Members of VentureOhio are studying the feasibility of forming a private “fund of funds” of $100 million or more to invest in venture capital groups and thus draw investor attention to Ohio startups.
“Having a fund of funds in Ohio will be really important in our ecosystem,” VentureOhio Executive Director Falon Donohue told me.
I checked in with Donohue, on the job three months, following her statewide tour meeting investors and entrepreneurs to determine awareness and effectiveness of various programs to help startups.
Formed 18 months ago, VentureOhio has grown to 90 members including major VC funds, angel groups, incubators, corporations, universities and other research institutions, startup founders and individuals.
The major unmet need, one that’s been echoed repeatedly, is the need for more capital to help companies grow from their first sales to a bigger market. Most investing resources and state programs are directed toward companies in the concept and seed stage.
“We’re doing really, really well in those early stages,” Donohue said. “When you get to your Series A, Series B, especially, that’s when we get into trouble.”
The Ohio Capital Fund, a bond-backed state fund of funds, attracted $1 billion in outside capital to the state but has no more to invest, and lawmakers have not renewed it.
“It would be great to have both” state and private funds, Donohue said, but in the meantime VentureOhio is assessing the private route.
The group is looking to Michigan’s statewide Renaissance Venture Capital Fund and Cincinnati-focused Cintrifuse, which I described in a recent cover story on what Central Ohio’s startup community needs to take off. Major corporations invested in both funds, which in turn makes investments of about $5 million in local and out-of-state VC firms. The VC’s aren’t required to invest in Michigan or Cincinnati companies, but they do travel to hold workshops and meet with startups.
VentureOhio would assess whether the state could raise a fund of $100 million or more and find a manager, but any fund would be independent of the trade group, Donohue said. More details on the study will come at the group’s annual dinner in September.
The group’s big goal is to make Ohio the top state in venture dollars per capita, and fifth overall.
“We want to be the place (where) people’s grandkids stay here and work,” she said.
