the 2008 venture capital report
the annual survey of venture investing activity across the cleveland plus™ region of ohio
In 2008, more companies in the Cleveland Plus region received investment than in any of the past four years. In a year that will be remembered for the national financial and
VENTURE Capital ADVISORY task force
economic slowdown, this positive trend demonstrates that the Cleveland Plus region continues
Tim Biro, Ohio Innovation Fund
Dorothy Baunach, NorTech
its purposefully conceived role as a nationally significant center for innovation and growth. While
Greg Blonder, Morgenthaler Ventures
nationally there was a four percent decline in the number of investments in 2008, the Cleveland
Becca Braun, JumpStart Inc.
Plus region actually experienced a five percent increase. It is this steady activity that leads us to believe that our regional goal of ensuring that $1.2 billion of venture capital is raised by Cleveland
Melford Carter, Ohio-Midwest Fund Chris Coburn, Cleveland Clinic Foundation
Plus area companies over five years (beginning in 2007) will be met. Completing the second year
Paul Cohn, Fort Washington Capital Partners
of this ambitious goal, companies have raised $577 million, or 48 percent of that five year goal.
Mark Coticchia, Case Western Reserve University
Other highlights of this report include:
Lorelei Davis, Frantz Medical Ventures
• 73 companies received $259 million in investment capital. The dollar amount is a decline from 2007, largely because of a few significant non-recurring later and growth stage investments.
Michael Goldberg, Bridge Investment Fund, LP William Grimberg, Consumer Innovation Partners Jack Harley, JWH Group, Inc.
• 60 percent of the capital raised in 2008 was in the Healthcare sector, demonstrating this region’s status as a national center for healthcare innovation and entrepreneurship. • With 27 Healthcare venture firms now located in Ohio, the state is one of the top five states in the nation in terms of Healthcare venture firms having offices established within its bounds. • Cleantech, which consists of the Energy, Advanced Materials, and Environmental sectors,
Steve Haynes, Glengary Ventures LLC Joe Hudson, OneEarth Capital James Ireland III, Early Stage Partners, LP Don Knechtges, GLIDE/Lorain County Community College Fund Ray Leach, JumpStart Inc. Floyd D. Loop, M.D., Radius Ventures
more than doubled the investment dollars from 2007 to 2008, leveraging the region’s
Chris Mather, TechLift/North Coast Opportunities Technology Fund
strengths in materials-based sciences and manufacturing.
Kevin McGinty, Peppertree Capital Management, Inc.
• Seed and early stage investment dollars increased by ten percent, demonstrating a steady pipeline of innovation and continuing development of the venture capital continuum.
Joe Michael, Fort Washington Capital Partners Bill Mulligan, Primus Capital Funds Don Murfin, DCC Growth Fund
• 14 firms from outside the region made their first investment here in 2008.
Jonathan Murray, Early Stage Partners, LP
Along with these achievements, this report highlights the progress and celebrates the successes
Clay Rankin, North Coast Angel Fund
of companies and investors in the region in 2008. These stories demonstrate the great opportunity
Barry Rosenbaum, Akron ARCHAngels
the Cleveland Plus region offers to investors at all stages of the venture capital continuum.
Scott Roulston, Fairport Asset Management, LLC
What kind of progress should we expect for 2009? While we remain concerned about the
Charlie Schliebs, iNetworks
significant national slowdown of the IPO market, and the overall near- and mid-term economic
Bill Seelbach, The Riverside Company
outlook, where crisis lies, opportunity abounds. Entrepreneurs and investors specialize in taking
Baiju Shah, BioEnterprise Corporation
advantage of opportunities (such as the strong market for strategic aquisitions of entrepreneurial
Chris Sklarin, Chrysalis Ventures
companies), and the Cleveland Plus region is no exception, offering continuing opportunities for
Jon Snyder, Arboretum Ventures
successful innovation and growth.
Karen Spilizewski, RiverVest Ventures Bill Stuart, Portal Capital Mike Stubler, Draper Triangle Ventures
Dorothy Baunach
James Ireland III
President and Chief Executive Officer, NorTech
Managing Director, Early Stage Partners, LP Chair, NorTech Venture Capital Advisory Task Force
Bill Trainor, Mutual Capital Partners Eric Von Hendrix, MWV Pinnacle Capital Fund, LP Brad Whitehead, Fund for Our Economic Future Bob Williams, Roulston Ventures Neil Wyant, Everett Partners, LTD. Wayne Zeman, MAGNET
Ray Leach
Baiju Shah
Chief Executive Officer, JumpStart Inc.
