Materials in Booming Emerging Market Sectors
CEO, Five Star Technologies
What do you get when you combine references to the Soviet Navy,
film clips from the movie Caddyshack and explanations of
advanced materials used in Apple's popular iPhone? Answer: one of
the more memorable OVA presentations in years.
During a lively presentation about his company, Five Star
Technologies President and CEO Gerard Weimann, an engineer
and a graduate of the Harvard Business School, outlined how the
ten-year-old company is finally beginning to get commercial
Five Star produces patented, branded inks and pastes used in
advanced electronic devices such as liquid crystal displays, touch
screens, circuit boards and solar panels. It also produces a
special ink which enables Apple's iPhone to operate better. It's
particularly well-positioned to address the demand for
increasingly miniaturized devices and other nanotechnology
applications. The company maintains a clean-room manufacturing
facility near Hopkins International Airport.
To leverage its technology in the booming biofuels sector, Five
Star has also spun off a separate company, Arisdyne Systems. In
this vertical market, it licenses the use of its equipment to
biodiesel refineries and ethanol plants. "If we can increase the
efficiency of processing ethanol just 5-10%, that translates into
hundreds of millions of dollars in opportunities for us," he
The company's roots spring from an improbable immigrant's
journey. A man named Oleg Koczyuk was once a Ph.D.
physicist in the Ukraine, studying the process of cavitation—or
the behavior of bubbles in liquids—for the purpose of reducing
tell-tale signatures from submarine propellers. After the fall of
the Soviet Union, he emigrated to Cleveland with little money and
no ability to speak English. He met a pair of brothers in the
hoist business who backed him in building a lab and developing his
technology, though the two sides at first needed interpreters to
put the deal together.
"Everyone knows the story of Hewlett and Packard starting in a
garage, but here you have a guy without money, who didn't speak
English, and still made it happen," Weimann said. "Hopefully, we
can take it the rest of the way."
Webcasts produced by Mike
Gesing, The Impact Group.
Venture Capital Summit III
February 22, 2008
Topic: "Our Economy"
Private Equity In the U.S. May Be Suffering Some Ills, But
Improved Deal Flow is Raising Hopes in Northeast Ohio
The private equity market may be undergoing some serious
macroeconomic challenges at the moment, but in Northeast Ohio, the
sector has probably never been healthier. Angel networks have
grown stronger, more sophisticated and better connected to each
other, and VC groups from outside the region have increasingly
opened offices here, attracted by the growing deal flow in recent
years. Naturally, a recession-if it comes—won't help any. But
neither will it necessarily be a disaster for venture-backed
Those were some of the main threads arising from OVA's third
annual Venture Capital Summit, held February 22nd at Corporate
College East. With 180 people on hand, it was by far the
best-attended yet of the three summits.
The Federal Reserve's Mark Sniderman summarized the Fed's
consensus economic projections through 2010, released just a
couple days before the summit. "The view was that real GDP growth
this year would fall into a range of between 1.3 and 2%, and that
range is considerably lower than the committee provided in
October, only a quarter ago," he said. "A number of factors led to
the downward revisions in this projection, including a much
sharper housing market correction than had been anticipated,
tighter credit conditions, and higher oil price."
But he went on to point out that the Fed sees a less-gloomy
outlook beyond this year. "A number of factors should support
economic growth beyond 2008, such as a gradual turnaround in the
housing markets and lower interest rates. If these factors play
out, real GDP growth is expected to accelerate somewhat in 2009
and 2010, eventually reaching a growth range of 2.5 to 3%."
Ray Leach, CEO of JumpStart, who moderated the angel investor
panel, noted that as VC funds have grown larger in recent years,
and consequently the dollar amounts they put to work in any one
deal have grown as well, a funding gap has developed for start-ups
and early stage companies looking for investments in a range
between about $500,000 and $3 million. It's here that angel
investors can find their sweet spot, he said. Neil Wyant, managing
director of Everett Capital, a fund established by the family that
founded Akron-based GOJO Industries, returned to the region after
about 20 years living and working elsewhere. "I've been pleasantly
surprised with the deal flow here," he said.
The well-known angel investor and serial entrepreneur Dan T.
Moore offered some hard-won insights, delivered in his signature
manner, laced with humor. "I think what drives angel investment is
somewhere between a psychiatric situation and meds, because you
don't own (the companies)," and thus often lack leverage to really
drive the company's success. But that's never stopped him from
investing in start-ups. Moore has been involved in about 20
start-ups, many unsuccessful. "Angel investments are fun, they're
invigorating. It's like getting a good workout," he said.
Veteran investor Clay Rankin, the central figure behind the new
North Coast Angel Fund, noted that angel investors "used to have
the reputation of being rather dumb money, but that's beginning to
change," with the formation of national, state and regional
networks of angel funds, which are helping to bring more
sophistication to the sector. But the most important factor in the
investment equation, he added, remains "the jockey"-the
entrepreneur investors choose to support. "And that's one of our
challenges in this region-we don't have as many serial
entrepreneurs as on the coasts."
