Ohio Venture - OVA Review Newsletter
News from the Ohio Venture Association meeting on April 8, 2011

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Keynote Address:

Clean Tech Panel

Jason Rottenberg
General Partner, Arsenal Venture Partners
Stephen Spoonamore
CEO, ABS Materials
Richard Steubi
Early Stage Partners

However one chooses to define the sector, venture investments in "clean tech" dwarf those of only a handful of years ago. And while opinions vary on the cause, there's no doubt that the sector draws a smaller share of the total venture funding in Northeast Ohio than it does in the country as a whole.

Those were among the major themes emerging from a panel discussion at the April OVA luncheon.

Early Stage Partner's Richard Steubi, who has worked in and around the energy industry for most of his career, said that nationally, the percentage of venture investments devoted to clean tech, or what some used to call energy tech, is believed to be as high as 17%. That number is about 10% in Northeast Ohio and about 12% in Ohio, he added. But he argued the regional numbers aren't necessarily a bad thing.

"One of the reasons clean tech has a smaller share of the market here than in Ohio or the country as a whole is that the venture ecosystem is exceptionally strong and exceptionally advantaged in other sectors." Because of the region's strong healthcare systems, life sciences and medical devices are probably stronger here than in rest of the nation on a relative basis, he noted.

ABS Materials' CEO Stephen Spoonamore, a Brooklyn native, said that as someone who worked in New York for many years and saw far too many silly investments during the dot-bomb era: "I would applaud Ohio for its prudence. I've looked at a lot of clean tech deals, and lot of them, particularly from California, are just stupid. I think they're just throwing their money down a rat hole. I see the investments going on here as being industrial systems-based...that really draws on Ohio's roots in hard manufacturing. So the investments I'm seeing here in the clean tech sector all seem really solid to me—not junk. So quantity (of deals elsewhere) may be higher, but quality less."

Much of the panel's discussion centered on what has by now become an all-too-familiar theme in regional VC circles: the extent to which the region lacks enough of the right kind of jockeys to lead a critical mass of entrepreneurial ventures, and thus must continue to import experienced business leadership. But this time, there was a twist.

Jason Rottenberg, who notes his firm, Arsenal, travels all over the country to find the right deals, suggested that top-shelf engineering expertise in commercially viable subject areas may be harder to find than entrepreneurial business leadership. "Around materials, there's a whole bunch of innovation going on, as the electronics industry and clean tech industry grows. You do not find that capability everywhere, and it's really hard to find that technical talent." Ohio, he agreed, is particularly strong in engineering talent in the materials sector. Unlike business leadership, he said, "that doesn't reside very many places in the world."

Speaking on behalf of the immigrant CEOs, Spoonamore argued that too many top leaders of Ohio companies are stuck focusing on internal process issues, and instead need to get out and sell more. "There are three things we need in Northeast Ohio: a direct flight to Amsterdam, a direct flight to London that runs all year, and a direct flight to Nagoya, Japan." He said he sends a monthly letter about this subject to Continental Airlines. "They've ceased responding."

More information:

Webcast from the Meeting:

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

Video Webcast from Recent Meeting
Webcasts produced by Tom Kondilas.

Upcoming Meetings:
 

June 10, 2011
Venture of the Year Award
Recipient: Turning Technologies
Award Finalists: ABS Materials and SageQuest

See complete details and registration for these events.
 

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