President, BioEnterprise
More Northeast Ohio companies received investment in 2008 than in any of the past four years. Cleveland Area Venture Investments $ Millions
Companies Financed
124
260
157
318
259
42
56
51
71
73
2004
2005
2006
2007
2008
2004
2005
2006
2007
2008
Source: Dow Jones VentureWire; Venture Source; Private Raise, LLC; BioEnterprise; JumpStart Inc.; Ohio Department of Development; TITC
Investments by Stage (2004-2008)
Building Pipeline Number of Companies by Stage of Financing
Growth
Early
Seed
$ millions
84
438
600
# of deals
164
122
47
Avg. deal size
0.51
3.59
12.77
14
22
8 16
27
29
8
1 Growth
15
early
19 22
26
27
29
33
SEED
2004
2005
2006
2007
2008
Investments by Sector Healthcare Services, Medical Information Systems, & Other
Agriculture
Business & Consumer Products & Services
Biopharmaceuticals
Number of Investments By Sector [2004-2008]
Information Technology
Medical Devices & Equipment
Equity Investments by sector
Biopharmaceuticals
Healthcare Services, Medical Information Systems, & Other Business & Consumer Products & Services
[$ Millions 2004-2008] Medical Devices & Equipment
Advanced Specialty Energy Materials & Chemicals
Agriculture
Information Technology Energy
Environmental
Environmental Advanced Specialty Materials & Chemicals
Healthcare n 33 Healthcare Services, Medical Information Systems, & Other n 28 Biopharmaceuticals n 81 Medical Devices & Equipment
Healthcare Cleantech n 38 Advanced Specialty Materials & Chemicals
n 68 Information Technology
n 17 Energy
n 55 Business & Consumer Products & Services
n 5 Environmental
n 1 Agriculture
n $249 Healthcare Services, Medical Information Systems, & Other n $228 Biopharmaceuticals n $247 Medical Devices & Equipment
Cleantech n $48 Advanced Specialty Materials & Chemicals
n $148 Information Technology
n $49 Energy
n $147 Business & Consumer Products & Services
n $3 Environmental
n $.32 Agriculture
Incentives for Investors
X
G The Ohio Capital Fund, supported by the State
Opportunity Taken
of Ohio, has committed over $98 million to 18 venture funds to date. Eight funds managing
Funds under management of firms taking advantage of Ohio Capital Fund incentives to establish a new Ohio presence
over $600 million have taken advantage of Ohio Capital Fund incentives to establish a new presence in Ohio.
G The Ohio-Midwest Fund, comprised of $102 million from OPERS and Credit Suisse, has now committed $72 million to 12 funds.
G The third and newest fund, the NEO Capital Fund, will commit capital to venture capital firms that have or establish a presence in Northeast Ohio.
$255
$330
$624
2006
2007
2008
X
G The Ohio Technology Investment Tax Credit program allows individual investors in qualified
Source: Ohio Capital Fund
technology-based Ohio companies to reduce their
X
taxes by 25–35 percent of the amount invested.
Featured Deals
Tursiop Technologies
Ovation Polymers
PartsSource
Brulant
Tursiop Technologies is
Ovation Polymers, based in Medina,
Founded in 2001, PartsSource is
Brulant, a digital marketing
commercializing a novel magnetic
Ohio, is at the leading-edge of
the nation’s only alternative parts
firm, has been growing steadily
resonance imaging (MRI) coil that
polymer compound innovation. The
aggregator for hospital equipment
since it was founded in 1989.
will greatly increase MRI resolution,
company’s breakthrough polymer
parts. The company supports
Brulant
allowing clinicians to capture
products are used in electronics,
over 2,500 different makes and
provides
more detailed images or use less
optical technologies, medical
models of hospital equipment and
marketing
expensive or smaller MRI machines
devices, energy production products
has automated the process for
programs
for the same results. Led by CEO
such as batteries and fuel cells,
ordering them through an online
for its
Brad Goldstein, who brings 20 years
and products for the wind and
experience in commercializing
solar industries. By creating
advanced technologies, the
alliances with their clients
company raised its $1.4 million seed
and selecting forward-
round for continued research and
thinking polymer
development from local investors,
industry partners, the
RMS Management and JumpStart
company has continued
Inc. Soon after, Goldstein and his
significant time and money. With a people-
GROWTH
to grow since
team received FDA certification
interface, saving its customers
it was founded
X
EXIT
clients that—beyond being user friendly and
oriented, continuous
technologically savvy—are
improvement culture
differentiated by their
forged by serial
stringent focus on being
entrepreneur, CEO Ray Dalton, the company shows a commitment to
X
insight-driven and focused on business results. In 2008, Brulant was acquired by
on their initial design and are
in 2004 by 30-year
growth at all levels. A winner of
Rosetta out of Princeton, New
currently continuing down the
plastic veteran,
numerous awards for growth,
Jersey, with the resulting
Asis Banerjie.
customer service, training and
company enjoying status as
Banerjie and his
its commitment to humanitarian
the largest and most profitable
efforts, PartsSource is a true
independent interactive
success story. In 2008, PartsSource
agency in the country, with
financing to date from Early Stage
raised a $50 million investment
30 percent growth in 2008.
