How Ohio boosted venture capital investment

Axios Technology 1 week ago

In the battle for talent and economic growth, U.S. cities are often competing with each other to become the next tech hubs and lure new investment and jobs. In Ohio, however, venture capital investors in three cities are taking a different approach by working together to boost the state's startup appeal.

Why it matters: The midwest is hardly a hotbed for venture capital activity, the majority of which goes to New York, Massachusetts and California. But legacy rustbelt states see a chance to attract entrepreneurs looking for alternatives to pricey cities like San Francisco.

Driving the news: The Ohio Third Frontier Commission, a statewide economic development initiative, recently approved about $77 million to support tech startups throughout the state. It's invested more than $2 billion since 2003.

  • A sizable portion of the latest round of funds went to three of the state's venture development funds: CincyTech in Cincinnati, JumpStart in Cleveland and Rev1 Ventures in Columbus.

What's happening: After years of population decline, Cleveland, Cincinnati and Columbus are seeing growth again. Local business leaders there have been focused on using their legacy industries to their advantage and collaborating on deals, advising each other on portfolio companies and exchanging tips for attracting executives from the coasts.

Columbus is one of the fastest-growing cities in the midwest. It's the state capital and home of Ohio State University and major corporations like Nationwide Insurance, Cardinal Health and Big Lots.

  • Tom Walker, CEO of Rev1 Ventures, created a 70,000-square-foot startup studio in an old mattress warehouse. As it's grown, he said he's now able to attract more co-investors from the west coast and it's gotten easier to bring senior executive talent from other regions.
  • Investing in entrepreneurs who are women and people of color is a priority for the three firms. About 50% of Rev1 Ventures' portfolio has diverse founders and leadership teams.
  • "The best way to win the talent war is to provide the best opportunities for the most diverse population," Walker said.

Cincinnati's legacy industrial economy has been somewhat challenging to revamp, said Mike Venerable, CEO of CincyTech, a seed fund focused on life sciences and digital startups. Technologies spinning out of Cincinnati Children's Hospital and local universities have been central to the strategy.

  • Venerable expects e-commerce and logistics to grow thanks to the new Amazon hub landing in nearby Kentucky.
  • Several of CincyTech's investments have been acquired by out-of-state companies.
  • "Buyers are finding really good talent here and there's a lifestyle arbitrage factor that goes into it," he said. "It's much easier to hire and grow here and employees tend to be more loyal. Maybe they're not moving their headquarters here, but it's easier to scale it here."

Cleveland has leaned into its health care and medicine expertise since the bottom fell out of manufacturing jobs, said Ray Leach, CEO of JumpStart Inc., a Cleveland-based nonprofit venture development organization.

  • JumpStart saw significant exits from investments about four years ago, and now the goal is to have two to five exits across Ohio every year.
  • Cleveland and the surrounding seven cities in northeast Ohio account for 40% of the state's population. "But the culture of Cleveland was not oriented toward entrepreneurs," he said. "It's taken 10 to 20 years to get that flywheel going."

The big picture: The public-private collaboration and cross-city relationships is what has made the difference for Ohio, the investors say.

  • Leach, Walker and Venerable meet frequently and have a running text-message chain to compare notes.
  • The state's investment, Venerable said, has let each city "spin up what made sense for it" allowing each to develop a distinct entrepreneurial ecosystem without directly competing for resources.

Source link
Read also:
Business Insider › Finance › 1 month ago
Drive Capital, a venture capital firm based in Columbus, Ohio, has raised a $350 million fund to invest in Midwestern startups. The firm's founders came from venture capital powerhouse Sequoia Capital and moved to find new opportunities. While most...
CNBC › 1 month ago
Capital One has two Venture credit cards that are popular among avid travelers: The Capital One Venture Rewards Credit Card and Capital One VentureOne Rewards Credit Card. We compare the two cards so you can decide which is the best option for your...
Axios › Finance › 1 month ago
The National Venture Capital Association (NVCA) submitted a long list of comments on Thursday to CFIUS — the Committee on Foreign Investment in the United States, an interagency group housed within Treasury — regarding a year-old law that added...
The Boston Globe › Finance › 1 month ago
Arkuda Therapeutics has been incubated by Atlas Venture since February of last year. It has $44 million in venture capital raised by Atlas and the venture capital arm of Pfizer, the pharmaceutical giant.
Forbes › 2 months ago
Struck Capital is a next generation Seed Venture Firm based in Los Angeles which leads seed rounds in Los Angeles, with early investments in companies such as ScratchPay, Joymode and Brainbase.
Forbes › 1 week ago
Meet the young investors of the 30 Under 30 Venture Capital list for 2020, transforming their industry one investment at a time.
Forbes › 1 month ago
In leading the $10 billion investment in LabGenius, two U.S. venture capital funds Lux Capital and Obvious Ventures reveal a biotech investing strategy not seen from the old guard of life science financing.
Forbes › 1 month ago
In leading the $10 billion investment in LabGenius, two U.S. venture capital funds Lux Capital and Obvious Ventures reveal a biotech investing strategy not seen from the old guard of life science financing.
Business Insider › Finance › 2 months ago
WeWork's failed IPO isn't going to change the way venture capital funds behave, according to Erik Gordon, a professor at the University of Michigan's Ross School of Business. That's because no matter how dramatically WeWork's valuation falls, VCs will...
Business Insider › 2 months ago
Successful entrepreneurship is about knowing the best way to fund your business. Raising venture capital isn't always the answer. VCs say the most important factor to consider is market size: How big could your company get? Ultimately, VCs want a big...
Sign In

Sign in to follow sources and tags you love, and get personalized stories.

Continue with Google