Two leading business figures from Greater Cincinnati have teamed up with two of Ohio’s top venture capitalists to launch a new state-specific growth capital investment fund that aims to reach $500 million.
Mike Venerable, who retired in January after seven years as CEO of locally based startup investment firm CincyTech, and Jill Meyer, former CEO of the Cincinnati USA Regional Chamber, are two of the four founding leadership team members for the Ohio High-Growth Investment Opportunities (O.H.I.O.) Fund. Venerable is the fund’s founding director of health care and life sciences. Meyer is chief legal officer and a founding managing director.
The fund completed a first close Tuesday, July 2, receiving commitments for $108 million, according to a Securities and Exchange Commission filing. The filing stated the $500 million target figure, according to an investor presentation.
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Two of Ohio’s top venture capital leaders are the other founding leaders of the O.H.I.O. Fund. Mark Kvamme, co-founder and managing partner of Columbus-based Drive Capital, is CEO and chief investment officer of the O.H.I.O. Fund as well as a founding managing director. Ray Leach, founding CEO of Cleveland-based JumpStart Inc., is chief operating officer and founding managing director for the new fund.
The fund’s founders aim to create an impact fund to take advantage of high-growth investment opportunities in Ohio’s $861 billion economy.
“I’m drawn to things that can have a tangible, significant impact,” Meyer said. “We believe The O.H.I.O. Fund can positively impact Cincinnati’s and Ohio’s economy for decades. Given Ohio's momentum, we believe in what’s here now and anticipate incredible opportunities will come down the road."
Its founders intend to invest about one-fourth each in Cincinnati, Cleveland and Columbus, with the remaining 25% spread around the rest of the state.
“The opportunity for Cincinnati is incredible,” Meyer said.
The fund plans to build a network across Ohio of groups working together to spur growth in the state, Meyer said.
The idea behind the O.H.I.O. Fund is to invest only in Ohio companies and work as an evergreen fund. That means it will reinvest its returns rather than pay them out to investors, enabling the fund to continue investing in Ohio companies.
The fund will invest in companies, funds, real estate and infrastructure projects with strong growth potential that can drive economic impact. It will invest across a variety of industries, with artificial intelligence opportunities being a primary area of focus. Companies and other entities in which it invests have to be based in the state or have a significant presence in Ohio.
The founders see a huge opportunity in Ohio.
Venerable told me in March when he was retiring from CincyTech he sees Ohio as offering unique investment opportunities. He mentioned aerospace, auto, energy and health care as areas ripe for investment. The key: “All are being re-engineered by data and by AI,” he said.
“If we re-invest in those companies, we can build them up,” he said. “And if we don’t they’ll become laggards.”
It takes capital and talent by retaining students, Venerable said.
“We need to become the most wired, connected, forward-thinking state we possibly can be,” he said. "I'm looking to scale capital, talent and infrastructure to make sure we future-proof our economy in Ohio and Southwest Ohio."
Ohio has advantages, he said, including its relatively consistent government leadership that has been pro-business over the years.
Ohio is positioned to thrive amid the global warming trend. Founders pointed out in an investor presentation its northern location in the U.S. is an advantage and it sits on an enormous resource of water. It has loads of engineering and other talent across the state. And it has a lot of untapped land for development.
“Ohio has a tremendous opportunity,” Meyer said. “For startups, the state of Ohio and its partners have done a great job of building seed-stage capital. We’re interested in strengthening and enabling Ohio’s private sector to invest more capital. We think there is an impressive untapped opportunity for the private sector to play a more significant role."
That opportunity for the private sector would involve investments in high-tech and high-growth companies as well as real estate and infrastructure projects, she said.
The fund’s venture capital leaders from across the state began pursuing the idea in earnest in October. Meyer, who had previously been CincyTech’s board chair, joined the group in November.
“I realized this is an opportunity for me to continue doing something I really care about,” Meyer said. “It’s about helping our economy grow to reach its full potential – in Cincinnati and across the state."
The fund is actually two funds that aim to combine for $500 million in capital, according to its investor presentation. It’s split into an evergreen fund and a smaller, typical closed-end fund that would pay investors back within a specified time. Some investors, such as banks, aren’t able to invest in evergreen funds. But both of the funds will invest in similar opportunities in Ohio.
The fund is seeking minimum investments of $500,000, according to the presentation.
The fund has already made its first investment. It bought a 148-acre property 12 miles northwest of the the $28 billion Intel plant being built on nearly 1,000 acres in New Albany, just outside Columbus. The O.H.I.O. Fund's property, aimed at commercial development, is part of the 492-acre Sunbury Business & Technology Park being developed by the New Albany Co. The fund chose the property because of its proximity to Intel and the New Albany International Business Park as well as strong workforce availability.
Investors will be able to take part in specific deals as co-investors. Some investors will participate only through the fund itself.
The fund is targeting a 20% annualized internal rate of return, according to its investor presentation.
The O.H.I.O. Fund is patterned after a similar fund launched in Singapore in 1974. The Temasek Fund invested in Singapore companies and helped its economy achieve explosive growth, expanding by 24 times its original GDP since then. It started with the equivalent of $180 million and now has $382 billion.
The fund should be a boon to Greater Cincinnati’s economy, Cincinnati USA Regional Chamber CEO Brendon Cull told me.
“The O.H.I.O Fund is big, bold and will inject significant new capital and growth into our region,” Cull said. “The fund is a welcome addition to our capital landscape in this region and in Ohio, particularly because it is focused on growth capital, which is a later stage than the startup ecosystem. We know that successful and growing regions can thrive when there is an abundance of capital across the investment continuum. Cincinnati already has many players making job-creating investments. We need more, more, more, at all levels.”
The investors, while unidentified publicly, include some big names in Greater Cincinnati.
“It’s clear to me that there is significant participation and interest from some of our region’s biggest investors and top companies,” Cull said. “That bodes well for the fund but also for the resulting investment strategy.”