Partners of Cleveland, Ohio and
led by Polaris Venture Partners
other investors, including a Series
of Boston and joined by Primus
B round this year.
Capital Funds of Cleveland.
path to commercialization.
EARLY
X
team have raised over $9 million in
Seed
X
National Investment EXTERNAL EQUITY INVESTORS IN CLEVELAND PlUS AREA COMPANIES [2004-2008] Midwest (outside NEO) Advantage Capital Partners *08 Apex Ventures Beecken Petty BioOhio Blue Chip Venture Company CID Equity Entrepreneurs Fund
OUTSIDE U.S. Aberne Limited *08
Hopen Therapeutics *08 Hopewell Ventures Medtronic NCT Private Equity Fund Orix Capital OTAF Southwest Michigan First Life Science Fund *08 Talisman Capital Thomas McNerney Partners Triathlon Medical Ventures
Fidelity BioSciences *08
BOSTON Ampersand Ventures Boston Scientific Corp. Capital Resource Partners Eastward Capital
MPM BioEquities
Behrman Capital
mTerra Ventures LLC
Brown Brothers Harriman & Co.
New Enterprise Associates
CMG Capital
Oak Investment Partners
Columbia Capital
OrbiMed Advisors
Cowen Healthcare
Psilos Group
Cordova Ventures
Domain Associates
Radius Ventures
ExOxEmis
GMG Capital
RLS Investments *08
MB Ventures
Greycroft Partners
StarVest Partners
Pappas Ventures
Halyard Capital
Sunrise Equity
Sierra Ventures
River Associates
Investor Growth Capital
Toucan Capital Corp. *08
SV Life Sciences
Symark
Johnson & Johnson
Welsh Carson
Vivo Ventures
Texas Pacific
Life Sciences Capital *08
South Accipiter Capital Management LLC
Compass Group
Roberts Communications Network
Morgenthaler Ventures
RA Capital Management
Midsummer Capital
Parker Price Venture Capital
Kearny Venture Partners *08
Polaris Ventures
Amphion Innovations *08
Chevron Technology Ventures
Intel Capital *08
Norwich Ventures
Aisling Capital *08
Panorama Capital
Hambrecht & Quist
M/C Venture Partners *08
NEW YORK/East Coast
West Coast Angiotech Advance
DW Healthcare Partners
Fletcher Spaght Ventures *08
LSKW Investments
Western Technology
Palo Alto Investors *08= FIRST INVESTMENT IN NORTHEAST OHIO IN ‘08
Ohio Venture, Angel, Seed & Pre-Seed Funds INVESTMENT Capital Funds
Isabella Capital
Second Generation Ltd.
Adena Ventures
Key Principal Partners
SunBridge Partners
SEED & Pre-seed INVESTMENT Funds
Arboretum Ventures *08
Luxemburg Capital
Talisman Capital
Blue Chip Validation Fund
Athenian Venture Partners
Max-Ventures
Triathlon Medical Venture Partners
Case Technology Ventures
Blue Chip Venture Company
Morgenthaler Ventures
Walnut Capital Partners
Bridge Investment Fund
Mutual Capital Partners
Xgen LTD
Cincinnati Children’s Tomorrow Fund
Charter Life Sciences
MWV Pinnacle Capital Fund
Zapis Capital Group LLC
Chrysalis Ventures
Nationwide Mutual Capital
CID Capital
NCIC Capital Fund
Consumer Innovation Partners
NCT Ventures
Crystal Ventures
Oakwood Medical Investors
Development Capital
Ohio Innovation Fund
Draper Triangle Ventures
Peppertree Capital Management
Early Stage Partners
Primus Capital Funds
Everett Partners
Radius Ventures
Fletcher Spaght Ventures
Reservoir Venture Partners
Frantz Medical Ventures
River Cities Capital Funds
Hercules Technology Growth Capital
Riverside Capital Microcap Fund
iNetworks
RiverVest Ventures Roulston Ventures
*08= NEW OFFICE IN OHIO IN ‘08
Cincytechusa Cleveland Clinic Innovations
Angel Networks & Funds
Flashline Partners LP *08
Akron ARCHAngel Network
Glengary Ventures
C-Cap
JumpStart Inc.
