SW Ohio Venture Capital Activity Up 34 Percent

Report shows reason for optimism about startup scene

Rodney Williams left Procter & Gamble in September when it looked like his startup technology company was really going to start up.

He didn’t tell his mother right away though. “I knew she’d be upset that I was giving up a great job at a big company to do something so risky.”

Williams had been working on his company, lisnr, since early this year. But it was only after he received an equity investment from CincyTech in August that he felt comfortable leaving his P&G job and leaping into entrepreneurship.

His company is creating a mobile technology that allows musicians and music labels to create exclusive content in order to turn listening into an interactive experience.

He and his two co-workers became the first tenants of the incubator at Cintrifuse, a nonprofit organization that is working to turn the region into a magnet for start-ups.

Williams’ story illustrates one way the region’s startup ecosystem can work: A corporate pillar company such as Procter attracts or retains talented people here, a local investor provides funding for an idea to grow, and a hub of educational and physical resources supports this growth.

Williams’ story played out in 2012, but a statewide survey released last month found that Southwest Ohio was already growing vigorously in 2011.

The amount of venture capital invested in Southwest Ohio jumped 34 percent in 2011 from the year before – to $70.2 million, according to the Center for Entrepreneurship at the Ohio State University Fisher College of Business, which conducts an annual analysis of startup activity in the state.

The region also saw a 34 percent increase in the number of technology companies that received a seed-stage or venture capital (later stage) investment in 2011: to 36.

That compares to a 22 percent drop in statewide activity, to $440.9 million, and a 23 percent increase in U.S. activity, to $28.7 billion, in 2011. In the past three years, the amount of venture investment here has increased 220 percent, while the national activity has remained flat.

The four biggest investment “rounds” in Southwest Ohio last year were:

• Akebia Therapeutics in Blue Ash, which raised a $17.9 million round last year and has raised $55 million to date for its anemia and vascular disease treatment programs.
• Bioformix in Loveland, which raised a $13.6 million round. It now has 20 employees and several labs here developing a broad new class of sustainable, environmentally and biologically benign monomers, resins and polymers.
• AssureRx Health in Mason, which raised a $10 million round for a total of $27 million raised to date, has 110 employees, and is seeing strong revenue growth for a test that helps doctors determine the proper drugs and dosages for patients based on their metabolism.
• Thinkvine in Blue Ash, which raised an $8 million round. The marketing analytics software company has more than 40 employees and is aggressively adding new customers. There are dozens and dozens of companies here these days that fall between Akebia and lisnr. As the Fisher College report shows, we are creating more startups, attracting more capital and generating jobs and wealth. CincyTech’s portfolio of 41 companies, for example, has created 370 jobs through Q3 – up 56 percent from a year ago – at an average salary of $77,000.

Our region has reason for genuine optimism that startup technology companies will drive our economic growth. And Rodney Williams’ mom has reason to feel a little better about her son’s risk taking.

For the full 2011 Ohio Venture Capital Report, CincyTech’s latest Annual Report, and details on the CincyTech Annual Big Breakfast Meeting and Startup Showcase on Thursday, visit www.cincytechusa.com.

Carolyn Pione Micheli is communications director for CincyTech, a seed-stage investment firm that receives support from Ohio Third Frontier and dozens of organizations and individuals in Southwest Ohio.