In five years, Ohio Innovation Fund has already returned more than half what state-owned institutions and other investors put in, its managing director said.
The Columbus venture capital firm has averaged an annual 30% annual return the past five years, putting it on track to return five times the investments by limited partners including Ohio State and Ohio universities. A VC fund's typical life cycle is about 10 years.
Three of 20 tech companies the Columbus VC firm backed have been acquired, and another 12 had their valuations increase – some reaching the hundreds of millions of dollars, Managing Director Bill Baumel said. Many are quickly growing revenue by several multiples annually. That's the inverse of the industry standard, in which just one in four portfolio companies survive.
"To have a majority of (a firm's first) fund be successful is almost unheard of," Baumel said.
Ohio State University committed $20 million and Ohio University $15 million to create the fund in 2012, but it didn't get started investing until the schools recruited Cincinnati native Baumel from a Silicon Valley VC firm in 2016. Kent State University and the State Teachers Retirement System later joined as limited partners, according to regulatory filings; the fund's total size is undisclosed. University representatives were not immediately available for comment.
True to its name, Ohio Innovation Fund backs tech companies within the state. Besides financial returns to the universities, the fund and member companies create boot camps and internships for students. Fueling the growth of Ohio's technology industry keeps more graduates from leaving, and entices graduates who left for coastal jobs to return.
The biggest win so far was Stirling Ultracold, an Athens-based maker of energy-efficient super-low-temperature freezers. Stirling, the DBA of Global Cooling Inc., had raised approximately $20 million in cumulative venture capital; the exact amount of some rounds had not been disclosed. Seattle-area public company BioLife Solutions Inc. acquired it in May 2021 for $235 million, according to BioLife's annual report – a more than tenfold return for all investors.
"That created 40 to 50 millionaires in the Athens area," Baumel said. Plus the manufacturer stays in Southeast Ohio, and the company is using another Ohio-based contract manufacturer to help meet demand, according to the annual report.
Able, a Cleveland-based maker of employee onboarding software, was acquired this January by Boston-based Bullhorn Inc. for an undisclosed amount, the Cleveland Business Journal reported. The startup had raised more than $10 million in venture capital.
ConnXus Inc., a Cincinnati platform for managing supplier relationships, was acquired in May 2020 for $10 million – less than the $11.3 million in cumulative VC raised over 10 years, according to Cincinnati Business Courier research – by Coupa Software Inc. in Silicon Valley. The purchase price was not disclosed at the time of the deal but was listed in Coupa's annual report. A later investor, OIF did get a return for an undisclosed amount.
Portfolio company Enable Injections Inc. raised a $215 million Series C in January, the largest VC round ever in the Cincinnati region, the Courier reported, and its medical device for under-the-skin drug delivery is being used in a $300 million-plus collaboration between drugmaker Sanofi and global investment group Blackstone Life Sciences to advance Sanofi's skin cancer treatment.
Recent news from Central Ohio companies in the portfolio includes:
- Aware, data analytics for workforce collaboration, tripled revenue last year with some of the biggest brands "on the planet" as customers, CEO Jeff Schumann told Columbus Business First this month. It's building out a new Brewery District headquarters as the staff is expected to double this year. The company aims for an IPO within five years.
- ScriptDrop Inc., the Grandview Heights maker of software for one-click prescription delivery, added at least one investor in a new round, according to a release and regulatory filing, but has not yet announced the round's closing. Revenue is doubling quarter-by-quarter following last year's delivery partnership with Uber Health, Baumel said.
- Columbus-based eFuse, a professional networking platform for the fast-growing esports industry, has grown to 60 employees and is opening a new office in the Short North, Baumel said. CEO Matthew Benson was not immediately available for comment.
- Columbus OSU spinoff DAtAnchor Inc. has grown to 15 employees and landed about 20 clients in recent months for its data encryption technology, Baumel said.
Several entrepreneurs and executives are alumni of the schools involved: ScriptDrop CEO Amanda Epp graduated from OU, and Schumann from OSU. Benson started at the venture fund as an OU intern and entrepreneur-in-residence, conceiving and incubating the startup there.
Baumel had several successful exits with his previous VC firms in California and the Midwest, and employs a hands-on approach in the OIF portfolio. He often uses "we" when talking about a given startup's operations. The level of engagement evolves as the company matures: quarterly board meetings at Aware these days, as opposed to weekly coffees with Benson.
"We respect the founders, and we treat the company as if it were our own," he said. "We want that founder to be successful. We want that company to reach its full potential, and we will help any way we can to make that happen.
"The entrepreneur, because they trust you and enjoy working with you – the more they open up, the more we can help them."
