20110117-NEWS--1-NAT-CCI-CL_--
1/14/2011
4:26 PM
Page 1
$1.50/JANUARY 17 - 23, 2011
VC groups struggle to raise funds Economy improves, but investors leery of portfolios’ so-so returns By CHUCK SODER csoder@crain.com
MARC GOLUB
Mayor Frank Jackson speaks on Friday at the official groundbreaking of downtown Cleveland’s new medical mart and convention center.
JACKSON: FIX SCHOOLS FIRST Mayor says, ‘If we don’t deal with education ... the benefits derived from these other projects will be short-lived.’ By JAY MILLER jmiller@crain.com
F
rank Jackson had every intention of using a meeting with a reporter to advance his administration’s strategy for attracting new public and private investment to the city. And for much of the 90-minute interview in his corner office in Cleveland City Hall, the city’s mayor laid out a vision for development — much of it facing Lake Erie and the Cuyahoga River — that he hopes will follow the more than $1 billion in downtown construction already under
way or expected in the form of the Flats East Bank mixed-use project, the convention center/medical merchandise mart and the planned casino. But as Mayor Jackson talked about the dirt beginning to be moved on the Mall for the convention center and in the Flats, the conversation turned to what he believes is a major roadblock the area faces — a business and civic community that in his view is unwilling to “tackle education.” The mayor said he was frustrated that he has received no response from community leaders to his annual calls for See JACKSON Page 5
OUR QUOTABLE MAYOR Cleveland Mayor Frank Jackson emphasized in a recent interview with Crain’s that more focus must be placed on the success of area schools. Some of the mayor’s thoughts: ■ “I put the subject (of the schools) on the table every year (in his State of the City address) and I don’t get a peep. I don’t even get criticism.” ■ “The hard, substantive decisions that are left that will ensure the future of the (region) and guarantee population growth — education — (the leadership community as a whole is) refusing to do.” ■ “What (other districts) do ... is compare themselves to Cleveland: ‘Look how much better we’re doing than Cleveland.’”
Stephen Haynes calls it a “gray period.” Venture capital groups in Northeast Ohio and across the nation are finding it hard to raise money despite an improving economy, according to Mr. Haynes, CEO of investment firm Glengary LLC in Cleveland, and other members of the local venture capital community. The main reason: The recession made it hard for them to sell the companies in their portfolios, which is how venture capital groups make money. And without a track record of making money, it’s hard for venture capital groups to attract new capital. Venture capital firms that recently have produced solid profits will be able to attract new money, but firms that are new or that have produced poor returns are in for a big challenge. In the middle are firms with portfolio companies that are young but promising. They may need to wait until they can sell those companies before they can raise more money, Mr. Haynes said. “We’re kind of in that gray period” as an industry, he said. See VC Page 6
ON THE WEB Crain’s podcast goes behind the news On this week’s show, available at Crains Cleveland.com/ podcasts, we tackle the top stories in this week’s paper, plus the future of the medical mart and convention center.
Eaton suit over trade secret theft may be dead due to improprieties Lawyer’s contacts with judge lead to dismissal of company’s case By DAN SHINGLER dshingler@crain.com
03
Eaton Corp. may have made a billion-dollar blunder in Mississippi. A lawsuit Eaton filed against a competitor over stolen trade secrets was thrown out last month by a
Mississippi circuit court that said the company allowed its attorney to influence a judge improperly. The outcome leaves Eaton preparing to appeal the ruling before the Mississippi Supreme Court in the hope that it can re-file its case. Eaton spokesman Gary Klasen
said last week the company could not comment on estimates by legal observers that the lawsuit might have been worth as much as $1 billion to the company had a ruling been made in its favor. Eaton did not ask for a specific dollar amount in its suit.
Now it stands to receive nothing in a case at least one observer familiar with the Mississippi courts says Eaton could have won on the facts. “There was a lot of merit to Eaton’s case,” said Philip Thomas, a Jackson, Miss., civil litigation attorney and author of a blog called the Mississippi Litigation Review and Commentary. But, because of the improprieties between the judge
and the lawyer Eaton hired, the merits of Eaton’s claims were not a factor in the court’s decision to dismiss the case, Mr. Thomas said. “He basically said, ‘Regardless of your claims, your conduct was so bad that your case is going to be thrown out.’” It is a legal journey Eaton would have rather avoided. See EATON Page 16
0
NEWSPAPER
71486 01032
6
SPECIAL SECTION
2010 NEWSMAKERS We identify and profile 10 Northeast Ohioans who made the biggest news and moves last year ■ Pages 11-15 ■
Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 3