Tuesday, February 07, 2012
Posted by Ray Leach
JumpStart has historically been known as an investing organization. And, in fact, in 2011 JumpStart invested $3.2 million through 15 investments in 14 high growth companies (bringing our total to more than $22 million committed to 62 Northeast Ohio tech companies since 2004 and making us one of the most active seed-stage investors in the US over this period of time).
But truth be told, we’ve always been much more than a nonprofit investor in startups. We also provide significant services to entrepreneurs, both those leading companies in which we've invested and those that have not (yet) received direct investment from JumpStart but that get a ton of support from us to gain access to other resources they need to succeed. In fact, some of our clients say these services are much more valuable than money. We’re able to do this work because our public, private and philanthropic partners and supporters agree with a comprehensive approach of providing both investment capital and assistance.
One of JumpStart’s most important partners in accelerating the successes of our region's entrepreneurs is the Ohio Third Frontier. Recently, JumpStart was asked how we have used the resources awarded by Ohio Third Frontier and the required non-state matching resources related to these grants.
(As a side note, you might be asking yourself, what are matching resources? For every dollar that we, or any other entity receives from Ohio Third Frontier, some type of “match” is needed. Many times, $1 dollar of non-state “match” is needed to receive $1 from Ohio Third Frontier, although that ratio has changed from time to time. This required match ensures the State of Ohio that it is funding programs and activities that others are also willing to support. Furthermore, a “match” agreement leverages dollars for greater impact.)
JumpStart philosophically believes in transparency and in engaging with our community, so we’ve posted information pertinent to this and other operations on our site. Relative to the question about our allocation of funding, we’ve posted a listing of every grant we’ve received (both for our investing activities and our entrepreneurial services) and we’ve identified the amount of match allocated towards each.
A few headlines:
- We believe that investment dollars and services go hand-in-hand; that is, that an entrepreneurial company at the early stages will have its best chance of success if it receives both capital (funds) and entrepreneurial services.
- We have, with the encouragement of our funders, partners and collaborators, always tried to secure as much Ohio Third Frontier funding as possible for our region’s entrepreneurs, in both services dollars and investment dollars.
- We have always matched 100% of the funds for investing we’ve been awarded by the State of Ohio, and sometimes, have overmatched those funds.
- JumpStart has raised more money for investing than for services from the Ohio Third Frontier over its eight year history, and has invested more money than it has spent providing services.
- In order for JumpStart to draw down state funds for investing, we must have a company in which we will invest and provide evidence of the match. As a result, even if JumpStart has received a commitment from the state for investment dollars, those dollars are not disbursed to JumpStart and sitting in a checking account! They are sent to JumpStart once JumpStart is ready to close a funding tranche with a company.
We realize this is a lot of detail, so we’ll continue to provide insight into JumpStart’s projects and processes in short blogs. Please feel free to submit topic ideas at email@example.com.
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.