Growing Ohio’s High Performance Economy (cont.)

Promote entrepreneurship

Incubators provide ever-evolving business development, managerial and technical assistance, as well as affordable office space and shared office services to provide an environment conducive to small business growth. Early on, Ohio recognized incubators as critical components to achieving an advanced economy. Ohio established Edison Technology Incubators to foster the growth of new companies in partnership with the Edison Technology Center program, which exposes those new companies to the expertise of industrial partners.

Excera Materials, a developer of methods for processing ceramic-aluminum composite materials into various end products, is an example of an Ohio technology company that has benefited from the Edison Technology Incubator system. During its time at the incubator, Excera developed its technology from an idea into a business that has attracted the attention of such heavyweights as the U.S. Air Force. In order to accommodate its increased manufacturing demands, the company is graduating from the incubator and will move into its own facility this spring, creating approximately 20 new jobs initially.

Nurture investments

Business incubators provide new companies with many services at reduced rates, but new ventures also require capital to continue growing, particularly early-stage investments. Ohio has increased funding for startup ventures and reduced investor risk by establishing several incentive programs for investing in Ohio-based companies. In 1996, Ohio created the Technology Investment Tax Credit (TITC) program, which offsets the risk associated with investing in small R&D and technology-oriented firms by offering a 25 percent state tax credit to Ohio taxpayers. Since the program started, 1,470 investors have invested more than $45 million in 131 companies throughout the state.

The success of the TITC program prompted the state to consider other initiatives to promote early-stage capital availability, particularly to bridge the gap between innovation and commercialization. Since 2000, the state has invested more than $18 million in seed funds and validation funds throughout Ohio. With only a quarter of the available money invested to date, state dollars already have helped leverage more than $150 million in nearly 60 Ohio start-up companies. These funds have helped create more than 400 high-skill, high-paying jobs statewide.

To increase venture capital funding in the state, Ohio created the Ohio Venture Capital Authority (OVCA), a fund-of-funds program. OVCA is hiring a program administrator who will capitalize the fund with $100 million through loans from banks, insurance companies, corporations and individuals. The program administrator will determine qualified, professional venture capital funds in which to invest this money, which then will invest in startup companies throughout Ohio. Revenues will be funneled back through the program fund to repay the principle and interest incurred on its loans.

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