Barry Rosenbaum, founding member of an angel network affiliated
with the University of Akron, the Arch Angels, argued that
colleges and universities in the region play a crucial role in
developing the next generation of entrepreneurs. "And it's not the
job of the business school-it's got to be cross-disciplinary," he
maintained. He explained that his group has amassed approximately
300 participants, about 30% of whom are accredited investors. But
matching emerging companies with mentors and customers is often
just as important, and sometimes more important, than helping them
line up investors.
At the same time, noted Karen Spilizewski, who now splits her
time between Bioenterprise and the new Cleveland office of St.
Louis-based RiverVest Venture Partners, the pipeline of
innovations and spin-offs from this region's large medical centers
has now essentially caught up with those of Minneapolis, long
considered the benchmark for regions hoping to spawn a critical
mass of innovations and commercial spinoffs from its medical
centers. Despite Minneapolis having enjoyed a head start of many
years, she said, "you can see some of those same pipelines here,
with the Cleveland Clinic and University Hospitals. But Cleveland
is really on an accelerated pace, and now is pretty much on par
The day's final panel-in which VCs provided practical advice on
how to pitch a deal to venture capitalists—received some of the
most enthusiastic word-of-mouth from attendees. The consensus: if
you want to get funded, don't bother cold-calling VCs or sending
them unsolicited emails outlining your deal. Instead, first
persuade one (or several) of their trusted allies that you have a
worthwhile plan, and ask them to endorse you and your business
plan. That's a far more likely route to success.
Here are a few other notable & quotable items that came out of
- Virtually every company I've invested in, I've engaged
professors from either Case or Akron U (to help with the
technology)," said Dan Moore. "The problem is, we don't go to them
- 35% of the companies JumpStart has invested in are
- Reservoir Venture Partners' Tim Biro, agreeing that Northeast
Ohio's lack of population density compared to coastal areas is
often a plus in attracting talent: "I come from Philly, and you're
right-rush hour here is rush minutes."
- Asked what the effect of a recession might be for their
portfolios, Karen Spilizewski said it could delay exit strategies
and make it moderately harder to raise funds. Chrysalis Venture's
Chris Sklarin added it would force start-ups to better manage
their burn rates.
Webcasts produced by Mike
Gesing, The Impact Group.
April 11, 2008
President and CEO, SpineMatrix®
The Union Club
1211 Euclid Ave.
The Quiet Recovery
Focused on the regional core competencies in bioscience
SpineMatrix, Inc. is a spinal imaging company that has developed
the CERSR® spinal imaging system for evaluating low back
physiology related to the origin of low back pain and injury.
CERSR aids the physician in more accurately diagnosing low
back pain with the very real potential to significantly reduce
total health care costs and significantly improve patient care.
CERSR is FDA cleared to monitor and display bioelectric
signals produced by the paraspinal muscle system to aid in the
diagnosis and prognosis of muscular, facet and disc disease and
dysfunction associated with chronic low back problems.
SpineMatrix, has completed clinical efficacy studies at The
Cleveland Clinic, the Texas Back Institute, The Ohio State
University College of Medicine and others on facet and disc
Ben Shappley has more than 25 years of orthopaedic and
neurosurgical implant experience with management and senior
management responsibilities. He has significant global business
development and acquisition experience. Ben has successfully
raised private equity and institutional fund for
orthopaedic/spinal concerns and is skilled with start-ups and the
on-going operations. Mr. Shappley is a founding charter member of
the Institute for Orthopaedic Enlightenment and currently holds
seven orthopaedic implant patents.
complete details and
Medalign Helps with Healthcare
Medalign Corporation is a healthcare informatics
solutions provider which uses proprietary analytic software to
document and account for shared savings in fee-for-service health
care. Why invest? "The healthcare cost-containment market is
absolutely exploding," said COO & Vice President of Sales and
Marketing Bridget Turrittin.
Medalign is seeking a $1-million investment to build a beta
version of the system.
For information, contact Bridget Turrittin at
call 330-721-8855, or see
See complete PowerPoint presentation.
New Venture Fund to Serve Area
Flashline Partners is a new venture capital fund which
will focus on seed and early-stage technology opportunities in the
corridor between Detroit and Pittsburgh. The four-partner firm
will be looking to invest in "an intrepid team and an unmet
billion-dollar need," said partner Charles Stack, who sold
his software company, Flashline, to BEA Systems. That will include
micro-investments of $10,000-$50,000 in "agile startups." Flashline Partners is raising a $50-million fund.
information, contact Charles Stack at
firstname.lastname@example.org, call 216-220-4580, or see
complete presentation (PDF).
The 5-Minute Forum is an opportunity for business owners to
make a 5-minute presentation at our monthly luncheon meeting for
raising capital, identifying customers, establishing distribution,
or recruiting management. See