Clarion Capital CoreNetwork
Lorain County Community College Innovation Fund
Custer Capital
Miami Valley Venture Fund
Findaway Ventures
Rocket Ventures
Growth Strategies Group
Southern Ohio Creates Companies
North Coast Angel Fund
TechColumbus
Ohio TechAngel Fund Queen City Angels RMS Capital Sycamore Partners
Companies That Have Raised Capital [2004-2008] INFORMATION TECHNOLOGY ARDC AVE Intervision Axentis Ayalogic Banyan Technology BlueBridge Networks
Think-a-Move, Ltd.
Turning Technologies
Interscopic Analysis
TOA Technologies
Victory Solutions
Interventional Imaging
Unitask
Visual Edge Technology
Lifeline Screening
Vox Mobile Workflow.com YeboTV BUSINESS & CONSUMER PRODUCTS & SERVICES Accessmount
HEALTHCARE AcelleRX Therapeutics Inc. American Safety & Health Institute
m2m Imaging Corp. MDG Medical MemberHealth Merlot OrthopediX
Cleantech ADVANCED SPECIALTY MATERIALS & CHEMICALS 6062 Holdings AMTI Aria Analytics Blue Spark Technologies
AnalizaDx
NDI Medical
Aris Teleradiology Systems
NeoMed
Aerodynamic Trailer
Arteriocyte
NextMed Systems
Amish Naturals
Athersys
Ogenix
MemPro Ceramics Corporation
Technology Management
AxioMed Spine
MesoCoat, Inc.
DIY Real Estate Solutions
BDC Management Group LLC
CardioInsight Technologies
OrthoHelix Surgical Designs
Embedded Planet
Cleveland Unlimited, Inc.
Employ Media
Cervilenz
Cohesant
Everstream
ChanTest
Collaborent
Flashline
Clear Catheter Systems
CoupAd
FLX Micro
Cleveland BioLabs
DMI Manufacturing, Inc.
Myriad Health
CleveX
Embrace Pet Insurance
BSK Live Clear Image Technology ComSense Technology, Inc. CutterCroix LLC DimpleDough
Cell Targeting Inc.
Cone Instruments
Carbolytic Materials
PartsSource LLC PeriTec BioSystems PrognostiX
Helios Coatings
MIMFlow Technologies Nanomimetics Ovation Polymers RSP Tooling
ProPractica Ricerca
Stanton Advanced Ceramics
Roscoe Medical
Stratum Energy Systems
Simbionix
Trivium Technologies
I2C Technologies
Fire-Dex Inc.
InSet Systems
Copernicus Therapeutics
Inspherion
Gauntlet Technology Systems
CornerStone Medical
Inspiron
Hartville Group
IQS
HF Food Technologies
Knotice
InnoDesk
LogiSync
Insurance.com
Monarch Teaching Technologies
Ladies Who Launch
Franklin & Seidelmann Subspeciality Radiology
Learning Horizons Inc.
NCRx Optical
Freedom Meditech, Inc.
Nine Iron Innovations
QuickPayNet
NineSigma
Fused Multimodality Imaging
Northcoast PCS
PetsDx
Ganeden Biotech
Vascular Biogenics
One Source Technologies
Pfingsten Publishing Predictive Services
Great Lakes Pharmaceuticals
Vasolux Microsystems
PC On Call Inc.
ViewRay
ENVIRONMENTAL MAR Systems
PsiBase
PsyMax
Icon Interventional
WholeHealth Management
MORK Process
Imadent
within3
Polyflow
SageQuest SamePage Solutions
Stack Media Teraphysics
Critisense CSF Therapeutics Early Sense Endotronix
SpineMatrix Symphony Medical Synapse Biomedical Syncro Medical Telerad Express Thermedx Tolera Therapeutics Transcutaneous Technologies Trek Diagnostics Tursiop Technologies
Imalux
Sypherlink
Tooling University
Telisys Inc.
Improvita Health Products
Treatment Online
IntElect
AGRICULTURE
ENERGY Arisdyne Systems Contained Energy Energy Focus Five Star Technologies Greenfield Light Resonance Technologies Ocean Energy Systems reXorce Thermionics Inc. Wireless Environment
Sorbent Technologies
Delta Plant
Private Investments in Public Equities (PIPES) were included in cases where it appeared that venture investors were involved.
www.jumpstartinc.org
www.nortech.org
www.bioenterprise.com
Special thanks to the Fund for Our Economic Future for underwriting this report. www.futurefundneo.org