Venture Capitalists and Social Safety Net Advocate Weigh in on Ohio Economy
There’s never been a better time to start a company in Ohio – especially a technology company. That’s the bottom line of a study done for VentureOhio, a group of venture capitalists.
But VentureOhio chairman John McIlwraith of Allos Ventures of Cincinnati says there’s a problem with funding startup entrepreneurs in Ohio.
“There’s about $520 million of need over the next 18 months from those startup companies moving to the next stage," McIlwraith said. "There's about $260 million of capital available, and that capital is going to be deployed not just in Ohio but throughout the Midwest and potentially across the country.”
Venture capitalists and angel investors note that some of the most successful companies in recent memory were startups just a few decades ago. Mark Kvamme is probably the most well-known venture capitalist in Ohio, having served as the first head of Gov. John Kasich’s public-private entity, JobsOhio. Since leaving JobsOhio, he’s started his own venture capital firm, Columbus-based Drive Capital.
“A rising ship lifts all boats," Kvamme said. "So, for example, here in Ohio, we’ve now funded four companies. By the end of the year, those four companies will have a total of 100 employees.”
It should be noted that of those four companies, only two are based in Ohio – the others are based in Michigan and Illinois.
And that leads to a major complaint of people who’ve been concerned about job creation in Ohio in the last few years, including advocates who work with people in safety net programs. They gathered recently for a conference that featured Jared Bernstein, a former adviser to Vice President Joe Biden. He’s now at the Center on Budget and Policy Priorities, a left-leaning think tank, and he says the state needs more and better jobs.
“And if the venture capitalists can help in that regard, great," Bernstein said. "But one of the problems that we’ve had in this recovery is that folks at the very top of the income scale have claimed a disproportionate share of the growth and they’ve done so without creating enough employment and certainly without creating enough quality employment.”
The venture capitalists say quality employment will come along when entrepreneurs have success. But when asked if there are any specific policies they want enacted, they don’t name any.
However, Bernstein says if they have ideas in mind, they know how to get them done.
“What I worry about is their disproportionate non-transparent influence on politics," he said. "And it looks to me like that's getting a lot worse before it gets better.”
Frank Samuel is the president of Venture Ohio, and one of the creators of the Third Frontier, Ohio’s high-tech development initiative. He says while venture capitalists may have money, they don’t have political connections.
“This is a new group," Samuel said. "I think we’re still at an early stage of developing our relationships. And so I think to say that we have too much influence is maybe a criticism I’d like to have in 10 years, but not now.”
While the first ever Venture Ohio report touts over $149 million was invested into 129 mostly high-tech companies last year, other studies have shown that non-skilled and less educated workers in Ohio are still struggling in this economy.