Taft Applauds Success of Third Frontier Investments
CLEVELAND, OHIO (November 23, 2004) - Governor Bob Taft today announced that $12 million in State of Ohio grants have helped 12 seed and validation funds leverage investments of more than $145 million in 53 early-stage Ohio companies since 2000. Taft made the announcement at The Cleveland Clinic during a product demonstration conducted by Cleveland Clinic spin-off company, Ohio BioGel. He also announced that $5 million in Third Frontier Validation Fund and Seed Fund Initiative (VFSFI) grants will be awarded to five investment funds throughout Ohio, including CCF Innovations, the capital and commercialization arm of The Cleveland Clinic Foundation.
"We are committed to providing early stage capital to get research ideas to the market and launch new companies that will become the large, successful employers of tomorrow," said Taft. "By creating the high-paying entrepreneurial and research jobs of the 21 st century, the Third Frontier Project is reinventing the economy in Cleveland and all over Ohio."
Third Frontier Validation Fund and Seed Fund Initiative grants increase the dollars available to grow early-stage Ohio technology companies. According to Chris Coburn, executive director of CCF Innovations, Third Frontier VFSFI grants will allow his organization to expand its portfolio and invest in companies with technologies that have the potential to revolutionize healthcare. A previous Third Frontier grant winner, CCF Innovations already has funded 13 spin-off companies formed out of research projects conducted at The Cleveland Clinic.
"Due to the higher-risk nature of validation and seed funding, investors often avoid early-stage rounds of investment until a company has proven its technology's viability and marketability. As a result, many start-up companies fail to attract the necessary capital, and innovative products are regrettably abandoned," Coburn said. "With State-backed Third Frontier Validation Fund and Seed Fund Initiative grants, CCF Innovations will be better able to fill this gap and fund pioneering companies like Ohio BioGel. The goal is to make the company ready for its first round of institutional venture capital financing."
Ohio BioGel is an example of a company seeking early-stage funding to commercialize its technology. Formed earlier this year as a spin-off of The Cleveland Clinic, Ohio BioGel has developed patent-pending hyaluronan-based hydrogels that mimic normal tissues such as cartilage and have a number of potential applications in plastic surgery, facial reconstruction, orthopedic repair, non-orthopedic tissue engineering, scar prevention and drug delivery.
The 2005 Third Frontier Validation Fund and Seed Fund Initiative Award recipients are:
- Blue Chip Validation Fund (Cincinnati), a new pre-seed fund for the successful Cincinnati Venture Capital firm, received $1 million and plans to invest in approximately 10 companies. Formed in 1990, Blue Chip's first fund invested in 22 companies, of which two-thirds were Ohio-based and most were early stage. Blue Chip is returning to investing in very early-stage companies with this new fund.
- Cleveland Clinic Foundation (CCF) BioValidation Fund (Cleveland) received $1 million and plans to invest in eight to 10 companies to support activities that further demonstrate the potential of technologies prior to the initiation of clinical trials. A previous Third Frontier fund recipient, CCF has helped spin off 13 companies in which it holds equity, 11 of which are based in Ohio. To date, these companies have secured nearly $38 million in additional investment.
- Draper Triangle Partners II, LLP (Cleveland and Pittsburgh) received $1 million and expects to invest in 25 early and seed stage technology companies. A Midwest-based fund of Draper Fisher Jurvetson, a Silicon Valley-based leader in seed and early stage investing, the $40 million-plus fund's portfolio focuses on compelling advanced software, medical device, automation technology, MEMS and nanotechnology companies in Ohio and central and western Pennsylvania. Draper Triangle Partners is opening an office in Cleveland, and a new office in Cincinnati early next year.
- Ohio TechAngels Fund (Columbus) received $1 million. The fund is a contributed-capital and "sidecar" angel fund with 68 private equity investors from throughout Ohio investing in early stage technology opportunities. Ohio TechAngels is central Ohio's first angel fund and the largest in the upper Midwest. In addition to providing the capital for the $2.5 million plus fund, the angels provide mentoring for management and are statewide networking resources.
- Queen City Angels (QCA) First Fund II (Cincinnati) received $1 million and plans to invest in 10 to 12 high-growth technology companies. The fund makes investments in very early stage companies and encourages others to co-invest. The QCA First Fund I has invested $285,000 in three Ohio companies, resulting in total Ohio investments of $1.745 million.
"Availability of this type of capital not only helps Ohio companies grow, but also helps us showcase Ohio as a hotspot for new technology companies," said State Development Director Bruce Johnson. "This is just one way we are ensuring Ohio has the type of business environment in which good ideas and good companies can thrive."
Unveiled by Governor Taft in February 2002, the Third Frontier Project is a ten-year, $1.1 billion initiative to expand high-tech research capabilities, promote innovation, encourage company formation and create high-paying jobs in the State of Ohio. It is the State's largest-ever, technology-based economic development investment, awarding more than $220 million to Ohio-based companies, universities and research organizations to date.
