One of the best ways Ohio can promote job creation and economic growth is to support the state’s entrepreneurs — people who take the risk of starting businesses, often in cutting-edge industries such as software, medical devices, and renewable energy.
A new trade association, VentureOhio, aims to connect entrepreneurs with investors who can provide the start-up capital they need. It’s Ohio’s first such statewide effort; if it can avoid the self-inflicted problems of economic development agencies such as University of Toledo Innovation Enterprises (UTIE), it merits public support.
VentureOhio’s board includes members from every part of the state. The Toledo region is represented by Bob Savage, Jr., the executive director of Rocket Ventures, a program of the Regional Growth Partnership that invests in and supports emerging businesses in northwest Ohio.
The new association’s president, Frank Samuel, says VentureOhio plans to promote investment in “high-growth, high-promise” businesses at early stages, but will not make investments itself. Instead, he said, the group seeks to bring together, and speak for, venture investors, business incubators and accelerators, and universities across the state. It will advocate policies that strengthen Ohio’s support structure for entrepreneurs, which he concedes is a work in progress.
“Ohio does not have a self-sustaining system yet,” Mr. Samuel told The Blade’s editorial board last week. “The valuation of early companies in the Midwest is not as rich as on the coasts. But a lot goes on here that people don’t know about.”
Ohio’s universities, including UT, are a fertile source of scientific research. Mr. Samuel says Ohio is developing an entrepreneurial culture that encourages start-up firms. But these companies need long-term investment and support to grow.
Programs such as Ohio Third Frontier and the Ohio Capital Fund (OCF) make money available to early-stage companies. Ohio voters have twice approved bond issues to support Third Frontier’s work. VentureOhio proposes an expanded use of Third Frontier resources to help fledgling companies get funding and attract talented executives.
VentureOhio notes that OCF has essentially run out of money to invest in venture-capital funds that in turn invest in early-stage companies. The group advocates a change in state tax-credit support that it says could free up $100 million more in venture capital through OCF, without an increase in state spending. VentureOhio also calls for restoration of a state tax credit for investment in small, technology-oriented companies.
VentureOhio says the state needs a new “fund of funds,” overseen by Third Frontier, to back investors who support Ohio firms. A similar model works well in Michigan, VentureOhio officials say.
Investing in a start-up business can be nearly as risky as running one. UTIE and state government, among other institutions, have lost money on public investments in local solar-technology firms. The UTIE investments were complicated by that agency’s murky management structure — something VentureOhio needs to avoid.
Still, Mr. Savage, whose organization recently cut its ties with UT, says that while the failures often attract more attention, northwest Ohio has its share of successes in alternative energy as well.
VentureOhio notes that venture capital helped seed the success of such big corporate names as Home Depot, Whole Foods, and Intel. If the new group can help cultivate such companies in Ohio, the state and its people stand to benefit.