I.        The Cleveland Technology Center (“CTC”) – A collaborative hub of thought and development that becomes the centerpiece of Cleveland’s investment in the tech industry. This is a physical space, a state-of-the-art tech-based facility.
     II.        The Cleveland Ventures Fund (“CVF”) – A technology-centric fund that will invest in promising technologies, partnerships within the City of Cleveland. Goal was to secure $100.0 million to be invested in Cleveland-based tech-companies.
    III.        The “Information Technology” Cradle – Creation of special zones along Euclid, Superior and Carnegie that allow for heavy concentration of tech companies and new real estate development.
   IV.        Cleveland Municipal Schools Tech Vision – The Mayor’s Office and the CEO of the Cleveland Schools creating a special tech-based curriculum for top students.
    V.        “Tiger Teams” – A specialized group formed to target middle-market tech and biotech firms and assist them with the relocation of their corporate headquarters or R&D facilities to the City of Cleveland.

The Cleveland Municipal School District (now “Metropolitan”) was, in my mind, the great key to really explode the tech industry in Cleveland. Imagine embedding a “world-class” curriculum (more on this in a moment) in the school system while creating an elevated student level who will then become the future leaders (not just in tech) in the Cleveland area. The creation of a “technology academy” (students would have to apply) within the school system that offered a new set of curriculum that would include: biology, chemistry, business, software programming and strategic planning. The classes would be held in the Cleveland Technology Center (“CTC”) – which was a central part of an earlier part.

The CTC is so important here – a new, invigorating environment for the students where they would get to see first-hand the tech entrepreneurs working on new companies and technologies, interacting with the best legal and financial minds in the region and perhaps starting their own company while still students. (Hey – this model works. Go check out E-Tech as developed by John Zitzner.) Another intriguing component of the curriculum for students is a leadership process where as these students take leadership training (as prepared by the Cleveland Leadership Council) and met civic, religious and business leaders on a monthly basis.

Here’s where it gets really cool. You want a mechanism to stop the “brain drain” with these students how are a part of this “technology academy.” All students who graduate from this rigorous program with a 3.0 or better GPA will receive a full-scholarship to any public college or university within the State of Ohio. Then students who graduate and commit to finding a job in Cleveland and residing in the City are eligible for a four-year life grant – starting at $5,000 in year one and then declining by $1,000 a year for each year. This little mechanism may start attracting our best and brightest that we trained to return to Cleveland. We could create our own continuum of market ready students who are then ready to propel us to a new era in Cleveland. This could happen, my friends.

Here is a great company that has experienced tremendous growth (over 300% during the past four years) and has grown from 3 employees to over 120. SchoolOne is a great success story. And now we are about to write another chapter in the company’s history. On January 28^th, SchoolOne formally becomes FIT Technologies (although SchoolOne will remain as the go-to-market name for our education division). FIT best represents the new direction of the company – a direction that will move into the corporate IT space and offer an impressive technology menu to companies in the small to middle-market arena. Everyone at FIT is thrilled. Our growth plan is aggressive and, I believe, we have the management team and better yet, the staff to get us over the mountain.

I don’t know of another company that had so many trials and tribulations over the years, but has always persevered. That is a sign of good leadership. I hope you will join us during our celebration this week, please feel welcome to call me and ask for a tour of our facility – I can be contacted at 216.583.5049 or at mdealoia@fittechnologies.net (or hit the website, man, www.fittechnologies.net) – and a chance to meet good people. Having been on the front lines of tech industry here in Cleveland for over eight-years, I can tell you the industry is replete with good people doing great things. And that is true at the new FIT, as well.

