Monday | June 23, 2008

Cuyahoga County Investing In Tech Start-Ups

I have to honest, Cleveland, I never thought I would see the day when the Commissioners of Cuyahoga County decided to invest in a tech start-up loan fund. But it has happened.  The Commissioners agreed today to put $750,000 in a loan pool that will target young technology start-ups.  The loans will range between $25,000 and $125,000 @ 5% interest. I was doing the same thing at the City of Cleveland through the Core City Technology Fund (rather a segmentation of Core City money directed at Technology). Unfortunately, the current administration has stopped offering this technology specific loan program.

The North Coast Technology Fund will administer the loans. Good group. I know a few of the gents involved at North Coast – good crew. NorTech will help evaluate the loan applications as they come in to the County. Love the concept. However, to really make an impact we need millions of dollars going into funds like this and like Jumpstart.

Posted by Tech Czar at 18:48:18 | Permanent Link | Comments (1) |

Tuesday | January 15, 2008

A Plan to Grow Cleveland's Tech Industry - Part IV

The best part of my tenure at the City of Cleveland was recruiting companies to relocate into the City. Hard work, but worth the sweat. When I started at the City there were more than a few people who gave me the cold, hard advice that I would never be successful  (one would be surprised by how many political “elites” told me that as well, makes you think where their heart really is regarding Cleveland). Truth is Cleveland is a great asset to sell.

 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.

Posted by Tech Czar at 00:11:26 | Permanent Link | Comments (2) |

Monday | January 07, 2008

A Plan to Grow Cleveland's Tech Industry - Part III

During my time as “Tech Czar,” I had the privilege of meeting hundreds of entrepreneurs blessed with many, many great ideas. I quickly found that Cleveland and Northeast do not have a dearth of commercial, and yes, financeable ideas. Recently, I started to detail a development plan 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 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.
Posted by Tech Czar at 23:16:18 | Permanent Link | Comments (1) |