Potential investors visit with startup founders at the recent Demo Day at FlashStarts. Plenty of companies are getting started in Ohio, but they may not find the capital they need to grow. Lynn Ischay/The Plain Dealer

CLEVELAND, Ohio — Ohio’s success at entrepreneurship has created a venture capital gap that existing resources cannot fill, according to a first-of-its kind study of venture funding in the state.

Experts fear the shortfall imperils young companies poised to create a new generation of jobs.

OhioVenture Report 2013 echoes the fears of many economic development specialists in Northeast Ohio. The state’s emerging startup scene, stoked by talented inventors and entrepreneurs, lacks the capital needed to take young companies to the next job-creating stage in their evolution.

Job creating by new companies is an important part of a healthy economy, Lisa Delp, the former executive director of the Ohio Third Frontier Commission, said in a statement. Our report shows that this process is alive and well in Ohio, but that it faces a severe shortfall in capital to fuel growth.

Delp chairs the research committee of VentureOhio. a Columbus-based trade association focused on financing and supporting Ohio-based entrepreneurs.

In the first statewide survey of venture investment in Ohio, VentureOhio found that venture capitalists invested nearly $150 million in 129 Ohio companies in 2013.

Those investors have about $260 million of follow on funding, or dry powder, available to help the startups grow or to invest in new ones, the survey found. Unfortunately, that’s $163 million short of what the ecosystem is projected to need.

The problem is a lack of venture capital in a state where venture funding is still novel. State government has helped to fill the void. but private investment has not arrived in amounts sufficient to meet the needs of hundreds of young companies.

I think part of it is the success we’ve had building out the pipeline, said Michael Goldberg. an instructor in entrepreneurship at Case Western Reserve University. There’s a bigger pipeline of companies that need capital.

The danger now, he said, is that those companies will move to states where they can get their growth plans funded.

This is a decade-long process that we’re in, he said. If you take your foot off the gas, they might just go away.

In its public policy agenda, VentureOhio proposes three solutions. For starters, it suggests increasing the Ohio Capital Fund by at least $100 million. The $150 million fund was created in 2003 to invest in venture capital funds that support Ohio companies, thus growing the pool of capital in Ohio.

After 11 years of investments, the fund has exhausted its resources and the Gov. John Kasich administration has been slow to refund it.

VentureOhio also recommends creating a catalyst similar to the fund-of-funds in Michigan that invests in venture capital managers who invest in early stage companies based in the state.

The trade group is also pushing to restore the Ohio Technology Investment Tax Credit to encourage more seed and startup investment in Ohio tech companies.

Mitch Turck, co-founder of a startup called Vendelize.com, pitches his ideas to investors during a Shark Tank-like forum at Shaker LaunchHouse last November. Joshua Gunter/The Plain Dealer

Ohio Venture Association offers glimpse into incubator life

Ever wonder what the working life is like at one of the region’s business incubators; whether you could live off coffee and Good Greens nutrition bars at Shaker LaunchHouse, or endure seven-day work weeks at FlashStarts?

The Cleveland-based Ohio Venture Association is offering a window into that caffeinated world Friday at the Union Club. A networking luncheon will be followed by the presentation, Life in an Incubator.

Survivors and thrivers from the region’s three business accelerators and the entrepreneurship support center at Case Western Reserve University will offer insight into the collaboration and chaos at the epicenter of the startup scene.

The panel includes Jason Nemeth, who developed InStoreFinance.com at Bizdom; Chris Wentz, the chief executive of Everykey, a startup nurtured by Blackstone Launchpad; Rich Rodman, the CEO of Crowdentials from the FlashStarts portfolio; and Jeremy Handel, who launched Handelabra games from LaunchHouse.

Networking begins at 11:30 a.m. Lunch and the presentation will follow. For reservations, call 216-566-8884 or email admin@ohioventure.org .

Top executive leaving JumpStart

Lynn-Ann Gries, a founder and top executive at JumpStart, is leaving the Cleveland business developer after the first of the year. JumpStart president Ray Leach shared the news with JumpStart portfolio companies in a memo today.

Gries co-founded JumpStart in 2003 and has served as its Chief Investment Officer for 11 years, helping to build the entrepreneurial ecosystem in Northeast Ohio.

Case Western Reserve University and NorTech founded JumpStart to re-ignite the spirit of entrepreneurship in the region. Financial support came from the region’s leading civic organizations and foundations and, most notably, from the Ohio Third Frontier Commission.

In addition to orchestrating an entrepreneurship support network, JumpStart identifies promising young companies, mentors the founders and sometimes makes early stage investments.

Over the next three months, Gries’s work will be transitioning to her successor, Rem Harris, Leach said in his memo. Gries was traveling Tuesday and could not be immediately reached for comment.

She was very instrumental in the success of our organization and the important work we do every day with entrepreneurs, Leach said in a statement. While Lynn-Ann has decided to leave us after the first of the year, her contributions will show for many years to come. We wish her nothing but the best.

Robert L. Smith covers economic development and the innovation economy for The Plain Dealer. Reach him at rsmith@plaind.com