The Ohio Third Frontier program is looking to award up to $60 million to organizations that will invest that money in Ohio technology companies in the early stages of commercializing their products or services.
Cleveland entrepreneurial growth organization JumpStart Inc. is having conversations “with a handful of institutions, universities, hospitals and others” with whom to partner on proposals for landing some of that money, said Ray Leach, JumpStart’s CEO.
Among the goals of the Ohio Third Frontier’s capital formation program are to increase the number of pre-seed funds investing throughout Ohio and the amount of capital invested in early-stage technology companies in the state.
“The Third Frontier is interested in partnering with entities across the state to continue this early-stage investing,” said Leach, whose organization has won tens of millions of Ohio Third Frontier dollars over the years.
Letters of intent for the seed (proposals for between $1 million and $5 million) and seed-plus (proposals between $2.5 million and $5 million) loans are due Nov. 13, and proposals are due Dec. 4, according to the request for proposals.
The capital formation awards will be announced in February.
Started in 2003, Ohio Third Frontier is a $2.1 billion economic development initiative that supports technology entrepreneurship and growing jobs statewide.
As is typical of Ohio Third Frontier programs, organizations that receive capital formation loans must leverage them with private money. In this case, each dollar in loan money must be matched dollar-for-dollar for seed loans or 3-to-1 for seed-plus loans.
Seed investments usually are the first institutional investments a company raises. Seed-plus investments are “a later seed, maybe co-investing with Series A,” Leach said.
Both are small rounds of capital but can add up when leveraged by private dollars.
Given the match requirements, the $60 million in state money would become between $120 million to $240 million, if fully leveraged.
The last time Ohio Third Frontier awarded capital formation loans was in December 2015.
The $72 million awarded at that time “ended up leveraging $170 million in matching capital,” Leach said. “Ultimately, it was a meaningful amount of capital.”
Ohio Third Frontier, which is the state’s largest economic development program, has been between $125 million and $150 million left, Leach said.
This article originally appeared in Cleveland Business Journal on November 4, 2020.