JumpStart: IdeaExchange Blog

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.

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.

I introduced ‘Getting It Done’ in my last post featuring BioEnterprise and JumpStart Ventures. Here’s Part 2 — highlighting two additional organizations that are playing pivotal roles in our entrepreneurial ecosystem.

JumpStart TechLift Advisors

JumpStart TechLift Advisors started in 2007 as TechLift, the most visible new program in Northeast Ohio’s implementation of the state’s Entreprepreneruial Signature Program. In 2009, TechLift became part of JumpStart and evolved into what is known today as JumpStart TechLift Advisors. 

How it works: JumpStart TechLift Advisors provides business consulting, support and funding access to Northeast Ohio’s technology entrepreneurs. Five Entrepreneurs-in-Residence (EIRs), all former founders/CEOs who have raised capital and have significant domain experience, deliver these services and connections. The advice given is direct and hard-hitting. JumpStart TechLift Advisor EIRs are often an entrepreneur’s first and prime connection point to Northeast Ohio’s entrepreneurial support network, as they are tightly linked into funding vehicles and processes, and other support structures. 

Results: JumpStart TechLift Advisor’s results have been significant, both numerically and in terms of effects on Northeast Ohio’s entrepreneurial landscape. JumpStart TechLift Advisors has connected with over 700 technology entrepreneurs, and has given at least 3 hours of support to over 400 clients. These clients have raised more than $25 million in follow-on funding, grant funding and incremental revenue (state defined Level A metrics), a number which increases to more than $35 million when those clients who subsequently attracted JumpStart Ventures funding are included. Just as importantly, JumpStart TechLift Advisors has become a critical organization for making Northeast Ohio one of the best places in the U.S. to start and grow a technology business.

Why it works: JumpStart TechLift Advisors filled an important gap that was inadvertently created with the success of, and necessary selectivity of JumpStart Ventures and BioEnterprise. JumpStart TechLift Advisors has been able to offer support to a broader group of entrepreneurs, especially those who are not yet ready for those other structures, but who, nonetheless, have potential to be developed. Coincident with the formation of the original TechLift came a number of earlier stage funding vehicles in the region designed to augment our already growing early-stage capital structures. JumpStart TechLift Advisors is the natural connection point for these funding vehicles and the entire Northeast Ohio entrepreneurial ecosystem.

JumpStart Inclusion Advisors

Although formalized as a JumpStart Inc. line of business in 2009, JumpStart Inclusion Advisors got its start in JumpStart’s inclusion efforts as early as 2005, and is gaining momentum as a template for minority technology entrepreneurship development. 

How it works: Although rates of general entrepreneurship are higher amongst females and minorities, as compared to the general population, the rate of high growth, venture investable entrepreneurship in these segments is significantly lower. JumpStart Inclusion Advisors takes a multifaceted approach to addressing this, starting with a strong outreach program designed to raise awareness and identify potential opportunities. Next, is a strong support program, driven by highly experienced Entrepreneurs-in-Residence, coordinated with JumpStart TechLift Advisors and other organizations, ensuring that minority and female entrepreneurs get the coaching and direction to help maximize their potential. Lastly, JumpStart Inclusion Advisors connects clients with funding sources, both directly within JumpStart and indirectly through a national network, to appropriately capitalize the venture. 

Results: Woman- and minority-led companies supported by JumpStart’s inclusion efforts have raised over $20 million in capital since inception, including $5 million from JumpStart Ventures. Additionally, JS Inclusion Advisors has helped start the Emerging Market Venture Partners Fund, one of the nation’s largest early-stage minority focused venture funds. JumpStart Inclusion Advisors has quickly emerged as one of the best organizations in the country promoting and developing high growth minority entrepreneurship,

Why it works: JumpStart Inclusion Advisors works because it takes a very focused, disciplined, and connected approach to addressing an underserved segment of our population. It works with system and vehicles currently in place, augments and goes beyond those vehicles when appropriate and productive, and sets high expectations for participating entrepreneurs.

