Beyond the broad notion that the region is lagging other regions in venture investing, the investment professionals pointed to two sectors of venture investing, in particular, that need improvement.
One is corporate involvement. Other regions have major corporations making major commitments to investing in venture capital funds, which gives them a look at new ideas developing in their industries.
Scott Shane, a professor of economics at Case Western Reserve University’s Weatherhead School of Management and managing director of Comeback Capital, a Shaker Heights VC firm, wondered why Northeast Ohio doesn’t have a major corporate investor or two in startup businesses: “The first thing I would say to (corporations) in Northeast Ohio is, ‘Where’s our Heritage Group?’ Where’s the big company that’s going to put money into early-stage companies?”
Heritage, based in Indianapolis, is a private firm with a portfolio of companies specializing in heavy construction and materials, environmental services and specialty chemicals, with annual sales of over $800 million, according to Dun & Bradstreet. It has invested $65 million in tech startups since 2018, according to Inside Indiana Business, a statewide media business.
Some local firms are looking to invest in young companies.
The Goodyear Tire & Rubber Co. in 2020 created Goodyear Ventures in Akron and committed $100 million to invest in what it calls “mobility solutions,” which includes everything from new tire materials to robots that happen to have wheels.
In 2017, KeyCorp jumped into the startup field with a four-year, $24 million commitment to JumpStart to support programs that build business ownership. Then, at the annual meeting of North Coast Ventures earlier in March, KeyCorp CEO Christopher Gorman said the banking firm intends to have an increasing role in the young field of financial technology, or fintech.
“Fintechs are going to be a part of the fabric of banking for the future,” he said. “At Key, we’ve been ahead of this, we’ve been focused on this, for 15 years. We feel we’re part of the ecosystem.”
Corporate venture capital, though, is more focused on advancing corporate needs, rather than those of its hometown. Still, spinouts funded by the corporation tend to stay close to home.
“I think startups win when the region’s corporations are focused on innovation,” said Todd Federman, managing partner of North Coast Ventures, which has invested more than $60 million in 57 Midwest companies over the last 12 years. “They’re thinking about developing technology, partnering on technology and buying technology, and all of that is good for a startup ecosystem.”
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