Sharing Knowledge with Others
Since that set of grants in 2007, the innovation ecosystem had raised another $50-60 million across the six regions, again through a competitive process, that have promoted expansion of the ecosystem and helped to identify additional market gaps and opportunities. Starting in 2004, JumpStart focused exclusively on its own outcomes, but over the last three years it has spent more effort and resources trying to help other organizations or funds by providing due diligence, marketing and other back-office services at no cost. It has also become more engaged with higher education institutions at the programmatic level, and with a new set of incubation activities in the nonprofit and private sectors. This kind of evolution has occurred across the state, so the level of collaboration is high. “We meet regularly,” Mr. Leach said. “We’re excited about the new administration’s interest in what we are doing, and in leveraging tools in more significant ways.”
As part of this “experiment,” he said, resources from the state can be used flexibly to “meet the regions where they are” and enable them to design and develop their own strategies. For example, the program has been able to take the best regional companies to Silicon Valley and other centers of capital to encourage investors there to invest in the best of the Ohio private sector.
Feeding the Pipeline to the Private Sector
In terms of outcomes, Mr. Leach said, 2010 data from northeast Ohio show that in greater Cleveland, an all-time high number of companies, 79, have received investments totaling 234 million from angel and private-sector investors and/or members of the northeast Ohio Entrepreneurial Signature Program. Of those 79, 68 percent received capital and services from one of the four funds in the ESP: Glengarry Ventures, North Coast Angel Fund, the Ohio Innovation Fund, and JumpStart’s Evergreen Fund. “We anticipate, for pre-seed and seed stage, that this percentage will exceed 85 percent starting next year. So what we’re doing by investing in these companies that are not ready for prime time is feeding the pipeline to the private sector.”
Of the 79 companies in northeast Ohio, he said, 57 percent were in health care, 32 percent in IT, and 10 percent in clean tech, energy, or advanced materials. There is also a robust pipeline in instruments, controls, and electronics and in chemistry in the pre-seed and seed stages. In 2010, 42 of the 79 investors were located outside Ohio. “We have an opportunity to do an even better job of attracting capital from outside Ohio.”
Looking forward, Mr. Leach saw challenges in finding enough equity for the financing pipeline. He said that Michael Camp of Ohio State estimated that between now and 2018 there will be at least $500 million in seed investment opportunities available across the state, with some 800 companies needing seed capital. In 2010, $22 million were invested in the seed category. The universities