Next in the series: North Coast Opportunities Technology Fund and The Innovation Fund of the LCCC Foundation 

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.

Recently I was asked to give a presentation at a local Chamber of Commerce’s annual meeting on ‘What is happening in entrepreneurial development in Northeast Ohio?’. The topic made me think about what initiatives are ‘getting it done’, and some of the key organizations taking part in the transformation. With the list of such organizations being so long, this will be the first post of a series (‘Getting It Done’), taking the key points of my presentation and bringing them to life here in our blog. If you remember, I did another post on a similar subject early this year. ‘We’re building something big‘ took a 30,000 foot look at the ecosystem. ‘Getting It Done‘ will be a deep dive into some of the individual organizations behind the transformation.

Let’s start with BioEnterprise and JumpStart Ventures, organizations that have played pivotal and nationally visible roles in our entrepreneurial ecosystem. 

BioEnterprise

BioEnterpise came onto the scene in 2002, and has led Northeast Ohio’s surge in the Healthcare space.

How it works: BioEnterprise has made itself a national leader for regional healthcare industry development, and has been a coalescing force in making Northeast Ohio a recognized hub for healthcare entrepreneurship and activity. They give extremely strong support for select, high potential healthcare startups from industry experts who have done it before. BioE connects these select companies with investors across the nation interested in healthcare investing. 

Results: The results have been impressive. BioE has been involved with creating, recruiting, and accelerating over 80 companies, evaluated over 1,100 opportunities and more than 1,900 invention disclosures, and brokered over 300 technology transfer deals. However, the best measure of BioE’s success is in the new capital brought into Northeast Ohio, which includes nearly $150 million in technology transfer revenues, and over $860 million of new capital attracted in the healthcare sector. 

Why it works: BioE has made itself a huge piece of the Northeast Ohio entrepreneurial ecosystem. Baiju Shah and his team have been able to create a huge “buzz” around Northeast Ohio as a healthcare destination and center for medical device development, and coalescing the strengths represented by the Cleveland Clinic, University Hospitals, the top-ranked biomedical engineering department at Case, the Summa health system and others. They have hired top talent to provide support for their companies, and have developed a reputation and relationship with venture capital funders throughout the U.S.

JumpStart Ventures

JumpStart Ventures is JumpStart Inc.’s (started in 2004) line of business investing in, partnering with, and accelerating the growth of early-stage companies. 

How it works: JumpStart Ventures employs a highly selective process to choose companies for investment, and strictly adheres to the process to achieve fairness and consistency. Unlike traditional funders, they actually help companies selected to present to them through a process called ASSIST. After investment, JumpStart Ventures companies receive significant operational support from a Venture Partner (as much as 20% of an experienced executive’s time), as well as direct help in raising the all-important next round of funding.

Results: JumpStart Ventures is primarily measured by follow-on capital raised by its portfolio companies, and the results are outstanding from the more than 40 companies in the portfolio. Since 2004, these companies have raised over $80 million in follow-on funding and generated an estimated $180 million in regional economic impact. Additionally, JumpStart has been recognized by the U.S. Economic Development Agency as the nation’s top urban or suburban economic development group, and has been featured in national press like The New York Times, The Wall Street Journal and PARADE magazine. 

Why it works: JumpStart Ventures works by primarily providing funding to early-stage companies at the time when they most need it — when they are in the proverbial “Valley of Death”. Beyond that, the operational support and connections to next level funders afforded to portfolio companies is top-notch and significant. JumpStart Ventures has taken a very process oriented approach to company selection and to other aspects of the successful entrepreneurial mix, making it understandable and repeatable. Like BioEnterprise, JumpStart Ventures has created and accelerated a “buzz” around Northeast Ohio as a place where things are happening in early-stage entrepreneurship.  

Next in the series: JumpStart TechLift Advisors and JumpStart Inclusion Advisors

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.