A real estate partnership including Cumberland Development, New Era Builders and Ariel Ventures bought the building in June of 2006. The new owners understood that there was a shortage of incubator and post-incubator space for technology based companies. (Quick side note – I was trying to get the City of Cleveland to buy Carpenter Press Building at the same time the new owners were reviewing the sight. I wanted to create a biotech incubator and R&D facility.) The new owners immediately began the renovation of the 52,000 square foot facility. It was totally gutted, a new parking lot was put in, back-up power and the original car showroom has been brought back as close to its original state as it can be. The goal was to create an environment to develop over a 100 new tech jobs in the Midtown corridor.

Current tenants now include:

·         Bunge BIPHOR – an innovator of pigments and coatings
·         Volcano Corporation – a company that develops intravascular ultrasound technology
·         Diagnostic Hybrids – an R&D company that specializes in molecular diagnostic kits
·         iNetworks – a Pittsburgh-based venture capital group
·         Cumberland Development – owner and real estate development company

There is only 20,000 square feet available in the building and it is estimated that it will be fully-occupied by the end of summer. The project cost almost $7.1 million and was supported by New Markets Tax Credits and $1.0 million from the County’s Brownfield Redevelopment Fund. Unfortunately, no City participation. The building is now listed on the National Register for Historic Places and was redeveloped utilizing green and sustainable design practices and will receive a LEED Silver Certification.

This building’s proximity to University Circle (and especially the Cleveland Clinic) and Downtown will make this a very attractive building for new tech companies. Of course, having a venture capital group on site is always a provocative development. I have always been proud of this development, especially given its Midtown location.  Of course, more development is necessary in the Midtown area but my sources in the real estate area are detailing to me that there is significant real estate speculation in the Midtown area. This could be a fantastic corridor (now with the RTA Silver Line nearing completion) for tech and biotech. Stay tuned for new developments and congrats to all those involved in the Baker Electric Building.

Not to say that selling Cleveland did not have its challenges. More often than not I would approach or contact a Company and talk about the virtues of Cleveland and I would get the response, “Cleveland? You’re freaking kidding me, right?” To which I would respond, “Just give me a few hours and let me show you a few properties that are going to knock you out.” Lucky for the City, we are blessed with great architecture (most of which needs a little “TLC” but is so impressive when compared to suburban office spaces). And would you believe that we were successful in bringing in 36 tech companies into the City. The good tech entrepreneur loves the City and is a good friend of Cleveland. (Search for the recent article on the success tech in Cleveland as printed on the front page of the PD – and do me a favor, spread the gospel to your friends and family.)

Anyway, the core of my policy at Cleveland was to recruit and to develop a continuum of real estate that offered a selection of pricing and space to tech entrepreneurs. Also, upon reflection of my old development plan was, in fact, the creation of an “IT Cradle” that spanned west to east along Euclid and Carnegie Avenues. Just a reminder of the development plan I put together for the technology sector in Cleveland. The five proposed policies of this plan were:

      I.        The Cleveland Technology Center (“CTC”) – A collaborative hub of thought and development that becomes the centerpiece of Cleveland’s investment in the tech industry. This is a physical space, a state-of-the-art tech-based facility.
     II.        The Cleveland Ventures Fund (“CVF”) – A technology-centric fund that will invest in promising technologies, partnerships within the City of Cleveland. Goal was to secure $100.0 million to be invested in Cleveland-based tech-companies.
    III.        The “Information Technology” Cradle – Creation of special zones along Euclid, Superior and Carnegie that allow for heavy concentration of tech companies and new real estate development.
   IV.        Cleveland Municipal Schools Tech Vision – The Mayor’s Office and the CEO of the Cleveland Schools creating a special tech-based curriculum for top students.
    V.        “Tiger Teams” – A specialized group formed to target middle-market tech and biotech firms and assist them with the relocation of their corporate headquarters or R&D facilities to the City of Cleveland.

The original goal of the “IT Cradle” was to remove blight along the Euclid and Carnegie Avenue from Downtown to University Circle with new tech companies being placed in older buildings that merited new life and vigor. The hope was to target regional and national tech firms and offer economic incentives and build-out allowances to relocate into the City. I have always found Euclid and Carnegie Avenues to be rich with potential and could be our very own “Silicon Avenue.” And based upon personal experience – this is a very doable policy. My fear is that the City overlooks the success it has had in tech and will not continue to heavily recruit the next generation of Cleveland companies.

