Wednesday, November 04, 2009
Posted by Ray Leach
One of the most fortuitous facts that has benefitted Ohio's entrepreneurial ecosystem over the last eight years is how the outcomes of a visionary program -- the Ohio Venture Capital Authority -- have aligned with many of the programmatic goals and programs of the Ohio Third Frontier program. When it comes to Ohio companies needing the resources to start and grow their technology-based organizations these two programs have fit like hand in glove.
Both of these nationally recognized public/private sector programs were launched during the Taft administration in 2002, yet these same programs have been strongly supported by the Strickland administration as well.
The Ohio Venture Capital Authority's focus has been to use state-backed tax credits, which are likely to never be needed, in order to aggregate a significant amount of capital ($150 million to date) support and attract hundreds of millions of investment dollars to the State of Ohio. To do this, the State implemented a fund-of-funds mechanism that has to date invested in over 20 different venture funds. Many of these funds have historically been located in Ohio but were under-capitalized; others were funds that are headquartered outside the State and have now been attracted to invest all of their fund's capital in Ohio firms.
Recently State representatives Sandra Williams and Jay Goyal have announced their interest in the expansion of the Ohio Venture Capital Authority by adding another $100 million in tax credits to this initiative. One of the elements that is so powerful for the State with this program is that these dollars can be provided by local financial institutions (lending money to the State against the collateral of tax credits available to them if their principal is not able to be returned in the next 10-15 years). This allows the State to do this with minimal cost and risk compared to having to use such significant resources out of the general revenue budget, which would be almost impossible in these economic times when so many Ohioans are suffering from our national economic situation.
With this leadership from Williams and Goyal, along with the anticipated continuation and expansion of the Ohio Third Frontier project (which is likely to be on the ballot next spring), the inventions being created at Ohio research centers and by our citizens will be supported by the Third Frontier and the resources needed to continue their grow in Ohio, while helping them create jobs for thousands of Ohioans over the next five years.
Ray Leach is CEO of JumpStart and brings his energy and leadership experiences from founding five high growth entrepreneurial and intrapreneurial endeavors in the last 20 years. Ray is a Sloan Fellow and earned an MBA from the MIT Sloan School of Management. He also earned a BA in Finance from the University of Akron.