JumpStart: IdeaExchange Blog

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.

Sounds familiar, doesn’t it? It’s not Metropolis, where Superman lives and works. Not Metropolitan, the place to eat tasty food on W. 6th Street. Not Neotropix, the venture-backed company in Pennsylvania. Not TeamNEO, our fabulous regional business attraction organization that works every day to attract companies to locate to Northeast Ohio. No, NEOtropolis — familiar as it might sound — is all new, and I suggest you tune in Fridays (starting tomorrow) at 9:00 pm to get a taste for yourself.

NEOtropolis is the new 30 minute TV show being shown on Western Reserve PBS (WNEO/WEAO 45.1/49.1), and it’s one of the first shows ever that aims to build Northeast Ohio’s viewers’ knowledge of regional economic issues, strengthen their confidence in the economy of Northeast Ohio, and provide them with useful information and resources to endure challenging economic times. (And in the spirit of full disclosure, JumpStart is one of the sponsors of the show, as are: The Burton D. Morgan Foundation, Dominion Foundation, Kent State, Key Private Bank and KeyBank Foundation, MAGNET, and The Raymond J. Wean Foundation.)

In essence — a positive show about positive things happening in our region! Cool! Wow! Can’t wait!

The show will be split into short segments, including a long-form field piece which takes a look at some aspect of business or the economy relevant to current events. It will also include shorter pieces which feature new and emerging business ventures, the work of the region’s business incubators, projects from some of our region’s strongest business sectors (such as healthcare), research at universities and colleges, and a weekly roundtable analyzing the week’s economic news for our area. And, one of the best parts — it is hosted by the knowledgeable and always entertaining Thomas Mulready. 

So be sure to tune in, or set your DVR while you head to Metropolitan, but either way, don’t miss it.

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.

Though he was kinda slow and none too bright**, Microsoft co-founder, Bill Gates III did have one great asset: his father was a small business lawyer. Bill Jr. purportedly helped the teenage Bill negotiate phenomenally well on behalf of his fledgling software company and himself. Without his father’s guidance, would Bill have owned less than the 64% of the company that he started out with (Ballmer had 36%)? The world will never know, but I suspect so — my guess is he might have gone with the old 50/50 split that co-founders often agree on. (See this history here which I took straight from Noam Wasserman’s fabulous Founder Frustrations blog, where he discusses, among other things, the Microsoft Founders.)

Of course, most entrepreneurs have more upstairs than did/does Bill***. Despite their greater natural advantages, they should still make sure that they have a great lawyer. So, how do I define great lawyer? To my mind, for companies that are trying to raise equity capital (angel or venture capital), a good lawyer is someone who has done at least five angel/venture equity deals in the past two years, and a great one is someone who, at a minimum, has done ten.**** In other words, representing companies, founders and investors in angel and venture capital transactions should be a core part of what they do every day, rather than being an occasional thing they do when business is bad or when a friend asks them to help him/her out. Great lawyers for companies who want to take the equity-funding path are up on the latest deal terms. They have been privy to many different negotiating styles, have seen how different investors react to different “hot button” issues, and can bring this expertise to bear when negotiating on your behalf.

Also, figure out how to get some kind of a special deal from them — whether that’s having them offer extra services, like attending board meetings free of charge, taking deferred payment based upon some future funding event, or taking stock options as a form of payment. What I have found is this: lots of top lawyers are incredibly interested in working with entrepreneurs because they’ve seen how successful some early-stage company clients become, and they want to keep working with those kinds of companies. They know that the economics of early-stage companies require some special deal. And, sometimes, if you and your company truly seem high potential they’re willing to offer it. That’s a key point; top lawyers don’t offer special services for undifferentiated companies and entrepreneurs who just want a discount ‘cause they want a discount; rather, great lawyers are willing to “pay it forward” through right-sized economics and special services if they see the potential for payback in you and your business.

My final comment is that I have fully stolen this theme of hiring a great laywer from my esteemed and wise colleague, Lynn-Ann Gries – see her blog on similar subject here.

Notes:

* Disclaimer: I am not married to a lawyer nor do I have a lawyer in my immediate family. I have not been paid by the Cleveland Bar Association to post this blog. I do not get any kickbacks from lawyers. Indeed, I have practically no lawyer friends from whom I could get kickbacks, and since I recommended that you ask them for a discount for them to work for your tiny baby company (GE your company ain’t—might be one day, but it ain’t right now) lawyers probably aren’t that thrilled with me anyhow and will only give me the “kick” part of the “kickback”. Indeed, this posting is just my heartfelt and experienced-based belief about one key aspect of starting and growing a company.

