Trade group seeks broad role

VentureOhio hopes to fill role of singular investment network voice

2/26/2014

Savage

Ohio has large investment funds, venture capital, and one of the best private or “angel” investor networks anywhere, but it has never had one voice to tie them together.

A new group, VentureOhio, hopes to fill that role.

It plans to bring venture investors, incubators, accelerators, universities, corporations, foundations, entrepreneurs, and others together to create a self-sustaining network that will make Ohio a preferred location for entrepreneurial activity.

“Our role is to be a trade association, to oversee activity. We don’t invest in companies, but our members do,” said Frank Samuel, president of VentureOhio in Columbus.

Mr. Samuel, the top science and technology adviser to former Ohio Gov. Bob Taft and a former key official with Ohio’s Third Frontier program, said the fledgling association, which launched last fall, has 50 members and expects to add 10 more fairly soon.

Its founding members include several venture capital funds, such as Drive Capital, a $250 million VC fund in Columbus; CoreNetwork, which is northwest Ohio’s successful Angel investor network; the Cleveland Clinic, and the University of Cincinnati.

But the organization currently is on a tour of the state, trying to get its name and goals out in the public and recruiting new members. On Wednesday, Mr. Samuel met with The Blade’s editorial board and business reporters.

The bigger VentureOhio gets, the better it will be able to achieve its three major goals, Mr. Samuel said.

Those goals, he said, are to develop a variety of sources of Ohio venture capital, to strengthen the state’s venture capital organizations so that a cohesive network and support structures remain strong, and to tell Ohio’s story of entrepreneurial efforts to the state, the country, and ultimately, the world.

“The venture capital is there. There are a lot of people in place but not a self-sustaining support network. We don’t have a functional system just yet,” Mr. Samuel said.

As a result, he added, a lot of potentially large sources of venture capital, such as pension funds and investment funds, leave the the Midwest for the West Coast where entrepreneurial hotspots like Silicon Valley are a large draw.

“They are just looking out for their investors,” Mr. Samuel said of the investment funds. “We haven’t seen, historically, the big investments that they get in California. We have got activity. We have got an angel network. Ohio is a leader in angel investment,” he said, referring to wealthy individuals who invest in a startup company in hopes of getting a return on their investment.

But as good as Ohio is, it needs more angel investors, early-stage venture funds, and larger investment funds for companies that are past the startup stage.

“Our goal is to keep startups from going out of state for financing because when that happens it’s not good. First, the money they make goes out of state,” Mr. Samuel said.

Then, if they are successful, companies are usually forced to move closer to where their investors reside.

The result is Ohio loses the company, its growth potential, and the talent it employs. “If we can create a better investment situation in Ohio, we can retain that type of investment,” Mr. Samuel said.

He said he sees several potential fields that an Ohio investment network could fund and advance, including business-to-business software, medical technology, pharmaceuticals, material sciences, and healthcare information technologies.

VentureOhio has a 13-member board representing nearly every area of the state, according to the organization. Board members include Bob Savage, Jr., executive director of Rocket Ventures LLC, the venture capital fund, which affiliated with the Regional Growth Partnership and recently cut its ownership ties with the University of Toledo.

As a trade group, VentureOhio already has staked out several policy positions for which it plans to advocate.

It wants a $100 million expansion of the Ohio Capital Fund, which complements the Third Frontier program, or some alternative source of capital funding to meet growing demand for capital among startups and growing businesses.

VentureOhio also wants restoration of the Ohio Technology Investment Tax Credit, which was important to angel investors but expired in 2012. Under the OTITC, which provided a state tax credit of up to 25 percent of an individual’s investment, 4,800 Ohioans invested $160 million into more than 665 companies, according to VentureOhio.

The trade group recommends that the Third Frontier program be enhanced and $30 million in unallocated funds earmarked for the program be used.

Contact Jon Chavez at:

jchavez@theblade.com

or 419-724-6128.