Study details funding to startup companies

By MARC KOVAC

VINDICATOR CORRESPONDENT

COLUMBUS — More than $121 million in Ohio venture capital and seed funding was invested in early-stage companies from 2002-06, the academic director of Ohio State University’s Center for Entrepreneurship said.

Presenting the findings Tuesday of a new study during Ohio Capital Fund’s Seed & Early Stage Summit in Columbus, S. Michael Camp also said high-tech and health-care startups will need nearly triple that total in seed funding in the next five years to establish and expand operations — and create the types of high-paying jobs Ohio needs to bolster its economy.

“We haven’t done a good enough job in the area of job creation,” added Lt. Gov. Lee Fisher, who gave the keynote at the gathering at the main OSU campus in Columbus, and who called such seed and venture capital investments the “single best thing we can do to spur dynamic growth in Ohio’s economy.”

The Ohio Capital Fund was established by the state Legislature two years ago as a means of increasing investments in early- and seed-stage companies — those that are attempting to take marketable products and services from the startup phase through full operations.

Statistics

From 2002-06, 124 companies received Ohio seed and early-stage investments, totaling $121 million, according to the results of a study conducted by OSU and presented by Camp.

Thirty-nine percent of the dollars invested have been in information technology, communications and software; 21 percent in medical devices; 15 percent in bio-pharmaceuticals; 10 percent in health-care information technology and services; eight percent in business and consumer services; and seven percent in advanced materials.

But it can take years for high-tech companies to move from laboratory to market, and 15 percent to 20 percent that start out with seed investments don’t survive, Camp said.

Taking new seed companies through early years into a growth stage in five to seven years will cost more than $2 billion. And, for every $1 in seed funding, surviving companies will need an additional $7 to succeed.

Those investments are necessary for assisting emerging industries and making Ohio more attractive for startups, Fisher said.

“These are smart investments that the state is making,” he said.