Of course, it needs to be a coordinated effort with the City leading the charge and working closely with its partners – Greater Cleveland Partnership, TeamNEO, JumpStart, NorTech and BioEnterprise. Based upon my experience Cleveland should be bursting at the seams with tech, biotech and medical device companies. The best incentive – truth be told – was not the economic incentive offered by the City (or any other organization) but the operational incentives that the City is blessed with. And by that, I mean the large fiber connections in Downtown (largest fiber pipe between New York and Chicago is resident under Euclid Avenue) and all the assets that have been built around this pipe – the various data-centers, telecom switches, network-operating centers and other tech companies. We have a natural asset (i.e. – the fiber) in which to build a national powerhouse in technology. Now let’s use it.

However, I erred in my description of Primus and Joe offered the proper historical context for the fund as detailed below:

“I read your comments on expanding the technology capacity here in the region and just wanted to correct one impression.  Primus, was not a city created entity under Michael White.  Primus was created by Cleveland Tomorrow, as one of its first initiatives in 1984.  While Mayor Voinovich was mayor, the city really had nothing to do with the idea - but he was supportive.  Cleveland Tomorrow’s early research in the early 80’s confirmed the weakness in the rustbelt in terms of access to venture funding.  So, we started our own. The first $10 million was invested by corporations in Cleveland and it was eventually matched 2:1 by state pension funds for a total first capitalization of $30 million.As you know, it has gone through several rounds of funding and is now well over half a billion in size. 

One of Primus’ first investments was in American Steel and Wire, that reopened along the river in Cuyahoga Valley. Tom Tyrell, the first CEO of American S&W is still an active entrepreneur in the area. Bottom line, which is still the same, is that properly researched initiatives, led by experienced venture folks can succeed here and your idea there in building off Primus, Tim Biro’s work, etc. is consistent.”

Great stuff. I appreciate Joe taking the time to get us the right facts.

      I.        The Cleveland Technology Center (“CTC”) – A collaborative hub of thought and development that becomes the centerpiece of Cleveland’s investment in the tech industry. This is a physical space, a state-of-the-art tech-based facility.
     II.        The Cleveland Ventures Fund (“CVF”) – A technology-centric fund that will invest in promising technologies, partnerships within the City of Cleveland. Goal was to secure $100.0 million to be invested in Cleveland-based tech-companies.
    III.        The “Information Technology” Cradle – Creation of special zones along Euclid, Superior and Carnegie that allow for heavy concentration of tech companies and new real estate development.
   IV.        Cleveland Municipal Schools Tech Vision – The Mayor’s Office and the CEO of the Cleveland Schools creating a special tech-based curriculum for top students.
    V.        “Tiger Teams” – A specialized group formed to target middle-market tech and biotech firms and assist them with the relocation of their corporate headquarters or R&D facilities to the City of Cleveland.

The key part of this plan was, in my mind, the Cleveland Ventures Fund (“CVF”) which would be a $100.0 fund that would invest in technology-centric opportunities including partnerships and alliances. The CVF would have at its disposal various investment interests meaning the fund could invest as an equity participant, debt-holder, grants and tax credits. Obviously, a complex fund like this would merit professional management with a mandate to invest in Cleveland-based opportunities. The funding, of course, is problematic but with money being provided by the local foundations, regional financial institutions, the City of Cleveland and perhaps the County. By the by, this is not an unprecedented strategy to be taking by the City. Primus was started as a City supported venture fund in the Mayor White Administration. And recently the City of Ann Arbor created an investment strategy by the same amount. See link at http://blog.mlive.com/ann_arbor_business_review/2007/12/ann_arbor_firms_invest_100m_in.html. Clearly, if the City of Ann Arbor can muster the courage to invest in their own tech sector then why not Cleveland?

