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Ohio universities support venture capital investment
Top university officials are backing an idea by the head of Ohio’s largest college to pool resources in a $100 million-plus venture capital fund that would be used to finance marketable businesses developed from research projects.
E. Gordon Gee, Ohio State University president, said during a recent meeting with the Dayton Daily News editorial board that he’d like to see universities and private businesses partner on a fund that could stake new spinoff business opportunities from university research projects around the state.
“I think we could be very successful,” said Eric Fingerhut, chancellor of the Ohio Board of Regents. “One core strategy for helping the state grow is the development of research at the universities to create jobs for Ohioans. One of the limiting factors is the availability of venture capital.”
A similar program has been successful here on a smaller scale. The Entrepreneurial Signature Program, run by the Dayton Development Coalition, has helped finance 40 new companies in the past three years with money from the Third Frontier program, local universities and area businesses.
“Our investors invest because they want to make something happen in the Dayton region,” said Christina Howard, coalition vice president for entrepreneurial development.
But Gee knows colleges and university researchers often face obstacles when taking an idea from the laboratory out to the marketplace. To spur the creation of more small businesses from university research, a statewide university and privately financed venture capital fund is needed.
Earlier this year Gee appointed former J.P. Morgan Chase executive Geoff Chatas as OSU’s chief financial officer to help deepen the pool of venture capital money specifically devoted to universities and their research projects. “The idea is investors get access to our ideas, and we get access to their expertise,” Chatas said.
Ohio’s Third Frontier Program, which was just renewed by voters this spring, now provides money to help emerging businesses. Some see a university-sponsored venture capital fund as a way to provide a similar permanent investment.
In Dayton, of the 40 businesses funded by the Entrepreneurial Signature Program, 18 had ties to local education institutions, said Howard. The $22 million fund includes $1 million from both Wright State University and the University of Dayton and $500,000 from Sinclair Community College. “We are trying to commercialize companies and build jobs for the Dayton region,” she said. “In the Dayton Region, our model is very much like what (Gee) is talking about.”
It is unclear how a statewide model would be administered, but the idea has support locally from leaders at Wright State University, the University of Dayton and Sinclair Community College. “I think it is an absolutely wonderful idea,” said Mathew Willenbrink, director of technology partnerships for UD’s Research Institute.
S. Narayanan, executive director of the Wright State Research Institute, said a recent change in state law that allows universities to take a stake in business developed from research technology means schools could play a larger role. “I think overall it’s a great idea, but you have to make sure you do it in the correct manner,” Narayanan said. “When you have a financial stake, you want to make sure the academic pursuit of things is not compromised.”
Deb Norris, vice president of workforce development at Sinclair, thinks in addition to seed money for developing businesses, such a fund could also provide the flexibility needed to act quickly when job-training deficiencies are spotted.
“It is all about flexibility,” said Norris, who added that the ability to quickly respond to companies’ job training needs could make the area more attractive to new firms. “It gets at the root of what a business needs to get started. Having a fund to be able to do that would really differentiate the area and the state.”
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