Replanting the Economic Forest in Northeast Ohio

by Ray Leach, Chief Executive Officer, JumpStart Inc.

Visitors to Northeast Ohio – particularly those arriving for the very first time – are often struck by the area’s physical beauty. From the majestic shores of Lake Erie, to the 60 mile-long string of parks known as the Emerald Necklace which surrounds the city of Cleveland, Northeast Ohio’s attractiveness is impressive and unexpected for those who know the region only as part of the “Rust Belt” – the perception echoed ubiquitously by the media in recent decades.

Those of us who live here or visit frequently find themselves in an exceedingly comfortable environment, with short commutes, a diverse population, a broad range of housing and lifestyle choices, world-class healthcare, and extraordinary cultural amenities. However, even the most avid cheerleader for the area – which stretches from Lorain in the west to Akron and Canton in the south and to Warren and Youngstown in the east – must acknowledge that the struggling region still has a long road before it emerges from its 30-year recession.

Northeast Ohio has suffered disproportionately from the decline of the manufacturing economy that began in earnest during the last quarter of the 20th century. The 2004 presidential candidates from both parties, who repeatedly visited Ohio promising job growth throughout the election season, clearly recognized that the area has serious economic issues to deal with. At the heart of the problem is a disturbing statistic: hard-working Northeast Ohio, known for most of the 19th and 20th centuries as a powerhouse of industrial innovation and wealth production, ranked 57 out of 61 regions in 2004 according to Entrepreneur and Dun & Bradstreet’s “Tenth Annual Best Cities for Entrepreneurs.”

The old-growth entities in the region’s economic forest, planted by renowned and successful entrepreneurs like John D. Rockefeller and Marcus Alonzo Hanna in the 19th century, began to age and decline at the end of the 20th century in the face of the technology revolution, and new growth was hard to come by. Despite impressive upgrades to the region’s physical infrastructure, including large-scale improvements to the downtown areas of Akron and Cleveland, there was no matching economic turnaround.

In reaction, regional leaders from academia, government, and the business and philanthropic communities began to build a new model for stimulating economic development with a focus on rekindling the entrepreneurial spirit. Out of their vision for the future, JumpStart Inc., a unique public-private partnership, was created to solidify, celebrate and continually grow Northeast Ohio’s position as a nationally significant center for entrepreneurship and innovation.

The prescription: Early stage investment and support for entrepreneurs

A diverse nexus of community leaders, convened by NorTech (the Northeast Ohio Technology Coalition), coalesced into an Entrepreneurial Task Force that quickly confirmed the region’s lagging position in early-stage entrepreneurial development. As evidence, they cited a decade-long bottom-10 percent ranking in virtually all entrepreneurial benchmarks and a lack of early-stage capital as the primary culprits. NorTech identified a critical lack of appreciation within the region for the power of entrepreneurial activity to shape its economic future. The “serial” entrepreneurs who fuel the cycle of growth in today’s economic hot spots were missing – often having departed for the more supportive coasts, with their regional focus and risk-friendly angel capital that can be the lifeblood of an entrepreneurial company.

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