Other components of the fund include the necessity of the fund to be evergreen in origin – meaning all proceeds of any investment (post liquidity event) would be returned to the CVF. I have always thought that this could have been such a dramatic tool especially with the creation of the CTC as described in my previous post. Imagine, a constant flow of entrepreneurial companies being accelerated in the CTC, financed by the CVF and finding new residence along the major corridors in Cleveland (i.e. – Euclid Avenue, Superior Avenue, St. Clair Avenue). An amazing synergy for development.

The original idea for the CVF was developed prior to Jumpstart, as defined by its current structure. I am a strong proponent of Jumpstart – its current financing opportunity of say $30.0 to $35.0 million is fantastic , but when spread out over 12 to 16 counties it offers just a beginning not the ultimate finality that many are looking for. Cleveland, as a city, merits this type of investment alone. Just think of the number of companies and brilliant talent that would flock to here just to have the opportunity to merit investment. Cleveland is experiencing a dynamic change of pace to have venture capital companies moving into the City to participate in the burgeoning deal flow in the regional biotech arena. I believe this is fantastic news. But, I would offer the caveat that our technology companies should not be overlooked either and, hence, the reason for the CVF.

      I.        The Cleveland Technology Center (“CTC”) – A collaborative hub of thought and development that becomes the centerpiece of Cleveland’s investment in the tech industry. This is a physical space, a state-of-the-art tech-based facility.
     II.        The Cleveland Ventures Fund (“CVF”) – A technology-centric fund that will invest in promising technologies, partnerships within the City of Cleveland. Goal was to secure $100.0 million to be invested in Cleveland-based tech-companies.
    III.        The “Information Technology” Cradle – Creation of special zones along Euclid, Superior and Carnegie that allow for heavy concentration of tech companies and new real estate development.
   IV.        Cleveland Municipal Schools Tech Vision – The Mayor’s Office and the CEO of the Cleveland Schools creating a special tech-based curriculum for top students.
    V.        “Tiger Teams” – A specialized group formed to target middle-market tech and biotech firms and assist them with the relocation of their corporate headquarters or R&D facilities to the City of Cleveland.

Today, I thought of adding some detail to the first policy/program – the Cleveland Technology Center (“CTC”). The original idea behind the CTC was to construct a “best-in-class” building that would offer safe haven to fledgling technology development while at the same time to enhance capital market access and professional service.  I suspect the philosophy behind this notion was to appease the real estate developers at the time (remember this plan was developed in late 2001). But the idea of constructing a bustling center right at Public Square was a pretty provocative notion at the time (and honestly it remains so – to have so much of the center of Cleveland as a large surface lot is very disturbing).

My original plan was to work with local real estate developers to construct a 30-45 story tower where the planned Ameritrust Tower was to be built on Public Square. Working with the Mayor’s Office and City Planning (i.e. the Planning Commission) the goal was to fast tract the building not as a symbolic gesture (as economic development has often become in Cleveland) but as an orchestrated effort to create a lasting impression of Cleveland’s willingness to develop and promote its technology industries.

The CTC was to become an architectural bridge between the Warehouse District and Gateway (and to provide the completion of Public Square). I had high expectations that additional development of apartments, condominiums and specialty restaurants and retail would begin after the construction of the CTC. A noble goal and vision of the plan was to, yes, help centralize tech development but to also spur further downtown development especially in the Warehouse District which has great vibrancy but feels incomplete.

The building was to become a collaborative atmosphere where the entrepreneur, capital market experts, commercialization specialists, academics, students and professionals versed in technology in technology issues would work (in perfect harmony, mind you). Imagine a center where the large tech companies in the U.S. – Apple, Microsoft, Oracle, etc. – would establish their local offices are presence (as opposed to the suburbs), while local tech companies are being created in large incubators. National and regional venture capital groups would support small local offices, as well as National and regional law firms and accounting firms would house their tech-based consultancies and practices. I believe, as an entrepreneur myself, that it would be of great benefit to find new technologies, key management personnel, financing and professional services all in one place.

