Columbus, OH – The State's Third Frontier Commission today announced that more than $5 million in Third Frontier Project grants from the Pre-Seed Initiative have been awarded to three Ohio-based early-stage capital organizations including $2M for North Coast Angel Fund (NCAF). The funding, approved today by the Third Frontier Commission, will allow NCAF to make at least 10 additional investments in early-stage technology companies.
As part of its $2M grant application, NCAF raised $1M of private capital bringing NCAF’s total funding to nearly $6M, and making NCAF the largest Midwest angel fund and one of the largest angel funds in the country.
With a mission of accelerating Ohio’s “early-stage” technology ventures, the recently formed angel fund represents a new approach to identifying, evaluating and funding the region’s high-potential, early-stage companies. “The structure of an angel fund allows our members to collectively evaluate a greater number of opportunities, and make smarter, more diversified, and hopefully higher returning investments than would be likely if investing solely as individuals,” said Clay Rankin, Managing Member of NCAF.
NCAF plans to invest $200,000 in a typical company and partner with other institutions or groups in what are typically $750,000 - $1.5 million deals. The Fund anticipates making 20-30 investments in Ohio-based companies over the next five-to-seven years, with an investment focus on early-stage companies in technology driven growth industries including life sciences, software and IT services, advanced materials, advanced power generation, and instruments and controls. These investments will be further leveraged by member “sidecar” investments. Sidecar funding is the optional follow-on investment made by individual members of NCAF. It is expected that the typical NCAF investment will drive another $150,000-$300,000 of sidecar investments.
Rankin credits the Pre-Seed Fund Initiative and several of the State’s other economic development initiatives under the Third Frontier Program for creating a healthy growth environment for young companies. “Investing in startups always will be risky, but many of the State’s targeted programs are helping to create powerful new incentives to invest in early-stage Ohio companies.”
Over the past several years, an increasing number of individual angels have joined together to form formal angel funds and informal networks in other parts of the country in order to pool resources and investment expertise. “The trend of individual angels banding together brings significant benefits for both investors and entrepreneurs,” said Todd Federman, NCAF’s Executive Director. “Our membership has tremendous experience in creating, growing, and advising early-stage ventures and our hope is that this resource will be at least as valuable to our portfolio companies as the actual capital invested.”
The commission also awarded $2M to JumpStart Inc and $1M to the Tomorrow Fund, of Cincinnati Children’s Hospital.
NCAF collaborators on this project include JumpStart, NorTech, BioEnterprise, Cleveland Clinic Foundation, Jones Day, Dix & Eaton, Tech Columbus/Ohio TechAngel Fund, ARCHAngels, SalesForce4Hire, Mehran Mehregany, Tom Barratt Companies, and Enlight Advisors. The collaborator organizations will provide support to the Fund and/or its portfolio companies with services such as due diligence and advisory services.
About Angel Investing
Individual angel investors typically invest in fledgling companies between the “friends-and-family” stage and the venture capital stage. The funding gap in this space has consistently been cited as a major obstacle to entrepreneurial growth in the region. “Northeast Ohio has a long tradition of active angel investing, but until now, much of the funding of early stage-ventures has hinged on the efforts of a relatively small number of individual investors,” said Clay Rankin. “As the region’s first formal angel fund, we are working to dramatically improve the state of early-stage funding by creating a more active, accessible and flexible capital environment.”
“Due in large part to the economic development efforts of organizations such as JumpStart, NorTech and BioEnterprise, we are seeing a significant number of high-potential opportunities right here in Northeast Ohio,” said Rankin. “We believe this Fund will add another important piece to the entrepreneurial support network in this region, and that the end result will be job and wealth creation via accelerated success for business start-ups.”
For more information about North Coast Angel Fund, see: www.northcoastangelfund.com