Cuyahoga County, the Cleveland Clinic and JumpStart are expected to announce a deal Monday that could cement the region as the nation’s capital of medical innovation.
The deal will bring Plug and Play Tech Center, which bills itself as the world’s largest startup accelerator, to the city. The Silicon Valley company that connects entrepreneurs with investors, will establish an accelerator focused on biotech and digital health innovation at the Global Center for Health Innovation. Accelerators are essentially business boot camps. They give startups or emerging companies mentoring and educational programs and usually end in some sort of exhibition day and connections to investors.
The move, a boon for the region’s eds and meds sector, will mean that a stream of startup companies, entrepreneurs, venture capitalists and business executives from the world’s largest biomedical companies will come regularly to Cleveland. The execs and investors would use the Plug and Play office here as the place to find the next big thing in educational and medical innovation.
“This is a really, really big deal in our world,” said JumpStart CEO Ray Leach, who discussed the collaboration Friday with Cuyahoga County Executive Armond Budish and Peter O’Neill, executive director of Cleveland Clinic Innovations. “The fact that a partner like Plug and Play would choose the city of Cleveland for a health-tech accelerator will make a huge wave in our world globally.”
The partnership is to be announced during the annual Cleveland Clinic Innovation Summit.
Plug and Play is a major player in the world of venture capital. Its list of host cities includes Berlin, Sao Paolo, Moscow, Calgary, Singapore and Valencia in Spain. And now Cleveland.
The health-tech accelerator here is expected to attract up to 40 national and international startups a year. During their stay at the Global Center, the startups will receive coaching and can meet with leaders of established corporations.
JumpStart and the Clinic will provide an undetermined amount of money to pay for Plug and Play’s initial three-year residency. The company will hire staff in Cleveland. The company and startups will fill about 10,000 square feet in the Global Center.
Plug and Play, JumpStart and the Clinic will evaluate hundreds of startups and small companies to choose at least 10 who will arrive next spring.
Each will likely send two to four people. They will work at the center rent free and receive coaching and meet with potential investors.
While JumpStart and the Clinic will play a role in selecting the companies, they will not have an inside track to invest. The Clinic will partner with up to six Plug and Play companies each year to pilot their new health-care innovations.
Plug and Play has 13 accelerators in its Sunnyvale, California headquarters. It offers space twice a year to startups and small companies for up to three to four months. Those companies receive coaching and can meet with the more than 300 large corporate partners who pay a fee to Plug and Play to have first access to new innovations.
Budish first learned of the company last year from Lev Gonick, one of the region’s leading thinkers about digital technology. and traveled to California to meet with Plug and Play officials.
“When I saw it, it was clear it would be a great thing,” Budish said. “They are looking for a health-care focus. But to make it happen, it was clear we would need a big global player from Cleveland. When the Clinic got involved, things happened.”
After Budish’s visit he spoke to Leach, who visited the company. He contacted the Clinic and O’Neill and Dr. Brian Donley, the Clinic’s chief of staff, then traveled to California.
“It is really exciting because Plug and Play brings their credibility as an accelerator,” Donley said in a phone interview Friday. “We are really excited about innovation in health care and we think this can accelerate our ability to innovate, to provide better care for our patients and patients across the country and the world. This will help us attract more companies, more investors and more innovative thinkers and entrepreneurs that have a proven record.”
O’Neill and Leach said they could have developed a similar model as Plug and Play’s for Cleveland, but it would have taken years and Plug and Play has an international focus and the expertise.”
We very much feel that to help us do our job and for our regional role we think about building an ecosystem,” O’Neill said. “Plug and Play already has the ability to accelerate the growth of our ecosystem by plugging into their national and international connections. It is an amazing opportunity.”
Plug and Play has operations in 22 other locations in four countries. Most locations focus on a single business.
The Cleveland accelerator is similar to a transportation and logistics accelerator established a year ago in Stuttgart, Germany with Daimler as the primary investor.
It is expected that local, state and Midwestern health-care companies, foundations and corporations will join as funding partners of the Cleveland accelerator, Leach and O’Neill said.
The Clinic’s decision to help lead the project wasn’t about dollars and cents, O’Neill said. It was an investment that will pay dividends for whole region. “There is no return-on-investment calculation that says our expenditure on Plug and Play makes financial sense,” he said. “This is a rising tide, and the Cleveland Clinic has a lot of ships in Cleveland and this is a good thing for the Clinic.”
O’Neill said University Hospitals and MetroHealth System have shown interest. He said there are no restrictions on who can take part in this venture. “It is an open entrepreneurial culture and all are welcome to join,” he said. “The more the merrier.”
Leach said that having the Clinic involved is what determined JumpStart’s investment. The Ohio Third Frontier is also providing support. JumpStart will only invest in a company that is committed to staying in Ohio.
Leach said attracting Plug and Play puts Cleveland “firmly on the map.”
“Plug and Play could have gone anywhere,” he said. “In our tiny world, there are only 8,000 venture capitalists in North America. They invest hundreds of billions of dollars a year. This is a big deal.”
Plug and Play will move into vacant space in the Global Center, but may expand in the future.
Donley credited Budish and his chief of staff, Sharon Sobol Jordan, for helping to make the proposal a reality.
Budish and BioEnterprise, which promotes and nurtures health-care companies and bioscience technologies, announced last week that the company will oversee marketing, promotion and tenants at the center.
This article originally appeared on cleveland.com.