additional resources that may support the work of all of the Edison incubators in the region. The incubators include the Akron Global Business Accelerator, BioEnterprise, Braintree in Mansfield, GLIDE in Elyria, MAGNET, and the Youngstown Business Incubator, in addition to our local research-focused Universities and innovative established companies in the state.

Please read more about Issue 1 and please join everyone at JumpStart to help accelerate the progress of innovative companies in Ohio!

In the above blog, Ray is expressing his personal views as a citizen of the State of Ohio.

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.

Over the past month or so, I’ve taken you through some of the organizations behind the transformation taking place in our region around entrepreneurial development. These last two round out the group quite well — and bring some very unique strengths to the table. And, if you missed parts one through three, make sure to check them out too.

Akron Global Business Accelerator

Akron Global Business Accelerator (AGBA) was formed in 1983, and in its nearly 27 years of service, has provided business assistance, highly effective space, and a superb entrepreneurial environment to Akron area technology companies. AGBA’s longevity is largely due to its ability to react to changes in the environment.

How it works: AGBA offers very nice, edgy office space in a converted, 7 floor manufacturing facility. In addition to low rent, AGBA offers on-site entrepreneurial support, provided in partnership with JumpStart TechLift Advisors. The facility has been popular — it has truly become a “place to be” for entrepreneurs in the area. The large number of tenants creates an extremely robust and energized entrepreneurial environment, where companies are learning from each other, and leaning on each others’ expertise and experience.

Results: In terms of state defined follow-on funding and revenue metrics for its clients, AGBA leads the group of Edison funded incubators in Northeast Ohio. The incubator has grown to include nearly 50 companies, and its expansion plans continue indefinitely. AGBA was awarded the National Business Incubation Association’s 2008 Incubator Innovation Award as one of the nation’s best incubation facilities.

Why it works: AGBA works because it keeps innovating, pays attention to the facility’s environment, connects with funders and other support mechanisms, and is highly supported as a community resource by the city of Akron and other stakeholders. AGBA actively reaches out to companies when they receive funding from early-stage structures like JumpStart Ventures, North Coast Angel Fund, and works closely with JumpStart TechLift Advisors, The University of Akron, and others.

Youngstown Business Incubator

Youngstown Business Incubator (YBI) is a key community resource for entrepreneurial rebirth in the Mahoning Valley area. It has achieved spectacular results by focusing on one area: software.

How it works: YBI offers office space and business mentoring services to its clients involved in one business area: business to business software. The modern facility is in downtown Youngstown, and is the centerpiece of the city’s revitalization. The initial rent is very reasonable: free. Once a company has gotten some traction and achieved some success, they are asked to pay reasonable rent. Also, “veteran” companies are expected to coach and help “rookie” companies.

Results: YBI has seen a great deal of success, not only in receiving national attention (The Wall Street Journal, and others) for its efforts, but also in the success of its companies, Most notably, Turning Technologies has raised $8 million in capital, hired over 150 employees, and was named “the fastest growing software company in America” by  Inc. magazine. YBI has opened a new 30,000 sq. ft. facility, and continues to lead Youngstown’s downtown revitalization.

Why it works: YBI works largely because of focus. Since it only caters to business to business software companies, YBI is very good at working in that area, understanding the nuances, and how to be successful. Also, through focus, YBI creates tremendous synergy amongst its tenant companies, and a noticeable sense of energy and purpose in the facility.

This brings the ‘Getting It Done’ to an end. I hope that you enjoyed digging a bit deeper into a few of the entrepreneurial support structures that are transforming Northeast Ohio’s entrepreneurial landscape. As I mentioned at the outset, these are not the ONLY successful structures, just some notable ones. If you’d like to share others successes of note you know of — comment here to let us know. We’re always looking for more great stories to tell about the positive transformation taking place in our region.

High growth entrepreneurism has really caught fire in Northeast Ohio, and I really believe that if we aren’t there, we are well on our way to becoming “the best place in America to start and grow a small technology company.”

