90 Out-of-State Investors Put Money into Northeast Ohio Companies
Between 2007-2011, 226 Greater Cleveland companies collectively attracted $961 million from venture capitalists and angel investors, according to a five-year overview of equity investment in Northeast Ohio just released by the region’s Venture Capital Advisory Task Force and based on data provided by investors and collected by tech-based economic development organizations BioEnterprise and JumpStart. The regional activity represents a 133% increase in deals and a 26% increase in dollars when compared to the previous five years. Northeast Ohio also saw 37 venture-backed companies exit between 2007-2011.
“There is a dramatic change in the activity, the number of investable companies and the quality of the companies in the pipeline in Northeast Ohio from 10 years ago,” says Bill Trainor, co-founder and Managing Director of Mutual Capital Partners Funds I & II. “The activity we’re already seeing in 2012–both in investing and in exits—is reflective of the momentum shown in this five-year report and I predict there is another strong year ahead.”
Overall, the capital invested in the region over the five years came from 134 venture capital and angel investors, 67% of which were based outside of Ohio. Lynn-Ann Gries, JumpStart’s Chief Investment Officer, points to this widespread participation as a good sign. “The fact that VCs and angels from all over are turning their attention to Northeast Ohio reinforces the quality of our innovations and expresses a confidence in the region’s ability to produce globally competitive technologies,” says Gries.
Due to Northeast Ohio’s well-recognized hospital systems, research centers and universities, healthcare continues to be a regional strength, accounting for 61 percent of the capital raised in the last five years. Eighty-three (83) companies in the fields of biopharmaceuticals, medical devices and equipment and healthcare services/IT collectively attracted $587 million. Secondarily, information technology/software continues to grow in importance. Sixty-eight (68) companies, representing nearly a third of the companies in the report, collectively attracted $166 million. And, the centuries-old tradition of industrial entrepreneurship in the Great Lakes region has transformed into innovative manufacturing technologies looking at ways to reduce and reuse valuable resources. Thirty-nine (39) “cleantech” companies across the region addressing issues such as waste heat recapture, reduction of pollutants in the water supply, simplification of the waste-to-fuel recycling process and the economically efficient creation of renewable energy sources collectively received $143 million in investment.
“We’re only beginning to see the results of the public, private and philanthropic initiatives begun almost 10 years ago to accelerate the successes of startups in the state,” says Doug Weintraub, JumpStart’s chair and an active investor in the region. “Given that Northeast Ohio started ramping up activity to assist and support the creation and growth of tech companies in 2005 and 2006—and that the National Venture Capital Association estimates the average time from initial investment to a company’s exit is about nine years—we can expect even more success stories in the coming years.”
The report states that client companies that received business assistance from the region’s Ohio Third Frontier-supported incubators and accelerators represent 71 percent (162) of the companies that successfully attracted VC and angel capital, and 51 percent ($506 million) of the capital raised.
“Not only are these entrepreneurs transforming the region’s economy with life-altering technologies tackling everything from contaminated groundwater to preterm birth, they are raising Northeast Ohio’s profile as a hub for innovation and progress,” adds Weintraub. “They represent our next generation of world-class corporate leaders.”
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THE VENTURE CAPITAL ADVISORY TASK FORCE
The Task Force is comprised of Greater Cleveland investors dedicated to continually increasing regional entrepreneurial investment and success. To learn more about investment opportunities in Northeast Ohio, contact Lynn-Ann Gries, JumpStart’s Chief Investment Officer, at 216.363.3400 or firstname.lastname@example.org