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State of Technology in Cleveland “Ready for Impressive Growth”

Discover the thriving tech industry in Cleveland, with over 2,800 companies, 11,000 employees, and $1.0B in revenues. Explore various sectors like software development, biotech, and fuel cells.

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State of Technology in Cleveland “Ready for Impressive Growth”

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  1. State of Technology in Cleveland “Ready for Impressive Growth” Ohio Venture Association April 11, 2005

  2. State of the Industry

  3. “The Cleveland Tech Industry” • According to NEOSA and TeamNEO, the Cleveland area tech-based community now includes 2,800 companies. • Employees nearly 11,000 individuals. • Enjoys $1.0B in revenues. • Second fastest growing industry segment in Cleveland, behind health-care. • Deep knowledge in software development, medical devices, biotech, MEMS, fuel cells, SEO, ICE and satellite systems, disaster recovery, managed security.

  4. “The Cleveland Tech Industry” • Concerns with the industry. • On average each Company has four employees and enjoys $357,000 in revenue. • Geographic dispersion. • Additional management/technical talent. • Continuum of capital. • Short-term liquidity.

  5. “No Successes for Cleveland?” • Third Frontier Action Fund • Cleveland (1) - $13,896,436 (38.4%) • Bio R&D Transfer Trust Fund • Cleveland (1) - $34,347,478 (43.0%) • Wright Capital Funds • Biosciences (2) - $19,765,170 (27.2%) • Non-biosciences (1) - $18,000,000 (45.0%)

  6. “No Successes for Cleveland?” • Fuel Cell Initiative Awards • Cleveland (2) - $1,827,044 (23.4%) • Validation Fund/Seed Fund Initiative • Cleveland (T1) - $2,500,000 (41.6%) • Third Frontier Internship Program • Cleveland (3) - $920,100 (21.9%) • Ohio Research Commercialization Grants • Cleveland (1) - $1,216,813 (58.2%) • Innovation Revolving Loan Fund • Cleveland (1) - $2,254,439 (70.0%)

  7. “No Successes for Cleveland?” • Since the Creation of the Third Frontier in 2002, the State has awarded $244,027,866. • Cleveland’s Take: $85,763,210 (35.1%) • Estimated to be over $90.0MM by the end of 2005

  8. “The Emergence of the Seed Funds.” • JumpStart (2004) - $9.0MM • Case Technology Ventures (2002) - $5.0MM • Ohio Innovation Fund (1997) - $12.5MM • Early Stage Partners (2002) - $44.0MM • Draper Triangle Ventures (1999) – New Fund $40.0MM • Fund for Our Economic Future (2004) - $30.0MM • Mutual Capital Partners (2005) • SB180 and OVCA

  9. “The Emergence of the Seed Funds.” • Tech community should work with Nortech, JumpStart, NEOSA and other agencies to aid in capital aggregation. • Potential goal should be $500.0MM by 2010.

  10. The Strategic Vision

  11. “The Path to Follow….” • Heavily Recruit Tech Companies to Cleveland and Nurture the Companies Already Established • Aggregate Capital to the Cleveland’s Tech Industry • Create a Spectrum of Entrepreneurial Education from ‘Grade School to Grad School’

  12. Recruit/Nurture • Aggregate Tech Companies in Downtown. • Target: Euclid, East Ninth, Huron, Prospect, West Sixth, West Ninth. • Target: Street Level Space with Signage. • Target: Company with seasoning, employees from 10-50, success in generating revenue. • Discount smaller, entrepreneurial companies: Absolutely Not.

  13. Recruit/Nurture • Set of incentives • Loan Programs • Tax Abatements • Employment Tax Rebate (Legislation) • Grant Options • Potential/Considered Incentives • R&D Tax Credit • Patent Credit

  14. Recruit/Nurture • Centers of Excellence • Disaster Recovery/Business Continuity • Search Engine Optimization • MEMS • Fuel Cells • Medical Devices

  15. Recruit/Nurture • Scorecard • 18 Companies (Two from outside region). • 1 has signed lease, three others negotiating letters of intent. • Discussions on three Centers of Excellence.

  16. Capital Aggregation • Support Angel Fund Initiatives • Discussions with two groups to date. • New Market Tax Credit Fund • Next allocation secure $150.0MM in NMTCs. • Use NMTCs as an incentive to invest in emerging growth companies within the City proper.

  17. Capital Aggregation • “Plug-and-Play” • City will co-invest with venture funds and private equity funds on a non-equity basis. • Use of low-interest loans, tax abatements, etc., to enhance viability of the transaction.

  18. Capital Aggregation • Potential/Considered Strategies • Line of Credit Issues – Solve the short-term liquidity problems of tech companies. • Line of Credit Guarantee • Venture Bank – Either recruit a VB or establish a partnership with various banks to establish a VB.

  19. Education • Create a spectrum of entrepreneurial empowerment/education and technical training. • City Tech Certification • Cleveland Municipal School System • Entrepreneurial Academy • E-City

  20. Education • Create a spectrum of entrepreneurial empowerment/education and technical training. • Venture Capital Institute • CEO Forum • “The Red Room Meetings”

  21. Final Thoughts • “Success usually comes to those who are too busy to be looking for it.” • Henry David Thoreau

  22. Thank You Michael C. DeAloia Senior Executive for Technology Development 216.664.3644 (O) mdealoia@city.cleveland.oh.us

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