Last year, 118 tech-based companies in Greater Cleveland raised $259 million from venture capitalists and angel investors, according to the region’s Venture Capital Advisory Task Force. This was a 15 percent percent increase over the amount attracted in 2012.
Last year, 118 tech-based companies in Greater Cleveland raised $259 million from venture capitalists and angel investors, according to the region’s Venture Capital Advisory Task Force—a 15% percent increase over the amount attracted in 2012. This growth follows national trends: 2013 U.S. investment data recently released in The MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association (based on data from Thomson Reuters) showed a slight increase of 7% over the same timeframe. “Dollar-wise, equity investment in our region has finally returned to pre-recession levels,” explains Mark Williams, Board Chair of JumpStart Inc. (www.jumpstartinc.org), a Cleveland-based nonprofit organization that invests in and provides high-impact assistance to early-stage companies.
Twenty-seven (27) out-of-region investors made first-time investments in Northeast Ohio in 2013. “It’s a testament to the quality of companies here that so many non-Northeast Ohio investors are investing in the region,” says Mike Bunker, Venture Partner at Arboretum Ventures (www.arboretumvc.com).
Northeast Ohio-based information technology companies certainly caught the attention of investors, with 66 firms attracting $116 million. “The seed dollars flowing into the region are up, largely in this sector—which makes sense, seeing as how software- and internet-based companies typically require less capital to get up and running,” says Bunker. “But this increase may also reflect a recent proliferation of IT-focused accelerators making investments in the region.”
Not all of the region’s IT deals were in seed stage companies. TOA Technologies (www.toatech.com), a leader in field service management software, attracted $66 million in a deal led by California-based Technology Crossover Ventures. When the investment closed in July 2013, it was the fourth-largest venture-backed investment in software in 2013 in the U.S., and the largest-ever venture-backed investment in an Ohio software company. “TOA’s software solutions empower companies worldwide to enable their mobile employees to do their jobs more effectively and build stronger relationships with customers. Attracting this kind of investment is not only a testament to the success of our great idea and our people’s excellent execution, but also to having access to an ecosystem that has developed over the last ten years in the Northeast Ohio business community that supports us deeply and enthusiastically,” says TOA Technologies co-founder and CEO Yuval Brisker.
Companies like Juventas Therapeutics, Axiomed Spine Corporation, Securus Medical Group and others ensured that, as in previous years, Northeast Ohio’s healthcare sector attracted significant investor interest. Thirty-two (32) companies collectively attracted $98 million, with the medical devices and equipment subsector leading the way. ViewRay (www.viewray.com), whose technology allows for continuous soft-tissue imaging during cancer treatments, raised a $30 million Series D round led by previous investors Aisling Capital, Fidelity Biosciences, Kearny Venture Partners and OrbiMed Advisors. The Northeast Ohio cleantech sector also had a strong year in 2013, with 15 companies collectively attracting $44 million in venture capital. Wooster-based ABSMaterials (www.absmaterials.com), a water-remediation company, closed a $4 million Series B financing with investors including New Hampshire-based RKS Ventures and Harris & Harris Group Inc.
Despite these successes, a mere 15% of 2013 Northeast Ohio deals involved Series A growth capital, the lowest percentage in four years. “The dearth of Series A capital is a national concern, but to see this trend reflected in Northeast Ohio’s data is sobering,” says Williams. “A continuum of capital is needed for companies to be successful and our community will need to solve for this in order to continue our positive momentum.”
THE VENTURE CAPITAL ADVISORY TASK FORCE The Task Force is comprised of 35 Greater Cleveland investors dedicated to continually increasing regional entrepreneurial investment and success. Equity investment data is compiled from regionally collected data reported by area companies and provided by Task Force investors.
JUMPSTART INC. JumpStart is committed to strengthening the economy through entrepreneurship. For more information, visit www.jumpstartinc.org and follow @JumpStartInc on Twitter. To learn more about investment opportunities in Northeast Ohio, contact Lynn-Ann Gries, JumpStart’s Chief Investment Officer, at 216.363.3400 or firstname.lastname@example.org