Our Entrepreneurial Ecosystem

Posted: August 28, 2011 by Bill Cunningham in People, Planning, Startup

The natural world abhors a vacuum. And if you are a fan of Adam Smith’s “Invisible Hand,” you will find the entrepreneur world also fills voids and gaps in its environment. Jack Wyant, founder of Blue Chip Venture Company, presented an overview of the region’s entrepreneurial ecosystem to the Greater Cincinnati Venture Association back in 2001. He described the ecosystem as a 9 piece interlocking puzzle with many sectors, industries and people involved. The GCVA continues to update the state of the ecosystem every year, and I would like to share with you the richness of our region and just how far we have travelled on the entrepreneurial journey. The nine pieces include Universities, Government, Angel Investors, VC Funds, Incubators, Events, Grassroots Initiatives, Networks and Support Groups. I’ll cover the first four this week and continue the discussion in a future column.

Universities

No other region in the country enjoys the privilege of 5 universities that ranked in the top 25 entrepreneurial programs over the last 10 years (UD, XU, UC, NKU and MU.) The university programs offer tools and connections to students giving them a solid foundation for their entrepreneurial adventures. While it is difficult to teach the passion and inspiration, our universities do a great job of attracting students with those qualities.

Government

While most small businesses believe the government purpose in business is to prevent them from succeeding, there are several programs on both sides of the river that have been extremely helpful to startups. In Kentucky, there is a 40% Investment Tax Credit for investing in new technology startups through organized angel funds like the Northern Kentucky Angel Network. A similar program exists in Ohio with the Ohio Department of Development 25% Technology Investment Tax Credit. Both of these programs reduce risk for the investor, making it a little easier to attract that much-needed early stage capital. The Ohio Innovation Loan Fund provides lending to growth companies where banks sometimes fear to tread.

Angel Investors

The Queen City Angels and the newly formed NKY Angel Network have invested in dozens of companies with good results for both investors and entrepreneurs. While early stage investing can be difficult, QCA track record is better than most new angel groups and their analytic approach improves the chances for success. Angels fill an important void that was missing before the millennium started — early stage money. In addition to our work in Cincinnati, Entrepreneur Magazine ranked the Columbus Ohio Tech Angels Fund as the largest angel group in the country and Cleveland ranked #6. So anyone looking for early stage capital need not look too far.

Venture Capital

Venture Capital funds have continued to grow in the region. Although sometimes chastised for not investing more locally, VC’s bring capital to the high growth companies and offer collateral benefits by attracting other VCs to invest in the region. Rarely do venture firms invest alone – rather they invest with one or more other firms in a syndicate. River Cities Capital, Blue Chip Venture, Allos Ventures, Triathlon Medical Ventures and several others continue to energize the regions high growth startups and provide leadership, knowledge and expertise to entrepreneurs.

The region’s entrepreneurial ecosystem thrives on the energy of entrepreneurs. In my next column, I will highlight the less formal pieces of the puzzle that complete the picture. For an overview of the ecosystem puzzle, you can download a pdf version from our website at www.cincyentre.com.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s