support as an Edison technology incubator. The director of development, Bruce Johnson, said he was then cutting funds to technology incubators, and to come back again “when you’ve got a track record.”
Learning How to ‘Wrap a Good Business Around Their Idea’
In 2006 Dr. Church and his partners returned to share their early success. By then the GLIDE business incubator had placed third out of twelve then existing in the state, and Third Frontier agreed to take them on. “It really was a teaching and learning process consistent with the role of higher education,” he said. “We discovered that most of the entrepreneurs had great business ideas, technology ideas, and passion for what they were doing, but they were not trained in business. They didn’t know how to wrap a good business around their idea and breathe life into it.”
Since 2001, GLIDE has worked with more than 1,900 entrepreneurs and incubated 65 companies, about 45 of them on the Lorain campus and the others “virtually” in the community. “The exciting news is that 62 or those 65 are still in business.”
However, Dr. Church found that most of the young companies ran into the Valley of Death as soon as they had exhausted friends and family, second mortgages, and credit cards. “We knew we had to figure out a way to bring in some pre-seed capital that would enable them to move their ideas to market.” The team assembled by GLIDE came up with the notion of using the foundation to raise some funds philanthropically that could then be invested at that earliest stage.
Using Philanthropy to Support Business
Here they encountered a legal roadblock. “We knew that if we were going to use philanthropic dollars, the IRS would have to agree that the donation was tax deductible—even though invested in a private business. It took us three and a half years and five IRS reviewers, but we won. We have the only private letter ruling in the country allowing those contributions to be tax deductible, and for us to invest them in private enterprise.” The IRS ruled in 2006 that a “public good” was served if the entrepreneur receiving the award provided one or more students with a work-based learning experience. This brought a “triple win”—for the college in gaining educational value, for the community in building a business, and for the entrepreneur in reducing financial risk.
Dr. Church realized, however, that if the fund were going to be successful, it would need to draw great ideas from across northeast Ohio. Rather than restricting it to Lorain County, it now serves 21 counties. A first natural step was for form alliances with other educational partners. The first was the University of Akron. The two institutions began to raise funds together to provide matching dollars and bring eligibility for the Ohio Third Frontier preseed funds. They added Youngstown State University, and have now added