Innovation Capital Accelerates Growth in Central Ohio
TechColumbus recently released its annual Central Ohio Innovation Capital Report which provides a comprehensive overview of funding trends within Central Ohio for 2010. The full 2010 Central Ohio Innovation Capital Report is available here.
TechColumbus research indicates that over the past year (2009-2010), innovation capital increased nearly 73% to over $307 million in Central Ohio. Innovation capital, which includes all sources of funding—venture capital, angel investments, loans, grants, etc.—provides crucial financial support to entrepreneurial businesses. In 2010, 117 enterprising companies received a share of the record-setting funding. This figure represents a nearly 43% increase over the number of young companies receiving such capital funding in the prior year.
Not only did a record number of companies receive a share of record levels of innovation capital, but, according to TechColumbus, the capital was distributed across all stages of growth. Startup firms need seed capital to cover expenses and to help expand the brand before the company is profitable. In 2010, TechColumbus reported that more than $113 million went to 66 earliest-stage companies (representing a 44.56% increase from 2009 levels). Venture capital and angel investors provided over $48 million in funding with Central Ohio investors committing just under half of this amount. (For more information on seed funding for Ohio companies, see this list of capital sources maintained by The Gillespie Law Group.)
Earliest-stage innovation capital ($113 million) was spread across various sectors with Healthcare and Advanced Material companies obtaining the most funding. The table below provides a breakdown of funding by sector for 2010.
| Earliest-Stage Innovation Capital by Sector | Total Innovation Capital | Percent of Innovation Capital |
| Healthcare | $36.66 Million | 32.43% |
| Advanced Material | $30.18 Million | 26.69% |
| Information Technology | $16.21 Million | 14.34% |
| Energy | $14.60 Million | 12.91% |
| Retail & Consumer | $8.44 Million | 7.47% |
| Environmental | $6.97 Million | 6.16% |
Equally important, however, is a source of exit funding for the founders of a successful business. A lack of such funding can inhibit startup companies because founders do not have a clear way to get out of their investment. TechColumbus reports that more than $194 million in exit funding was brought in by seven companies in 2010 (a dramatic increase over 2009 levels).
The report concludes that the availability of early-stage funding and late-stage exit funding provides entrepreneurs vital capital at critical times and has helped contribute to a friendly entrepreneurial climate in Central Ohio. However, in order to continue attracting later-stage capital, young companies must be funded when they are in the early-stage and growth phases. Without a continuous supply of companies—at all stages of growth—in the entrepreneurial pipeline, later-stage innovation capital may be stymied. The report ends with the cautiously optimistic view that investment activity in Central Ohio is increasing, but that there is still a significant need for future funding if the region is to retain its growth trajectory.
Sources of Startup Capital in Ohio: UPDATED
I’ve updated our compilation of sources of capital available to startup companies in Ohio. The list includes angel groups, venture capital funds, innovation funds and some incubators offering financing alternatives. Our goal is to have this resource be as complete and accurate as possible, so if you have any recommended additions or changes, please let me know.
The chart is embedded below, but you can access it directly by clicking here.
Ohio Early Stage Summit
On September 27th and 28th, entrepreneurs, venture capitalists, angel investors and state economic development officials will gather in Columbus, Ohio to hear presentations from startup companies and learn about recent developments within Ohio’s entrepreneurial ecosystem. The event is presented by the Ohio Capital Fund and the Ohio Department of Development and is free to attend provided registration is made by September 22nd.
By way of a little background, the Ohio Capital Fund is a statutorily created “fund of funds” governed by the Ohio Venture Capital Authority and currently managed by Buckeye Venture Partners, LLC. Buckeye Venture Partners is a joint venture between Fort Washington Investment Advisors, Inc. (“Fort Washington”), a Cincinnati-based registered investment advisor and private equity manager, and Peppertree Partners, LLC, a Cleveland-based registered investment advisor and private equity manager owned by Fort Washington. The fund of funds invests in venture capital funds that are committed to investing in Ohio companies, currently a total of 22. According to this article in the Columbus Dispatch, “those 22 funds have invested more than $250 million in 45 companies that, together, now employ more than 1,600 people in the state.”
I have attended this event in the past and plan to attend again this year. It is probably the largest gathering of financiers and entrepreneurs in Ohio, and is great opportunity for networking and to learn about the industry.
For more information, visit the Ohio Capital Funds website here.
Venture Capital Firms and Angel Groups with a Focus in Ohio
Ohio-based startups and early-stage companies looking for capital may not have the same options as those on either costs, but there are quite a few Venture Capital Funds and Angel Groups who have stated a focus of investing in the Midwest region and in Ohio in particular. Over twenty funds have received investment from the Ohio Capital Fund, a state-created fund of funds that requires funds they invest in to invest in Ohio. I’ve used Google Spreadsheets to compile a chart with basic information about these sources of capital. I plan to update this chart as circumstances change and as I become aware of funding sources I’ve failed to include. Please feel free to contact me or leave comments with suggestions for additional listings.
The chart is embedded below the jump, but for a more readable version, click here.
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