Cincinnati Ecosystem
Cincinnati VC Regular Data:
VC Stage Definitions
Regular VC: Seed, Early Stage, Later Stage
Other Venture Related: Acquisition, Acquisition for Expansion, Bridge Loan, Expansion
Exclude: LBO, Other, PIPE, Recap, Secondary Buyout, VC Partnership
Session Details
Request Hits Request Description
0 - DATABASE: Portfolio Companies (VIPC)
1 95893 Venture Related Deals: Select All Venture Related Deals
2 45423 Company Nation : US
3 189 Company MSA : 1640
4 133 Round Date: 1/1/2000 to 1/1/2017 (Custom) (Calendar)
5 Custom Report: CincinnatiRound (Columnar) - Save As:
E:\McNair\Projects\Ecosystem\CincinnatiRound.txt
Billing Ref # : 2038623 Capture File : riceuniv.2038623 Session Name : CincinnatiRound.ssh
List of Variables
Variables:
| Company Name |
| Company City |
| Company Street AddressLine 1 |
| Company State |
| Company Founding Date |
| Date Company Received Last Investment |
| Total Known Amt Invested in Company 000 |
| Date Company Received First Investment |
| Round Dates |
| Company Stage Level 3 at each Round Date |
| Round AmtDisclosed 000 |
| Round AmtEstimated 000 |
| Round Numbers |
| Number of Investors eaRound |
Blog Post (Being peer-edited by Tay):
Introduction
The ten Fortune 500 companies that call Cincinnati provide a unique advantage for the emerging ecosystem. They have the potential to ignite the ecosystem, providing a unique narrative to a city not known for high tech development, but for branding, marketing and design. Several areas of the ecosystem are on a good trajectory, but many lack sufficient capabilities and resources that are likely inhibiting Cincinnati’s ecosystem development.
History of Entrepreneurship
The local and state governments have historically been the ignitors for the Cincinnati ecosystem. Individual grant programs have historically provided the Cincinnati Children’s Hospital Medical Center, University of Cincinnati, and the Cincinnati Regional Chamber with funding for high tech projects. Companies such as Kroger, P&G and Macy’s have long called Cincinnati home but have been largely nonexistent in the ecosystem.
Resources in Cincinnati
The past few years have seen an increase in entrepreneurial resources available for Cincinnati. Accelerators now span the tristate of Ohio, Kentucky, and Indiana. The Brandery, located in Cincinnati and founded in 2010, was inspired by successful accelerators such as Capital Factory and TechStars. The Brandery offers a three-month program for seed stage companies that utilizes the already existing strengths of Cincinnati; branding, marketing, and design. Companies receive $50,000 in seed funding in return for 6% equity stake in the startup, office space, branding identity, legal support and more. The Brandery has been ranked a top ten accelerator in the nation.
UpTech is a Greater-Cincinnati tech accelerator program for data-driven startups created in 2012. Startups go through a six-month accelerator program and receive up to $50,000 during the program. The third and newest accelerator in Cincinnati is Ocean, a three-year-old accelerator with a five-month program that provides mentorship, monetary support in the form of a $50,000 note, branding, and legal advice.
Seed stage investors such as CincyTech and Queen City Angels provide the ecosystem with capital. Since 2001, CincyTech’s mission has been to strengthen the regional economy through the creation and expansion of technology companies in Southwest Ohio. CincyTech is investing out of its fourth and largest fund, a $30.75 million seed stage fund bigger than its first three funds combined. Queen City Angels is the region’s longest running angel group and is currently investing out of its largest fund of $10 million.
StartupCincy, a public-private partnership that provides seed stage funding for Cincinnati startups, maintains an exhaustive list of upcoming network, education, accelerator and developer event in the city. It’s beloved by Cincinnati accelerators, seed stage investors, and entrepreneurs in the city.
One of Cincinnati’s most unique elements of its ecosystem is Cintrifuse. Established in 2011 with a goal to create a sustainable technology driven economy for the Cincinnati metropolitan area, Centrifuse manages a fund of funds. This fund of funds gives corporate investors access to over four-hundred startups and creates a network of venture capital funds that invest in Cincinnati startups. Centrifuse pairs start-ups with potential customers and corporations to start-ups. Big companies like Kroger, USBank, the Greater Cincinnati Foundation and Duke Energy invest in Centrifuse because they depend on Cintrifuse’s help to source innovation for their businesses and grow the region’s startup ecosystem. In turn, Cintrifuse invests in VC firms such as Allos Ventures, Mercury Fund, and Sigma Prime Ventures. Cintrifuse also provides co-working space and entrepreneur education.
Over-the-Rhine, a neighborhood of Cincinnati is now home to Centrifuse, CincyTech, and the Brandery. Coordination of the ecosystem creates cohesiveness. The companies going through the Brandery are only feet away from CincyTech’s capital, which provides unique collaboration opportunities.
Success in Cincinnati
CincyTech garnered considerable national attention after providing Lisnr, a company that has invented an ultrasonic technology for transmitting data through sound, with Stage A capital. Lisnr came to fruition aboard the 2012 StartupBus, a competition where participants launch a company in 72 hours on a bus headed to Austin, Texas for the South by Southwest Festival. Since Lisnr came to fruition, they have since received $10 million in Series B funding from Intel Capital and garnered accolades from CNBC’s Disruptor 50 list, Cannes Lions International Festival for Creativity, and Fast Company’s Innovation by Design Awards.
Not to be overlooked, Queen City Angels provided the initial stage funding for Assurex Health. Now ten years old, Assurex grew out of research at Cincinnati Children’s Hospital Medical Center and the Mayo Clinic. Its singular product is the GeneSight Test, which analyzes twelve genes that influence mental health and psychoactive drugs that treat a spectrum of mental-health disorders. Myriad Genetics purchased Assurex Health in April 2016 for $225 million with another $185 million to come when performance-met stipulations are met.
Venture Capital
The largest barrier to Cincinnati’s emergence as an entrepreneurial ecosystem is the absence of venture capital entering the system. Two indicators of the health of an ecosystem are the number of first rounds and the amount of venture capital entering a system. The number of Cincinnati first rounds has been increasing. In 2012, there was an average of one first round per year. In 2014, Cincinnati experienced its larges number of first rounds ever, with nine. It appears the the ecosystem is leveling out at an average of five first rounds per year. It’s generally held that a stable ecosystem closes around thirty to thirty-five deals a year. Cincinnati falls far below this. The second component of a healthy ecosystem is the VC entering the system. Despite an increase in first rounds, the seed, early stage, and later stage VC entering Cincinnati, current VC levels are not indicative of a successful ecosystem. Cincinnati VC peaked in 2002 at $343 million. The closest the ecosystem came to meeting 2002 VC levels was $235 million in 2014. The average VC entering the system is $139 million per year. Compared to VC levels of emerging ecosystems like Austin, Texas or Denver, Colorado, Cincinnati’s VC is weak and not supportive of an ecosystem.
Untapped Potential
For an ecosystem that really only started in 2010 with the establishment of the Brandery, Cincinnati is beginning to establish some of the resources it will need in order to emerge as an entrepreneurial ecosystem. However, VC and the number of first rounds needs to increase to help grow the ecosystem.
