Cuyahoga County may end up helping JumpStart revive its efforts to fund young tech companies.
County Executive Armond Budish plans to ask county council to set aside $4.5 million for JumpStart, a nonprofit that works with local entrepreneurs.
The money would come in the form of two loans: $2.5 million would go into the nonprofit fund that JumpStart has traditionally used to fund tech startups, and another $2 million would go into a new for-profit fund that would target more mature startups looking to raise larger amounts of money.
Budish said he anticipates “that there won’t be any significant objection” from Cuyahoga County Council. He has frequently stated that the county must watch its spending given the amount of debt on its books, but he noted that the county has to be aggressive when it comes to creating jobs.
And local businesses need more capital, Budish said, citing conversations he had with one hundred business owners during his first one hundred days in office.
“I heard over and over about the need for better access to capital,” he told attendees at Case Western Reserve University’s Innovation Summit on Tuesday afternoon, Oct. 27.
He added that the county will consider other non-traditional ways to make sure local businesses can find funding as its financial situation improves.
So what makes the JumpStart partnership a good one?
For one, he noted that JumpStart has guaranteed that it will pay back the loans, even if its investments don’t pay off. Plus, JumpStart will pay a 2% interest rate, according to the current version of the agreement, which isn’t final. That’s not a bad rate for the county, given that it makes less than 1% on its other investments, Budish told Crain’s.
The county’s money would only be used to fund tech companies within Cuyahoga County, according to JumpStart.
Read the full story at Crain’s Cleveland Business.