Our Healthy Ecosystem

Posted: March 17, 2013 by Carolyn Pione-Micheli in Ecosystem, Leadership, Money, Startup, Technology
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CarolynPioneMicheliPeople have asked me recent what is behind all the new entrepreneurial energy in Southwest Ohio.

Maybe you have noticed how startup companies are regularly featured in the media and how seminars and workshops are proliferating on topics such as how to launch a technology company, how to fund a technology company, how to work with a technology company.

Local universities are expanding entrepreneurship and startup accelerator programs, and new organizations such as Cintrifuse, the Brandery and Innov8 for Health have risen up to complement existing groups.

In just two years, the numbers have jumped dramatically: In 2009, 14 Cincinnati-based startups received $27 million in venture capital. In 2011, 36 companies received $70.2 million, according to Ohio State’s Fisher College, which is still gathering 2012 data.

A reporter from Louisville asked me last fall whether this activity was driven by the revitalization of downtown and Over-the-Rhine, drawing new people into the region. Others have credited a down economy with seeding ‘disillusionment’ toward corporate America.

Actually, the credit goes to you.

More specifically, Ohio citizens have twice voted to allow the state to borrow (by issuing bonds) up to $2.6 billion to invest in our state’s future through Ohio Third Frontier.

Ohio Third Frontier. It’s not a sexy answer, and I’ve never been able to uncover the meaning behind the name. But the fact is, entrepreneurs need money to launch businesses, especially technology-based startups, which require larger up-front investments than service and retail businesses and consequently grow more jobs. And state leaders – in what a cynic might call an uncharacteristic burst of wisdom – created a program that gets capital to these entrepreneurs (and to university research & development programs and to technology expansion efforts at larger companies, but that’s a topic for another day).

This program is envied by state leaders across the country trying to enliven their own economies.

former Ohio Gov. Bob Taft was created the Third Frontier program as a way to help create the jobs of the future in high-tech industries. This was more than 10 years ago now, and Taft and legislators at the time knew it would be a long-term investment.

CincyTech is the Southwest Ohio entrepreneurial assistance program of Ohio Third Frontier and has received about $30 million since 2007. Half its funding comes from the state, which requires the other half to come from local sources – civic organizations, universities and research institutions, foundations and other businesses – as a way to validate the local support of its mission and its results. The region’s other key startup assistance programs – Hamilton County Business Center, Cintrifuse, the Brandery and the University of Cincinnati’s new technology company accelerator program– all receive operating money through these grants. In addition, CincyTech, as well as the Queen City Angels and Cincinnati Children’s, manage seed funds supported by Third Frontier.

Though the total number of jobs at Southwest Ohio startups is a little difficult to pin down, CincyTech companies alone have created 400 jobs – and counting – and the Ohio Department of Development says 16,000 direct jobs across the state can be credited to Ohio Third Frontier.

To their credit, Governors Strickland and Kasich also have embraced Taft’s Ohio Third Frontier, and this important economic driver has not fallen victim to politics, though I still worry about that all the time. How can such a forward-thinking program survive the political process?

It’s unclear whether state leaders will once again put Ohio Third Frontier before voters in 2016 when it comes up for renewal. Even if they don’t, the momentum continues to grow, and our region continues to benefit.

So when you think about the basis for the vibrant startup scene we are growing here – the talented people staying here to build companies, the jobs they are creating, and the tax base they are expanding – I hope you will keep in mind this unprecedented investment that the citizens of Ohio, in partnership with state elected officials, have made toward our economic future.

Carolyn Pione Micheli is communications director for CincyTech.

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