Here's a novel concept: philanthropic organizations joining
forces to transform a flagging regional economy by fostering
entrepreneurship. Sound improbable? In Ohio, 80 entities formed
Fund for Our
Economic Future to do just that.
The three-year initiative launched in 2004 has raised $35
million, which is earmarked in part for fostering entrepreneurship
and business formation in sectors with strong growth potential.
"Our goal is to shift the regional economy from traditional
industries to promising areas such as advanced energy,
nanotechnology and electronics," explains Bradley Whitehead,
who oversees implementation of the fund's initiatives.
Rather than investing directly, the fund bestows grants on
nonprofit venture development entities like BioEnterprise
and JumpStart. These, in turn, offer assistance to early stage
ventures in the region, ranging from lending expertise to providing
funds. JumpStart, for example, advises and funds companies across
industry sectors, investing between $50,000 and $500,000 in its
portfolio companies. BioEnterprise focuses on offering a broad
spectrum of assistance to companies in the health-care sector and
on gaining recognition for the region among the national VC
community. In the past three years, BioEnterprise has received
$3.65 million from Fund for Our Economic Future--money it has
employed to help early stage firms build management teams,
commercialize innovations and reach out to investors.
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"BioEnterprise provided us with three major areas of
support," says J. Lloyd Breedlove, 58, former CEO and current
board member of Imalux, a medical imaging device company that
benefited directly from the fund's grant to BioEnterprise.
"They helped with early fundraising, including connecting us
with potential investors; assisted in preparing materials; and made
introductions to our current CFO and chief medical officer, as well
as to our investment bank and to key contacts at medical
facilities."
The trickle-down approach is also paying off for the region as a
whole, says Baiju Shah, president and CEO of BioEnterprise.
"Prior to 2002, Cleveland was barely a blip on the radar for
attracting health-care VC funding," he reports. "We were
getting roughly $30 million a year through the [dotcom] bubble.
Last year, we attracted $171 million."
While Fund for Our Economic Future remains something of an
anomaly in the region, other would-be hotbeds of innovation are
taking notice. "We've had interest from lots of people
looking for the magic elixir," says Whitehead. "We've
heard from Buffalo, Houston, Toledo and even Ireland, but we
haven't seen anyone pull it together yet."