All commercialization efforts of all the regional universities – University of Akron, Case Western Reserve University, Cleveland State University and Kent State, and others – would also find a home in the CTC. With entrepreneurs to the left and venture capitalists to the right, the idea was to foster a collaborative home where opportunity could be found, management could be secured and financing could be had. Another key component of the CTC would be a classroom area for students in the Cleveland Municipal School system; a full selection of e-Business and technology classes could be taught from thought leaders in the local tech scene, nationally recognized professors, venture capitalists, attorneys and accountants. These classes would be unlike anything currently being taught – ANYWHERE! Just imagine the great knowledge transfer from national tech companies, local entrepreneurs, and cutting edge technologies being granted to our next generation.

The final component of the CTC was an additional tool to support future generations and to provide technical training and entrepreneurship to the neighborhoods. A small number of mini-incubators would be developed in the various neighborhoods in Cleveland. I originally planned on creating these mini-incubators in Collinwood, Tremont, Fairfax, South Broadway and Glenville. The goal of these mini-incubators would be to understand how the various ethnic neighborhoods and economically-challenged areas of the City interact and utilize technology; decipher via research the extended opportunities of these interactions and to drive the commercialization of such usages toward profitable technology applications. There has been no other tech economic development plan that incorporates the “neighborhood-based” commercialization concept. The City of Cleveland would be the only city that would be creating a life-long continuum of tech development and entrepreneurship.

If the goal is to create a Cleveland as the new model in tech development then the CTC could become a great catalyst to rally around.

The presentation struck a chord with me, however. Remember, I wrote this presentation in late 2001. (And, in fact, when I interviewed for the post again in 2004 I used the same presentation I did two years prior.) The presentation offered a plan to create a new office within the economic development department called the Office of Technology and Innovation. This Office would then be given the goal of developing an economic environment that would be willing to initiate risk and accept reward; foster a “cycle” of education, creation, commercialization and capital market acceptance of local technology. And thus, create five programs – which I will detail in a moment – that establish Cleveland as a model of private and public partnership; a “case-study” in successful deployment and nurturing of a fledgling technology industry in Cleveland.

The five proposed policies or programs were:

      I.        The Cleveland Technology Center (“CTC”) – A collaborative hub of thought and development that becomes the centerpiece of Cleveland’s investment in the tech industry. This is a physical space, a state-of-the-art tech-based facility.
     II.        The Cleveland Ventures Fund (“CVF”) – A technology-centric fund that will invest in promising technologies, partnerships within the City of Cleveland. Goal was to secure $100.0 million to be invested in Cleveland-based tech-companies (and by the way, if Ann Arbor, MI can find $100.0 for tech-based investments then certainly Cleveland could do the same).
    III.        The “Information Technology” Cradle – Creation of special zones along Euclid, Superior and Carnegie that allow for heavy concentration of tech companies and new real estate development.
   IV.        Cleveland Municipal Schools Tech Vision – The Mayor’s Office and the CEO of the Cleveland Schools creating a special tech-based curriculum for top students.
    V.        “Tiger Teams” – A specialized group formed to target middle-market tech and biotech firms and assist them with the relocation of their corporate headquarters or R&D facilities to the City of Cleveland.

I still believe that this plan is just as relevant today as when I first proposed it nearly six years ago. Over the coming weeks, I will be adding some detail on each policy/program, why it did or did not work and current strategies in place by other groups. I will try to be as exhaustive as I can be in the detail. I would like to hear commentary from as many people as possible on this plan and others (I have never thought mine was gospel or the only answer). At the end, though, I believe I will have offered a comprehensive plan that could propel the City as a key national player in the tech and biotech sectors.