CSU's Center for Economic Development compared Cleveland to 32 similar metropolitan areas - and then threw in Akron, Canton and Youngstown. Innovation was measured in factors like the percentage of people in high-tech jobs, research and development at hospitals and universities, and numbers of patents issued. Cleveland did well; even Akron did well among much larger cities. But when measuring entrepreneurship factors like number of startup companies and amount of venture capital, northeast Ohio lagged behind. Center Director Ziona Austrian.
Ziona Austrian: So overall we rank 10th out of 36 in innovation. However, when looked at entrepreneurship, we are ranked 23rd. So as a region - and its true in Akron, Canton, And Youngstown - so as a region we are doing much better in research than we are in entrepreneurship.
Does that mean we might be doing the basic research but just not turning it into companies?
Ziona Austrian: I think we do a lot of research here historically in health care and materials and research-based manufacturing but we were never able to turn it into new companies, into entrepreneurship.
Professor Austrian cites the example of Kent State University inventing liquid crystals but leaving it to the Japanese to take LCD's to market. But with the help of local governments and foundations that picture is starting to change. The president of the business development group BioEnterprise, Baiju Shah, notes that Cleveland saw $31 million of investment in health care companies in 2004 but much more the next year.
Baiju Shah: 2005 we had a record year for this region that put us at a peer level with Minnesota and North Carolina - regions that are considered to be at the leading edges of not just innovation, but entrepreneurship. This region drew in $170 million equity funding to finance 16 different companies that have been nurturing through the pipeline, through the collaboration of a number of actors in this community.
Shah says it's local collaborations of government, universities, hospitals and foundations and the private sector that is making a difference. But he points out that wealthy Clevelanders are not doing enough to step up and invest as venture capitalists or the so-called investor angels. One non-profit group that provides financial help and expertise to startups is Jumpstart. Its CEO, Ray Leach, says they don't have enough money to invest in all the worthy prospects.
Ray Leach: The cream at the top of our cup is too thick and deep. And because there aren't enough investors who are willing to put in a quarter million, half a million, three-fourths million into emerging companies what we end up doing, we're struggling because there are 50 companies.
Business incubators that cities provide to grow companies are beginning to enter a new realm. Akron officials have invested in a privately held incubator - in Israel - to guarantee that those graduates set up shop in the Akron area. Even tiny Beachwood has gone overseas to lure companies to its business center. Tom Sudow of the Beachwood Chamber calls that "in-sourcing."
Tom Sudow: It's not fair to move someone from Independence to Beachwood. It's a net gain (of) zero for the region. As I'm often quoted as saying, 'it's rearranging the deck chairs on the Titanic.' We don't need to do that anymore here. I'd rather spend the money bringing a company in - and so would the city of Beachwood - and growing that company and getting a solid company rather than moving somebody from Westlake or Independence to Beachwood using tax abatement. It's cheaper doing it our way.
Suburbs like Beachwood were once satisfied attracting retailers, but Sudow says they now focus on industries like biomedical, alternative energy, and aerospace. Mark Urycki, 90.3.