Ohio Venture - OVA Review Newsletter
News from the Ohio Venture Association meeting on September 10, 2010

Keynote Address:

Mark Heesen
National Venture Capital Association

While conditions aren't nearly as bad for the venture capital industry now as they were in the depths of the Great Recession, the industry's overall health will continue to languish until the larger economy stabilizes, the industry's primary spokesman told OVA members at their September luncheon.

This is the second time in the last three years that OVA has opened its fall programming schedule by hearing from Mark Heesen, president of the National Venture Capital Association. Two years ago, just as the economic downturn was gathering steam, he painted a relatively gloomy picture of the state of the VC sector. This year, he said, things are mostly looking up.

"When it comes to fundraising, it has been a very tough year and a half, (but) we're starting to see a bit of a change there...You're starting to see limited partners being much more receptive to hearing from venture capitalists. So while these numbers are low, we have kind of hit bottom and are working our way up."

He noted that nationally, VC saw an uptick in investments in the second quarter of this year, "and I think that uptick is going to continue." Still, he cautioned that plenty of investors remain skittish about getting back into venture capital and private equity. And he noted that the VC industry won't be returning to the same scale it enjoyed during the boom period in the middle of the past decade. "The venture capital industry is contracting, and it will continue to contract over the next several years."

As the VC community returns to its roots, Heesen sees a re-emergence of interest in the early stage arena. He thinks clean tech "will in the next several years actually become our largest area sector of venture capital investing...The next Google, eBay will be in this space."

He noted that on a national basis, about one-third of venture investments are in the life sciences (biotech and medical devices), but that there's much more interest these days in medical devices, largely because investors can at least see some exit through the Food & Drug Administration (FDA) approval process. On the other hand, he complained that "innovation was left on the cutting room floor" by Congress when it passed the massive healthcare reform legislation earlier this year. He said an industry lobbying consortium plans to aggressively press that case to Congress and the FDA in coming months.

Meanwhile, his Ohio counterpart—John Huston, founder and manager of Ohio Tech Angels—argued that Ohio is in pretty good shape, all things considered. He noted that since 1999, there have been a total of 123 Ohio-based start-up companies that have exited through private equity, including four through IPOs and 86 through mergers/acquisitions. Fourteen of those exits, he went on to note, involved deals of $100 million or more. The median exit was $42 million.

"The issue is not the dollars," he said. "The issue is how many deals you support." Rather than trying to find the next mega-deal like Google, he said he'd rather find $5 million each for 20 entrepreneurs than $100 million for a lone start-up. That, he argued, will help boost the state's entire entrepreneurial ecosystem.

As if to endorse that point, during a subsequent question and answer period, Heesen said: "more and more, angels and VCs realize they need each other."

More information:

Webcast from the Meeting:

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

Video Webcast from Recent Meeting
Webcast produced by Tom Kondilas.

Next Meeting:

October 8, 2010

Raymond Onders, M.D., FACS
Director of Minimally Invasive Surgery, University Hospitals Case Medical Center
Founder, Synapse Biomedical

Event Sponsor
MedCity News
Ray Onders' advancements in the technology of pacing the diaphragm have lead to patents and to the founding of Synapse Biomedical to bring this technology to patients. This company in 2003 was the Runner up for TIME, CWRU/Weatherhead Business School Business Launch Competition in the Bioscience Category and Best in Show - 2003 Cleveland Growth Association/COSE Business Plan Challenge.

Through the work and help of JumpStart and BioEnterprise and many other local entities and with venture capital investments from California, Biomedical continues to grow with expanding sales worldwide in helping patient breathe and improving their quality of life. Future pipeline products will help patients with Amyotrophic Lateral Sclerosis (ALS or Lou Gehrig's disease) to any patient on a ventilator in the case of a pandemic.

Ray was born and raised in Cleveland, attended Kent State University and Northeastern Ohio Universities College of Medicine for which he was recently honored with their highest award for his work in helping advance medicine with their Distinguished Alumni Award.

After finishing his military commitment as a Major in the US Air Force, Dr. Onders became the first Director of Minimally Invasive Surgery at University Hospitals Case Medical Center and Associate Professor of Surgery at CWRU School of Medicine. Over the last 12 years in Cleveland, Dr. Onders has focused his research on ways to help people breath naturally using their own diaphragm. He has over one hundred papers, book chapters and published abstracts. One of his first research subjects in helping spinal cord injured patients breathe without the ventilator was the late Christopher Reeve-Superman. His research and work in helping patients has lead to numerous honors which locally include: The Maurice Saltzman Award presented on behalf of the Mt. Sinai Health Care Foundation; Northern Ohio Live Award of Achievement in Science and Technology; Crain's Cleveland Business 2008 Health Care Heroes for Advancement in Health; and the prestigious Margaret and Walter Remen Chair of Surgical Innovation at University Hospitals Case Medical Center and CWRU of Medicine.

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