Finding Ohio's Final Frontier in Cincinnati
Innovation. High pay. Economic competitiveness. It will take all three to secure the economic future of Ohio, say Ohio Third Frontier
supporters. The nearly decade-old economic development program is pushing Ohio forward by directing investment dollars to local companies that represent those fundamentals.
"It's about jobs, jobs and jobs," said Cincinnati USA Regional Chamber
President Ellen van der Horst. "Third Frontier is viewed nationally as one of the most innovative approaches to business startups. It has a reputation as a source of funding to stimulate new business ventures in the high-tech arena. That makes us an attractive place for entrepreneurs to settle and for young talent to take up residence."
Renewal of Ohio Third Frontier funding will be on the May 4 ballot, as Issue 1, and voters will have to decide whether to continue support for this program. Approval of Issue 1 would extend Third Frontier through 2016 at a level of $700 million dollars. The first-phase of the program expires in 2012; voters approved it in 2005.
State officials say the program has helped create, attract or expand 637 companies across Ohio and created more than 55,000 direct or indirect jobs. It's estimated the program has resulted in a return on investment averaging 22 percent per year over the program's life. These companies have attracted $3.2 billion in additional investments and produced more than $6.6 billion in total economic impact.
Third Frontier is funded through bonds, which won't raise taxes but does requires voter approval. The current phase will be repaid to the state in 2014, according to an independent study. Third Frontier is a different kind of economic development program; it directs funds into the potential new and existing companies that prove they have the capacity, talent and drive to grow. And is goes directly into expansion and job creation. The program targets sectors that economic development experts have identified as key competitive opportunities unique to the Buckeye state. Those sectors are:
• Advanced and Alternative Energy
• Advanced Materials
• Instruments/Controls/Electronics, and
• Advanced Propulsion
Here in Cincinnati, several dozen startups have been funded including Blackbook EMG
, Akebia Therapeutics
and Brighton Technologies
. Each company has its own story about how Third Frontier helped it grow.ThinkVine
, in Blue Ash, is a high-tech consumer marketing firm. Since its founding in 1999, ThinkVine has been helping some of the world's most esteemed companies refine the focus of their marketing and advertising, making sure its aligns with consumer behavior.
ThinkVine's signature technology is The Emerging MarketplaceTM that offers a simulated environment reminiscent of the real world where consumers and marketing mix.
"The funding we received was fundamental to our business. We're a consulting company that developed some custom software for our clients, and we made a decision in 2007 to turn into more of a software and tech services company," said Damon Ragusa, founder and CEO of ThinkVine.
Two rounds of Third Frontier funding allowed the company to skyrocket from 3 employees to 27 in the past two years. The company plans to hire several more employees by year's end, Ragusa said.
"When I was operating ThinkVine as a consultancy it was self-funded, and that was fine for a three-person company. But in trying to develop a growth company at some point you need a cash infusion ahead of growth. Third Frontier funding really allowed us to hire developers and analysts ahead of the revenue that we're now enjoying," he said.
Third Frontier helped Brighton Technologies
speed up commercialization of its highly specialized Surface Energy Probe, said company COO Eric Oseas. The probe is a handheld device that assesses a surface's readiness for bonding, coating, or printing. It can be used in automotive and airframe manufacturing and is designed to reduce costs, failure rates and rework.
With funding, Oseas moved the 14-year-old St. Bernard company into a larger space, from a 5,000 sq. ft. to a 14,000 sq. ft. mix of office, lab and warehouse. He also was able to hire a manufacturing engineer and a marketing sales director, both instrumental in getting the product to market.
"Third Frontier was absolutely invaluable. I don't know how we would've done this so quickly without them," Oseas said. The probe is currently in beta and Lockheed-Martin, Boeing and the USAF are among interested buyers.
Ohio Third Frontier dollars are awarded to four major categories of organizations: research institutions such as Cincinnati Children's and UC, established companies looking to grow high-tech jobs, such as Brighton Technologies, assistance groups such as TechSolve
, and seed funds such as CincyTech
CincyTech operates as a public-private venture capital and economic development organization. It received a $14.8 million Third Frontier grant to invest in entrepreneurs with startup technology companies. Since 2007, it has considered 815 investment opportunities and provided substantive advice to more than 150 companies, and so far it has invested $4 million in 13 companies, nine in information technology and four in bioscience. CincyTech also has helped local startups raise $66 million from private seed and early-stage venture capital firms, such as Queen City Angels
Companies must go through a rigorous review process before being awarded funds. And once a company receives money, it works closely with CincyTech executives on sales and marketing strategy, executive recruitment, technology platforms and other milestones.
"They're not throwing a big pile of cash at someone," Oseas said. "We're held accountable, we are required to outline exactly how the funds will be spent, and update milestones along the way. Quarterly we have to provide how the money is being spent and how we are meeting goals."
Supporters of Issue 1 say the program must be renewed as a tool to attract the talent that will create the jobs of the future. More than 200 divergent private, public and community organizations across the state have endorsed Issue 1, including the Ohio AFL-CIO, the Ohio Chamber of Commerce, the state Democratic and Republication parties and the Ohio Farm Bureau and BioOhio.
In Cincinnati, supporters include the Cincinnati USA Regional Chamber, CincyTech, BIOSTART, and the University of Cincinnati, as well as advocacy groups like Cincinnatians for Progress, Cincinnatus, and CincyPac, who recognize Third Frontier's many benefits.
"Our mission is to support and attract young talent in Cincinnati and one of our core priorities is providing access to economic opportunity to young professionals," said CincyPac President Candace Klein. "We see Third Frontier as a cutting-edge policy that will assist young professionals in Greater Cincinnati, who have a startup idea, receive the funding that they need." Want to learn more about Ohio Third Frontier or Issue 1? Check out this week's video.
Photography by Scott Beseler
Damon Ragusa (photo: Mark Bowen)Brighton Technology probe