THE 2014

NE OHIO VENTURE CAPITAL REPORT

FROM THE DESK OF RAY LEACHCEO, JUMPSTART INC.

2014 was another strong year for venture capital in Northeast Ohio.

104 companies raised $336 million in venture and angel investment, the highest total amount ever recorded since we began keeping track of this data in 2004. Meanwhile, growth-stage investments are also at an all-time high, with $207 million invested this year.

2014 also provides us with a unique opportunity for a ten-year look back. Seen across an entire decade, the statistics are even more impressive.

Since 2004, investors from across the U.S. have pumped more than $2.3 billion into North-east Ohio companies. During this same period, the total amount of capital invested per year has more than tripled, as has the total number of companies receiving investment capital.

Statistically, there have been ups-and-downs from year-to-year, but over a ten year period we have unquestionably seen major growth in nearly every major investment category we track.

There is an important story behind this growth.

No other region, or state has benefitted from such a proactive, comprehensive investment in their entrepreneurial future as we have through the Ohio Third Frontier (OTF). The funding and direction the OTF has provided has created a thriving network of organizations – including JumpStart – in Northeast Ohio, all dedicated to accelerating the success of entrepreneurs in any way they can.

The economic impact chronicled by this report was made possible largely by the efforts of the OTF and its many private and philanthropic partners – efforts that have helped create a steady supply of seed-stage capital over the last decade, giving companies an opportunity to launch and grow right here in Northeast Ohio.

With more than $126 million in OTF dry powder still left to be invested in pre-seed/seed-stage companies, the future continues to look bright for startups in Ohio. Still, with each new year it becomes more clear that continued economic growth will rely heavily on a healthy supply of ear-ly-stage “Series A” capital for young companies who are becoming more mature and preparing to grow aggressively.

can ensure that our companies have what they need to launch here, grow here and stay here for the long haul, creating the kind of robust 21st century economy we all want.

Here’s to another prosperous year,

Ray Leach

CEO, JumpStart Inc.1‘14 NEO

VENTURE

CAPITAL

REPORT

$336million raised in venture and angel investments by 104 Ohio companies.

69of these companies were at the seed-stage.

$207million was invested in growth-stage companies, the highest amount on record.

4 exits4 regional venture/angel-backed com-panies experienced successful exits.

This maker of cloud-based software was acquired by California

were not publically disclosed.

This provider of ion channel testing services was acquired by Massachusetts-based Charles River Laboratories Internation-al, Inc. in an all-cash transaction of up to $54 million.

This clean energy innovator was acquired by Johnson Matthey,

deal were not publically disclosed.

This maker of 3D virtual reality surgical simulation and training solutions was acquired for $120 million in cash by South Caro-lina-based 3D Systems.

STATS AT A GLANCEFROM 2004-2014

IN 2014

$2.3 billion was invested in Northeast Ohio companies by U.S. angel investors and venture capitalists.

412companies in Northeast Ohio were funded by angel investors and venture capitalists.

74% of these companies received some form of assistance from the Northeast Ohio ESP Network, a group of organizations – including JumpStart – supported by the Ohio Third Frontier’s Entrepreneurial Signature Program (ESP).

A WORD FROM THE NATIONAL VENTURE CAPITAL ASSOCIATION (NVCA)

In so many ways, the story of Northeast Ohio is the story of our nation. How do we leverage entrepreneurship and small business growth to replace the withering economy of the past with something new and better?

The statistics presented in this report show a rising trend of economic growth and an increasing amount of investment

There are big deals happening in the Buckeye state, thanks in large part to the vision of private, philanthropic and govern-ment leaders who have made bold, long-term commitments to the region’s economic future.

As an NVCA board member, JumpStart CEO Ray Leach has long advocated for Ohio — and the Midwest as a whole— as an emergent region for savvy investors. Increasingly, major exits like TOA Technologies and massive healthcare IT investments like CoverMyMeds are proving these projections a reality.

As Ray prepares to rotate off the active NVCA board, we will continue to look to Northeast Ohio for new ideas and new inspiration. Your region should be proud of what it has accomplished in the last decade; and your future looks even brighter from where we sit.

Bobby Franklin President & CEO, National Venture Capital Association

3‘14 NEO

VENTURE

CAPITAL

REPORT

YEARS OF VISION AND LEADERSHIP FROM THE OHIO THIRD FRONTIER13 Years ago, Northeast Ohio seemed like a totally different place to do business. National publica-tions were pronouncing the region’s entrepreneur-ial ecosystem all but DOA, and years of setbacks had left the existing economic development struc-ture exhausted. Frustrated private and philanthrop-ic leaders saw the writing on the wall. Thankfully, so did some forward–thinking leaders in our state government.

