Investment Growth Rate in NE Ohio Tops U.S. Rate
CLEVELAND -- Last year, 105 tech-based companies in Greater Cleveland raised $201 million from venture capitalists and angel investors. This activity represents a 34% increase over the sum companies raised in 2011.
The number of northeastern Ohio companies attracting equity investment in 2012 also rose 33% over 2011, according to the region's Venture Capital Advisory Task Force. This growth also bucks a national trend: Data recently released in The MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association showed a 10% decrease in dollars invested in 2012.
Of the 105 companies, slightly more than half received angel investment, a marked increase from 2006 when only 11% of deals involved angels. "Angels continue to be significant contributors to northeastern Ohio's investment momentum," said Clay Rankin, managing member of North Coast Angel Fund. The fund, formed in 2006, is has become the country's fifth-largest organized angel group.
"We're showing that well-focused angel investment can help competitive Midwest technology companies successfully launch and grow their businesses, in many cases reaching a point where they can attract [venture capital] investment," Rankin noted.
Rankin cites as an example the fund's portfolio company OnShift, an enterprise IT provider of cloud-based staff scheduling and shift management software for the health-care field. OnShift's strong performance -- including a 400% increase in revenues in 2011 -- enabled it to close more than $3 million in Series B financing early in 2012, he said.
Information technology/software continues to be an important area of growth for northeastern Ohio, with 46 companies collectively attracting $40 million in venture capital, Rankin said. But, as in previous years, health care is the strongest-performing sector in northeastern Ohio overall, also outpacing national trends. Some 35 companies collectively attracted $141 million, with medical devices and equipment ($64 million) and health care services ($50 million) leading the way.
Investors across the nation continue to discover the region's investment opportunities, with 28 out-of-state funds making first-time investments in northeastern Ohio in 2012, the report noted.
"The breadth and quality of first-time northeastern Ohio investors in 2012 speaks to the region's growing reputation," said Lynn-Ann Gries, chief investment officer at JumpStart Inc. Since 2007, she added, more than 150 organized equity investors have put money into northeastern Ohio.
The Venture Capital Advisory Task Force is composed of 35 Greater Cleveland investors dedicated to continually increasing regional entrepreneurial investment and success. Equity investment data is compiled by JumpStart Inc. and BioEnterprise from regionally collected data reported by area companies and provided by Task Force investors.
Published by The Business Journal, Youngstown, Ohio.
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