** That’s sarcasm.

*** Ditto - sarcasm.

**** By the way, just because they’ve worked on at least ten angel/venture deals in the past two years (note: ask them specifically for their track record and ask for names of clients or references) doesn’t make them great, but at least it puts them in the running.

***** Here’s another article that gives some more advice on hiring good or great lawyers.

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.

Recently, I was asked to give a talk to a group about JumpStart TechLift Advisors, JumpStart, and the support network for entrepreneurial companies in Northeast Ohio. In preparing, I took a look at where we have been, and where we are today in terms of a fabric of funding and support resources for entrepreneurial companies. The progress since 2002 has been incredible. 

First off, I apologize in advance to any organizations who I may slight or overlook — in 2002, I was running a company in Boston, and wasn’t all that aware of Northeast Ohio’s efforts to encourage and support entrepreneurs. At that time, we had a few organizations, like EDI doing some entrepreneurial support, and some premier funds like Morgenthaler and Primus, but Northeast Ohio certainly wouldn’t have been described as a great place to be an entrepreneur. Largely due to the catalyzing work by NorTech, its predecessor, Cleveland Tomorrow, along with tremendous support from the Fund for Our Economic Future, the Greater Cleveland Partnership, the Ohio Department of Development and others, things started happening:

• BioEnterprise came along in 2002, with its bold model of harnessing our region’s bioscience research strengths to spur the growth of venture fundable companies. BioEnterprise is now recognized as a national model for such efforts.
• Early Stage Partners was formed in 2002 to begin to address the early-stage capital needs of the region.
• JumpStart was formed in 2004, with a focus on funding and mentoring high growth, venture capital fundable companies. It too, has become a national model for doing this.
• NorTech convened its Early-Stage Capital Task Force in 2005 to understand and address the projected capital needs of the region.
• Two angel funding groups, The Akron ARCHAngels, and the North Coast Angel Fund, along with a statewide group, the Ohio TechAngels Fund, were formed to connect entrepreneurs with angel investors.
• The State of Ohio formed The Ohio Capital Fund, which provides incentive for venture funds to locate in the state. A number of funds take advantage of this as well as well as the growing deal flow environment to locate here, and names like Arboretum Ventures, Bridge Investment Fund, Chrysalis Ventures, Draper Triangle Ventures, Radius Ventures, Reservoir Venture Partners, and RiverVest Ventures were added to our list of locally based funders.
• In 2006, the state challenged the region to design a program to take our entrepreneurial support system to another level. NorTech took the lead, and the result was the TechLift collaborative, directly supporting and mentoring the region’s technology entrepreneurs, providing financial support for important initiatives in the current system, and increasing the investable capital in the region. Like JumpStart and BioEnterprise before it, TechLift has gone on to become one of the best models nationally for growing, supporting and funding early-stage technology companies.
• The Innovation Fund at Lorain County Community College and Cuyahoga County’s North Coast Opportunities Technology Fund came about largely as a result of this effort, and they have since become integral parts of Northeast Ohio’s funding map, investing in ventures even before JumpStart and the angel funds, and are outstanding examples of productive public/private partnerships.
• The region’s Edison Program funded incubators, the Akron Global Business Accelerator, MAGNET in Cleveland, Braintree in Mansfield, GLIDE in Lorain, and the Youngstown Business Incubator came together as NEOinc to provide a broader set of incubation services. These incubators were also part of the TechLift collaborative, which provided for expanded entrepreneurial services.
• In 2009, TechLift joined JumpStart as JumpStart TechLift Advisors, to create a broader, more seamless entrepreneurial support network. JumpStart Inclusion Advisors was also formed at this time to provide world-class support and eventually funding to our minority and female led entrepreneurial companies as well as those committed to growth in our inner cities. Through these additions, JumpStart becomes the premier venture development group.

As mentioned before, apologies to any people or organizations I left out, but, I guess, in a way, that is a good thing, since we have had so much growth in our entrepreneurial support system that it’s tough to list all of the contributors. Over the past nine years, this progress is startling:

This in 2002:

To This in 2009:

When we started TechLift in 2007, our stated objective was “to make Northeast Ohio the best place in the U.S. to start and grow a technology company”. From the above, clearly, JumpStart TechLift Advisors plays a role along with many others. Are we there yet? Probably not — we still have work to do. Despite our superior support structure, we still don’t have the funding climate of Boston or Silicon Valley. We haven’t had enough “home runs” — companies that start in Northeast Ohio, get funded and exit with success. Are we on the way to becoming the best place in the U.S. to start and grow a technology company? We are on our way, should be proud of how far we’ve come and must keep pushing this remarkable transformation of our economy.

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.