They decided try something new, and the Ohio Third Frontier (OTF) was born. Among the many initiatives the OTF has supported, one of the most successful has been the Entrepre-neurial Signature Program (ESP) – a program that supports and coordinates a network of organizations throughout the state

to provide capital investment and intensive technical assis-tance to entrepreneurs and the high-tech, high-growth ventures they build.

Today, the foresight of our state leadership is paying off. In Northeast Ohio alone, a network of 16 organizations supported largely by the OTF – including JumpStart – has helped more than 975 early-stage entrepreneurs obtain the space, invest-ment, advice, support and connections they need to raise nearly $1.7 billion in additional risk capital and create more than 4,000 jobs.*

*

known to be out of business, their most recently known job numbers are removed from the total.

16 975+ 1.7B

ORGANIZAT IONS ENTREPRENEURS DOLLARS IN CAPITAL

4KJOBS*

10+

OUR 2014 ESP NETWORK PARTNERS

$57.5 Million In capital invested into Northeast Ohio ventures by network partners.

$1.7 BillionIn additional capital raised by network clients.

$1 BillionIn revenue generated by network clients.

950+Early-stage entrepreneurs assisted by the network.

4k+Direct jobs created/retained by network clients.

NETWORK STATS AT A GLANCE2004 — 2014

5‘14 NEO

VENTURE

CAPITAL

REPORT

TOTAL CAPITAL INVESTED BY STAGE: IN 2014

TOTAL CAPITAL INVESTED BY STAGE: TEN YEAR LOOKBACK

$336MILLION

111

207

18

250,000,000

200,000,000

150,000,000

100,000,000

50,000,000

0

2004

IN

M

IL

LI

ON

S

2009 2014

50,000,000,000

40,000,000,000

30,000,000,000

20,000,000,000

10,000,000,000

0

20072004 20082005 20092006 2010 2011 2012 2013 2014

TOTAL CAPITAL INVESTED BY STAGE: TEN YEAR LOOKBACK

NORTHEAST OHIO

NATIONAL

Seed Stage Early Stage Growth

Seed Stage Early Stage Growth

IN

M

IL

LI

ON

S

NEO COMPANIES THAT RECEIVED INVESTMENT BY STAGE: IN 2014

NEO COMPANIES THAT RECEIVED INVESTMENT BY STAGE: TEN YEAR LOOKBACK

7‘14 NEO

VENTURE

CAPITAL

REPORT

#

OF

C

OM

PA

NI

ES

100

80

60

40

20

0

2004 2009 2014104COMPANIES

27

69

9

METHODOLOGY

The 2014 Venture Capital Report gathers data from multiple sources including primary research conducted by JumpStart staff, public data-bases of VC activity, media reports and a survey of companies conducted by the Northeast Ohio ESP.

information reported by different sources. Additionally, many growing companies operate either in a space between sectors or in multiple sectors. As a result, different reports from different organizations often display some statistical differences.

Nevertheless, we believe this to be the most accurate and comprehensive Northeast Ohio venture capital report available.

Seed Stage

Early Stage

Growth

SEED EARLY GROWTH

EXIT

SEED

Sector: Information Technology

Since its public launch in November, Cleveland startup Beegit (a JumpStart client company) has already closed a $220k funding round, including $100k awards from the North Coast Opportunities Technology Fund and the Northeast Ohio Innovation Fund. The company, and its eponymous platform makes it easier for writing teams to create quality content by combining the convenience of collaborative writing/editing software with the control of project management software.

EARLY-STAGE

Sector: Healthcare

Founded in 2012, Westlake’s own GenomOncology (a JumpStart portfolio company) spent nearly two years after

software solutions for managing and interpreting oncolo-gy data. In early 2014, the company emerged from this development phase with a new investment from Nash-

to operate comfortably for “the next couple of years” as their products begin to produce cash.

GROWTH-STAGE

Sector: Healthcare

In November, fast-growing healthcare IT leader Cover-MyMeds (a JumpStart portfolio company) announced a

year’s largest healthcare IT investments nationwide, since Francisco Partners typically makes investments from $50 million to over $2 billion.

EXIT

Sector: Cleantech

In September, Ravenna-based clean energy innovator Catacel (a JumpStart Portfolio Company) was acquired by

but Johnson Matthey leadership made it very clear throughout the process that they see strong potential in the technology, products and people of Northeast Ohio and are making a strategic investment in the region.

FEATURED COMPANIES BY STAGE

9‘14 NEO

VENTURE

CAPITAL

REPORT

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JumpStart’s mission is to strengthen the economic vitality of Northeast Ohio and the U.S. by helping communities realize their entrepreneurial potential.