Chris Mather is President, JumpStart Entrepreneurs-in-Residence. Previously, he managed a number of technology initiatives in Northeast Ohio for NorTech. Before entering the economic development world, Chris ran a number of technology companies in Northeast Ohio and New England, including Ion Optics Inc., where he raised $6.7 million in venture capital, and Apsco Inc. and Gould Instrument Systems. Prior to that, he spent 13 years in sales, marketing and management roles with Hewlett Packard after graduating from Worcester Polytechnic Institute with a BS in Electrical Engineering.

If you’ve missed the first two parts of ‘Getting It Done’  - check them out: Part 1 on BioEnterprise and JumpStart Ventures, and Part 2 on JumpStart TechLift Advisors and JumpStart Inclusion Advisors. And, here’s Part 3 — highlighting two more organizations doing incredible work to help fund our region’s startups.

The Innovation Fund

The Inovation Fund was formed in 2007, with funding provided by the Third Frontier Entrepreneurial Signature Program and the Lorain County Community College Foundation, and administered by the GLIDE Incubator. It plays a key role in Northeast Ohio’s early-stage funding climate.

How it works: The Innovation Fund provides early-stage funding to qualified technology companies in the form of grants (‘A’ grant — $25,000) and repayable grants with a funding replenishment right (‘B’ grant — $100,000). Both require the awarded company to provide an educational experience to a local university. The process is competitive, and is collaboratively administered by GLIDE, JumpStart TechLift Advisors, Youngstown Business Incubator, the University of Akron Research Foundation, and a high quality selection committee. It serves the entire 21 county Northeast Ohio region, a real show of vision by the president of LCCC, Roy Church.

Results: The Innovation Fund has shown significant results since its start in late 2007 — making 38 grants to 35 companies totaling $2.075 million. Many of those companies have gone on to receive funding from somewhat later-stage structures like JumpStart Ventures, the North Coast Angel Fund, and Series A venture investors. They have received 210 applications from 15 of 21 counties in Northeast Ohio. The educational experiences at these companies have ranged from internships to teaching classes and research associate positions.

Why it works: The Innovation fund works because it provides funding just when it’s needed. It helps make Northeast Ohio to offer funding options to qualified companies at all levels of the entrepreneurial spectrum. GLIDE and the LCCC Foundation have done a remarkable job of creating a highly effective, region-wide structure that collaborates with multiple organizations and entrepreneurs.

North Coast Opportunities Technology Fund

The North Coast Opportunities Technology Fund began in 2008, jointly announced by Cuyahoga County and JumpStart TechLift Advisors. It is a great example of a public/private partnership that works to enhance the entreprneurial and technology climate in Northeast Ohio.

How it works: North Cost Opportunities Technology Fund (NCO) is yet another vehicle to provide very early-stage funding ($50,000 — $125,000) to venture capital fundable companies located in Cuyahoga County. It makes loans that “feel like venture capital” to back a specific project designed to bring the company demonstrably closer to the next level of funding. Highly competitive company selections are made by a team from JumpStart TechLift Advisors, the MAGNET Incubator and Cuyahoga County. The unique loans are administered by the county.

Results: NCO has made six investments, from nearly 60 applicants, and has $480,000 in capital put to work. A seventh company has been selected for investment, and is in the works. NCO’s companies have already shown progress: Tremont Electric has received significant national press, SparkBase has doubled its employment, and CitizenGroove has received significant follow-on funding. Most importantly, the collaboration shows that Cuyahoga County is visionary in its plans for technology development.

Why it works: Like the Innovation Fund, NCO works because it provides critical funding to put early-stage companies in position to achieve the next level of funding. The project structure ensures that the relatively modest amount of funding is used wisely, and in a way designed to achieve results.

Next in the series: Youngstown Business Incubator and Akron Global Business Accelerator 

Chris Mather is President, JumpStart Entrepreneurs-in-Residence. Previously, he managed a number of technology initiatives in Northeast Ohio for NorTech. Before entering the economic development world, Chris ran a number of technology companies in Northeast Ohio and New England, including Ion Optics Inc., where he raised $6.7 million in venture capital, and Apsco Inc. and Gould Instrument Systems. Prior to that, he spent 13 years in sales, marketing and management roles with Hewlett Packard after graduating from Worcester Polytechnic Institute with a BS in Electrical Engineering.