Monday, September 21, 2009

Tech Across Ohio - Jumpstart - Keep on Truckin’

Keep on Truckin’

Keep on Truckin’

Posted By Lynn-Ann Gries

Keep on Truckin'I’m a bit of a data geek. Yes, it’s true. So, when I decided to blog about the venture capital “situation” here in Northeast Ohio, I figured I’d better put pen to paper to confirm my thesis that Northeast Ohio’s venture activity, while pretty good, was significantly below the predictions made by the Early Stage Capital Task Force back in 2005. Well, I was wrong – and I’m happy about it.

The chart below is a summary of my quick and dirty analysis (remember, it’s a blog post, not a white paper) and shows that the early stage funding environment in Northeast Ohio has played out pretty much exactly as the Task Force predicted:

Task Force Predictions

The “prediction” column comes from data published in the Early Stage Capital Task Force report in 2005. The “actual” column comes from data published in the 2008 Venture Capital Report and represents the average over the past five years (2004-2008). Overall, it made me smile; while entrepreneurs will always complain that there is never enough capital and fault can always be found with the existing sources of capital, the data shows that the ecosystem is pretty healthy. There is no doubt in my mind that the two most important contributors to this success are (1) the Ohio Third Frontier program and (2) The Ohio Capital Fund. Ohio Third Frontier provides funding for organizations involved at the earliest stages of a company’s existence (Pre-Seed/Seed category above) and has funded most, if not all, of the organizations in Northeast Ohio that provide business assistance and funding to researchers and entrepreneurs. The Ohio Capital Fund is a fund-of-funds that invests limited partner capital in early stage (Series A and B) venture funds with a quid pro quo approach – the funds receiving the dollars must invest a certain percentage of the money in Ohio-based companies. Both of these efforts have directly contributed to the positive results highlighted above.

What we have to remember, however, is that we’re in this game for the long haul. Ohio Third Frontier is coming up for renewal in the Spring of 2010 and The Ohio Capital Fund is about to invest the last of its $150 million and needs to be renewed ASAP if it is to continue attracting VCs to Ohio. So, while it might be self-serving to say that we need to continue funding these efforts (after all I work for an organization funded by an Ohio Third Frontier program), I’ve tried to provide objective data to support my position. As both of these issues come up for renewal (by the voters and in the legislature), the only thing we need to remember is to Keep on Truckin’.

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