News from the Ohio Venture Association meeting on September 12, 2008

The OVA hopes you will enjoy this new version of the newsletter and will view it as a unique benefit as it supports you and your profession.

Keynote Address:

The Good News and Bad News About the Venture Landscape

Mark Heesen
President, National Venture Capital Association

When it comes to appraising the state of the venture capital industry these days, one can choose to look at the glass half full or half empty. On the one hand, the IPO market is dormant, and the number of VC firms is winnowing, a natural reaction to the challenging macro-economic picture. At the same time, VC activity overall has returned to a more sustainable level. And the trends in Ohio are more pleasing than elsewhere in the country.

That was the gist of the industry overview that Mark Heesen, president of the NVCA, provided OVA members at the September 12th luncheon. The association over which he presides represents about 400 of the 700-some VC firms in the country, but about 90% of the venture capital under management.

He began by reminding his audience about the relatively small size of his industry. As crucial an economic player as some might believe the VC sector to be, with $37 billion raised last year and accounting for just .3% of GDP, it's still essentially "a rounding error" in the larger American economy, dwarfed by such asset classes as hedge funds, buyout firms and mutual funds. On the other hand, speaking no doubt as someone who makes his living lobbying Congress, he pointed out that venture-backed companies have a disproportionate effect on the economy, employing more than 10 million Americans and generating more than 17% of total GDP.

For all the buzz about the so-called clean tech sector, he noted that there hasn't yet been an overwhelming move to investing in that area. He predicted that when the final numbers were in for 2008, about 15% of U.S. venture funding will have been devoted to investments in clean tech deals, which tend to be larger investments than IT deals. While that might seem low, it's about seven times the activity of just a few years ago, he said. Overall, about one-third of VC funding still goes to the life sciences, but it has been increasingly shifting from the biotech area to medical devices, largely because of the relatively shorter time involved in receiving FDA approval for devices.

But the IPO situation has been nothing short of catastrophic, he said. With two-thirds of the year gone, there have only been eight in the U.S. thus far this year (the annual range is normally between about 85-100). For the first time in 30 years, there was a quarter this year in which not a single IPO took place in all of America. "I personally don't see a change in the IPO market in the next six months," he said. "I hope I'm wrong." Besides the obvious cloudier economic picture, he thinks the lower numbers also result from a sea change in thinking among those who begin companies. "I think entrepreneurs no longer see going public as the brass ring. That's a very important psychological factor." But he said the American economy still needs these new public companies as regional economic anchors and solid corporate citizens. "So this is a long-term issue for us," he concluded.

The trends in Ohio are more favorable than in many other states, he noted, in large part because of the catalytic role played by the state's Third Frontier project. The number of VC firms with a presence in Ohio has been on the rise.

Mr. Heesen concluded by observing that it's hard to say which presidential candidate would be better for the VC industry. But whomever it will be will likely have to work with a Democratic Congress next year. He identified more HB1 visas, lower capital gains tax rates and health care reform (where the industry hopes cost-saving innovations aren't tossed out of the equation) as the biggest legislative priorities for the industry.

See complete presentation (PPT).

More information:

Webcasts from the Meeting:

Click on the image below to view the entire presentation as video.


Webcast produced by Mike Sutyak, The Entrepreneurial Learning Initiative.

Next Meeting:

October 10
Brett Scully
Founding Family, eBlueprint

The Union Club
1211 Euclid Ave.
Cleveland, Ohio

In 1972, Anthony Scully founded Lakeside Blueprint as a family owned and operated enterprise. Lakeside continued to grow and expand throughout Northeast Ohio during the 1970's and 1980's by serving an expanding and loyal clientele. In 2001, the company changed its name to eBlueprint, thus embracing the future of online reprographics services and forging a new path by which all other would follow.

While they have grown to include offices throughout Northeast Ohio and Colorado, they remain committed to providing the same kind of hands-on, personalized service and support that customers have come to know and expect.

eBlueprint offers the most efficient services available in today's reprographics industry. We provide complete document solutions form a wide range of digital services, including CAD plotting, scanning, vectorizing, and file storage, as well as variety of output and finishing options such as large-format color output, mounting, binding and laminating.

Bringing ideas and solutions together with technology that' powerful and easy to use… Let eBlueprint help you bridge the gap between survive…and THRIVE.

Under the leadership of Brett Scully eBlueprint was recently sold and is now a division of ARC.

See complete details and registration.

5-Minute Forums:

Israeli Company Focuses on Vision-Screening Bottlenecks

El-Vision, Ltd., is an Israeli-based company that produces devices aimed at offering low-cost, high-quality vision-screening services to underserved populations, including diabetics, low-income individuals and those who live in remote locations. It says these patient populations are ill-served by the current health care system.

Having commenced operations in August, 2006, the company will soon complete a $2 million round of funding, and now has six employees. "There's a very intense competition in the U.S. between optometrists and ophthalmologists," CTO Arthur Rabner said. El-Vision plans to market to both specialties. He added that the company expects to form a partnership with the Cleveland Clinic. El-Vision seeks to raise an additional $1 million in the next year. 

For more information, contact Arthur Rabner, CTO, at arthur@el-vision.com, or by going to www.el-vision.com.

See complete presentation (PPT).

Device Focuses on Predicting Pre-Term Births

Cervilenz, a medical device start-up, makes a single-use, disposable tool that measures the length of the female cervix during the second trimester of pregnancy. That calculation is used to predict premature births. Almost 13% of births in the United States are pre-term, or occurring less than 37 weeks after conception. It's considered the leading cause of infant mortality.

The company's product grows out of research initially conducted at Ohio State University. Cervilenz now holds five U.S. patents, and has thus far produced 2,000 prototypes of the device. It plans to manufacture in the Cleveland area, with commercialization planned for late next year.

"There's no direct competition," president and CEO Dean Koch said. "The only alternative is the gold standard"—expensive appointments with medical specialists. Cervilenz has already received financing from Jumpstart and the North Coast Angel Fund.

For more information, contact Dean Koch, at dean.cervilenz@gmail.com or 440-289-3656, or by visiting www.cervilenzinc.com.

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 details.

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