MONEY TREE: Ohio Venture Fund List Mostly Bypasses Colleges
COLUMBUS, Ohio (AP) — A panel controlled by the governor has hand-picked contenders in the latest round of bidding for a pair of high-tech Third Frontier venture funds, breaking with past practice that based awards solely on merit.
The nine-member Ohio Third Frontier Commission opted for the first time to limit eligibility for its two entrepreneurial funds in response to tough economic conditions, said executive director Norm Chagnon. Grants for those funds will go only to business entities that have a track record with the venture capital program, including several tied to generous political donors.
Chagnon said investment experts and commission advisers were unanimous in recommending the step. He said business startups that might have taken off quickly in a better economy are taking longer to stabilize and finding continuing, or “later-stage,” funding is difficult.
“The need was to create a longer runway for the later-stage companies as we’re waiting for the economic market to open up,” he said.
So the commission handed an exclusive shot at the funds to 24 entities, mostly venture funds and a handful of others, with a proven track record running venture funds. The decision meant just two hospitals and four higher education institutions, including one community college, were allowed to bid.
Other entities included BioEnterprise, Early Stage Partners and JumpStart Inc. in northeast Ohio, TechColumbus and its subsidiaries in central Ohio, and the Blue Chip Ventures and Entrepreneurs Fund LLC in Cincinnati.
A review by The Associated Press found lobbyists, executives and directors for the chosen entities and their spouses have given at least $220,000 to Ohio political campaigns in recent years. They have supported both Democratic and Republican state leaders who control the future of the program.
Lawmakers will decide how much voters should be asked to pump into the successful initiative, one of the few bright lights on Ohio’s job creation horizon.
Gov. Ted Strickland initially proposed $1 billion. That figure was pared back to $950 million by the Ohio House and to $500 million by the Ohio Senate, and the two chambers must now compromise.
Campaign filings show that House Speaker Armond Budish collected more than $13,000 from high tech representatives as the debate raged last month.
JumpStart executives, meanwhile, have contributed nearly $23,000 to Strickland and other Democrats. JumpStart director Ken Semelsberger, a senior Eaton Corp. vice president, has given almost $26,000 to Republicans.
Jamie Ireland, a managing director at Early Stage Partners, has given at least $23,000 to Ohio political campaigns, including $9,200 to Strickland.
Mark Barbash, chief economic development officer at the Department of Development, said funding decisions made by the Third Frontier program have been merit-based and that there is great transparency in the process.
The program was created by former Gov. Bob Taft. Brian Hicks, Taft’s chief of staff, is now a lobbyist for BioEnterprise, among other clients. He said he was unaware of the decision to narrow the field of contenders for the venture funds but agreed economic conditions might warrant it.
Chagnon noted that the Third Frontier Program has more than a dozen other funds that were not restricted, including those that continue to invest in innovative technologies and new ideas.
“When it comes to investing in the good ideas, that’s something we haven’t restricted at all,” he said.