Tim Schigel’s business trip to the West Coast next week has at least one specific goal: to meet and network with former Cincinnatians living in the Silicon Valley area and potentially recruit them to move back home and launch new startups.
The effort, which Schigel has coined “Fund Your Way Home,” goes beyond just simple conversation. Schigel, who serves as managing partner of Over-the-Rhine-based venture capital firm Refinery Ventures, is putting money behind the effort: up to $3 million to start and scale the companies to a Series A type raise.
The candidates — known as boomerangs, or entrepreneurs who return to their hometowns after stints away — are among the best types of leaders to raise Cincinnati’s startup profile, he said.
“I've never heard of anybody else who's done this,” Schigel told me. “It has potential to be more effective than any economic development program (our region) has done.”
Refinery, specifically, is looking for people interested in starting a company themselves — partnering, for example, with technologists out of the University of Cincinnati — or joining a company that's nascent, or just starting to show signs of future potential.
That plays right into Schigel's, and Refinery’s, main thesis: The region has plenty of top-tier talent, just not enough people who know how to scale hypergrowth companies.
Refinery will fund the boomerang's new company immediately, Schigel said, putting in the first $500,000 for launch.
Another $2.5 million is pledged to get the company Series A ready.
An invite-only dinner Oct. 18 in Menlo Park is just the first step.
“Most people work in companies that are growing maybe 5% to 10% a year. It's predictable, and it's managed. They don't understand this process,” he said. “We're looking for people who’ve seen what it's like to grow from $0 to $10 million, or even $10 million to $100 million. It's managed chaos.”
Universities, like UC, make ideal partners in the effort, Schigel said. There’s potential to spin out intellectual property being developed on campus into new ideas.
Schigel, to that effect, is piggybacking off a trip Kate Harmon, executive director of UC’s Center for Entrepreneurship, had planned. Harmon is taking eight students out to meet with UC alumni living on the coast. During the inaugural trip, which she hopes will be an annual occurrence, the students will get to champion the work they’re doing back home.
Harmon said UC is being more deliberate about connecting with founders from UC and Cincinnati. The idea is to get them more engaged.
“We want to start weaving all these dots together,” she said. “With the grand opening of our Digital Futures (building, located in the Cincinnati Innovation District), we want to do more in terms of bringing in experienced entrepreneurs and VCs, so they can see the faculty research early.”
Schigel also sees “Fund Your Way Home” as an ongoing campaign. Refinery is using its traditional pool of capital, which it uses to invest in "early scale" companies, to finance the effort.
Refinery in December closed a nearly $37 million Fund II, more than double its first fund. Schigel said Fund III could come sometime in 2023. He did not offer a target amount.
“This is going to be a key part of the story (for the fund),” Schigel said. “If we fund 12 companies, I imagine three, or maybe 20% of the portfolio, being funded like this.”
So far, Schigel has only tested this boomerang thesis. It certainly worked with companies like Astronomer, which raised a $213 million Series C round in March, catapulting it to likely unicorn status. CEO Joe Otto served stints at California-based Greenplum and Alpine Data before he joined Astronomer as CEO in 2018. There are other similar stories in the Refinery portfolio.
While the highest concentration of potential boomerangs likely live on the West Coast, Schigel could also tap cities like Boston and others for talent.
“One of the key components, too, is the focus is on quality, not quantity,” he said. “I'm not looking for 30 of these. We need maybe three. If we could create three more Astronomers….we need to keep that pipeline going.”
