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.

Last week, Dan Primack continued his discussion from the week before on peHUB about the numbers being published on national trends in Venture Capital fundraising — and what it all means. His general conclusion was that the numbers are hardly worth celebrating. His three reasons why:

1. Bigger fundraising totals do not necessarily translate to better returns.
2. Even if size does matter, improving over H1 2009 is no great feat.
3. The two major databases - Dow Jones and Thomson Reuters aren’t consistent.

I couldn’t agree with him more.

I decided to engage in the conversation - and to continue the discussion here. Here is the comment I posted back to Dan:

Dan,
Thanks for bringing to light the challenges involved in data collection. Our organization takes the lead in collecting and publishing the amount of venture investment just in Northeast Ohio and it is a laborious task.

When two reputable data collectors come up with contradictory information I think the only option is to call it inconclusive, as you have wisely done. Given the uncertainty in the data, the only thing to do is talk to entrepreneurs to get real, if only anecdotal, data. Here in NEO I know that our entrepreneurs are definitely feeling more “Thompson” than “Dow Jones” – growth capital is very difficult to come by.

As you point out, big funds are not necessarily the most successful funds. I’d like to see venture turn back to its roots of smaller funds, managed by a handful of close-knit partners who have relevant backgrounds in the industries in which they are investing. Smaller funds mean smaller management fees and I think that’s a good thing. Venture investing becomes more personal, the principals have everything riding on their ability to generate great IRRs (rather than collecting current income via huge management fees.) So, I’m actually okay if the total dollars invested in venture nationally goes down, just to long as the number of firms managing the money increases.

What do you think?

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).

I just read a copy of the Global Detroit Study, which “revealed the important role that the foreign born play in transitioning our region’s struggling auto manufacturing economy into to the New Economy”. This wasn’t a surprising conclusion given the facts revealed in the study, by the NVCA, and in Richard Herman’s book “Immigrants Inc.”:

• Foreign born people comprise only 12.5% of the U.S. population but possess half of all new Ph.D.s in engineering.
• Foreign born people account for 45% of all new Ph.D.s in life sciences, physical sciences, and computer sciences; and 40% of all new masters degrees in computer sciences, physical sciences and engineering.
• In the workplace, 24% of all scientists and engineers with bachelor’s degrees are foreign born and 47% of all scientists and engineers with doctorate degrees are foreign born. One quarter of all practicing physicians in the U.S. are foreign born.
• Foreign born people are 1.8x more likely to start a business than those born in the U.S.
• Over 50% of tech companies in Silicon Valley have a foreign born founder (including Google, Yahoo, Intel, PayPal, Sun Microsystems, and YouTube).
• Foreign born inventors apply for around 35% of international patent applications filed within the U.S.
• Foreign born people founded 25% of all public venture backed companies in the U.S. between 1995 and 2005, and within the high tech arena, this ratio shot up to 40%.

This is not a new phenomenon; consider American history and the entrepreneurial legends of the past: DuPont, Pfizer, Dow Chemical, Procter & Gamble, and Diebold were all started by foreign born people. Even Andrew Carnegie was born in Scotland before emigrating to the U.S. with his parents and becoming one of the most influential entrepreneurs and industrialists of his time.   

10% of JumpStart Ventures portfolio companies have been started by foreign-born entrepreneurs, including: Echogen Power Systems, Embrace Pet Insurance, Electron Database, CardioInsight, and Great Lakes Pharmaceuticals. All of these companies have been making tremendous progress, as we have been reporting through JumpStart Connect and other vehicles. The team at CardioInsight is a great example of many of the statistics demonstrated above: Ping Jia and Charu Ramanathan, two co-founders, were here getting PhDs from China and India, respectively. In the course of their research, they identified a technology with commercial potential, and have been working on growing the company since. CardioInsight has not only raised JumpStart Ventures money, but also brought in a CEO to lead the company through the next stage of growth, one who has previously led exits in a similar space. Where is the CEO from? Canada.

We need more of these types of stories in Northeast Ohio, plain and simple. Whereas Northeast Ohio and particularly Cleveland grew into a leading city in the U.S. because of immigrants, the rate at which these people have come to the region has slowed dramatically in the last fifty years. Luckily, lots of people are worried about this and there are several initiatives around town to make Northeast Ohio more welcoming to immigrants. One that I find incredibly exciting is TiE Ohio, the Ohio Chapter of The International Entrepreneurs. A little over a week ago, the chapter featured a talk by Dr. Hiroyuki Fujita, the founder and CEO of 3 year old Quality Electrodynamics (QED), a company on Forbes’ 25 Most Promising Companies list with over 60 employees today. Dr. Fujita’s story is similar; he arrived at Case from Japan to get a PhD, incubated his company for two years while proving out his imaging technology, and since that time, has secured global customers such as Phillips and Siemens, leaders in the field of imaging and MRIs. This event was just an example of the activities TiE is leading in the region; in the fall, they will have the International Entrepreneur Awards, a business plan competition for entrepreneurs, more networking support, and most of all, mentoring opportunities. I want to see you at the next event.

Other ways you can get involved with this exciting Northeast Ohio community of foreign born entrepreneurs, or entrepreneurs-to-be? 

1. Engage with JumpStart’s Launch100 program to get help growing your early-stage business.
2. Sign up for Inside Inclusion and JumpStart Connect to hear the latest and greatest on everything related to entrepreneurship in Northeast Ohio.
3. Hire an intern. There are a number of foreign-born students at local universities whose education and experience will benefit your company. Let me know if you are interested.
4. Share your stories with us so we can share them.

Any other ways I didn’t mention here? Let us know!

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.

Local company (and JumpStart Ventures portfolio company) ABSMaterials is stepping up to the plate in an effort to aid the cleanup in the Gulf. Their core technology, called Osorb, can actually absorb oil (and other substances) from water, trapping it within so it can be removed. They are sending their water purification system to the Gulf with hope that it can help in the massive cleanup effort which lies ahead.

Last night, Cleveland’s WKYC featured the company and the work they’re doing:

 Congratulations to ABSMaterials!

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.