Ohio Third Frontier will continue supporting the operating budgets of regional entrepreneurial support organizations — including JumpStart Inc. — through next year, but commissioners want to start planning in earnest for when state funds run out.
Commissioners approved the $25 million "optional" third year Tuesday for 2022, reaffirming a vote from November 2019 for a three-year award with the final year conditioned on performance.
There's about $101 million left out of the original $1.2 billion Third Frontier fund, which has survived longer than first projected because it's starting to see loan repayments and investment returns. The Ohio Development Services Agency runs the program intended to foster job-creating technology and biotech companies.
Cleveland-based JumpStart is one of six regional organizations it supports, requiring at least an equal amount of matching funds. Third Frontier loans or grants also have seeded early stage investment funds for the programs.
Matt McClellan, assistant director at the agency, told commissioners in Tuesday's teleconference meeting that staff will "soon" bring forward a plan for the ongoing sustainability of the programs.
"That needs to be in the front of our minds as commission members, whether we're doing what we need to do to make sure the sustainability of this program is solid," said David Scholl, partner at Athens VC firm Athenian Venture Partners.
The operational grants go toward staff and other expenses for the groups to evaluate startups, guide them through structured business training, obtain discounts on accounting and other professional services, and make introductions to potential mentors and customers.
Amounts approved Tuesday for 2022:
- JumpStart Inc.: $10.7 million, divided into $8.3 million for services to startups in Cleveland and Northeast Ohio, and $1.9 million for services in Toledo and Northwest Ohio.
- Rev1 Ventures, Columbus: $4.7 million.
- CincyTech, Cincinnati: $4.5 million for Cincinnati and Southwest Ohio.
- Dayton Miami Valley Entrepreneurs Center, Dayton: $3.6 million.
- TechGrowth Ohio, based at Ohio University in Athens: $1.7 million for serving Southeast Ohio startups.
The money slated for northeast and northwest Ohio will be divvied up among about 14 organizations including Manufacturing Advocacy and Growth Network (MAGNET) in Cleveland, Bounce Innovation Hub in Akron and Youngstown Business Incubator, said Ray Leach, CEO of JumpStart, the venture developer in Cleveland.
Tuesday's commission vote "does give us assurance that there's a little more time to figure out what's going to happen in calendar 2023," Leach said about the next step for Ohio Third Frontier funding.
Also on Tuesday, the commission approved $400,000 in technology-validation grants to help three Cuyahoga County startups develop and commercialize their technologies:
- Edifice Analytics Inc., Cleveland Heights: $100,000 for software that will provide virtual building energy audits.
- NeoIndicate, Cleveland: $150,000 for a near-infrared molecular-imaging agent to help detect and image malignant tumors.
- Zehna Therapeutics, Cleveland: $150,000 for an oral therapeutic to slow the progression of chronic kidney disease.
And the commission approved $3 million in funding for the state's Diversity & Inclusion Technology Internship Program, which matches companies with diverse college students.
Cleveland reporter Mary Vanac contributed to this report.
