Q&A: OSU's Michael Camp gives a bird's eye view of Ohio's entrepreneurial landscape
S. Michael Camp came to Ohio State University in 2004 to lead the newly formed Center for Entrepreneurship
in the Fisher College of Business. The center is an academic and research institution as well as a resource for new startups, innovators and existing businesses within the community. In his role (which includes overseeing the annual preparation of the highly regarded Ohio Venture Capital Report
) Camp works with students, faculty and business leaders who want to know one thing: How can I give my great ideas legs? Camp recently agreed to spend a few minutes with hiVelocity.
The Entrepreneur Center's mission statement includes three core values, one of which is to educate aspiring and practicing entrepreneurs in the art and science of value creation. What does that mean?
We don't take the idea of entrepreneurship as strictly the formation of new companies. At a lot of programs across the country, that is the capstone experience. What they're trying to do is give kids the opportunity to start new companies. I felt we really needed to get focused on what we call entrepreneurial leadership. We try to train the students in the creative skills and practices necessary for the development of new and innovative products and services. Sometimes you're working within existing companies or you're in a nonprofit setting or some other situation that's not the traditional commercial type enterprise -- you can be very entrepreneurial in leading your organization through opportunities for growth and what we call the creation of real, new value in the products and services you provide. How has Ohio's entrepreneurial environment changed since you came to Ohio State?
There's been a quite a bit of change. It's a slow process, that's the challenge. A new governor comes in and expects in four years to create 100,000 jobs. To to do that they want to lean on entrepreneurs, and that's the right strategy, but it's a five- to 20-year strategy in a down economy. So, very few states have the tolerance and the patience to endure that type of time frame. Luckily, first through the Edison
program and now the Third Frontier
initiative, Ohio has had a decade or more of direct investment in the entrepreneurial infrastructure. And we're doing things that states like California, even though they're known for their high-tech entrepreneur environments, aren't doing to support their entrepreneurs. We're really seeing a big tick up in the number of deals, first of all, and then the quality of those as well. There seem to be a lot of new or emerging companies in Ohio that might have gone out of business without some help.
It makes all the difference during down economic times. You need to be able to identify the ones that have great growth potential and provide the necessary resources to assist them. Things like helping get them introduced to their markets. It's extremely challenging, and the state of Ohio has a lot of great programs to prop that up and the infrastructure locally from region to region across the state.Are there things Ohio could be doing better?
Even though it's gotten a lot better, there's still a lot of room for us to see improvement. I think we're still missing an enormous opportunity for higher risk capital at the earlier stages of development. We've got a lot of exciting, enterprising students at Ohio State that bring a lot of potential, a lot of creative ideas, but there's not a lot of early stage exploratory risk capital available. Even students with the most creative ideas are having to self-fund beyond what might be the average across the country. They tend to do the best they can, but then they have to look elsewhere and, unfortunately, they'll typically relocate because there's nothing about their idea that keeps them in Ohio. Some more established companies say they can't get the venture capital they need but that there seems to be money for early stage companies.
There's what we call validation funding (or seed funding) -- and there's quite a bit of validation funding out their right now. Pre-seed funding is what's missing. And that funding is necessary to allow someone to experiment with their concepts -- say, $20,000, $25,000 of investment with the investor having no real expectation of being paid back. Then, the funding (more established businesses) are referring to is, I've got proof of my concept, I've got my products and I'm working with a couple of customers, and now I need $2.5 million. And there are relatively few venture firms in the state of Ohio that are devoted to Ohio that have that kind of capital available.Are there common misconceptions both students or established entrepreneurs have about running companies?
I think the largest mistake or false thinking students have when they come in is that if I write a good business plan, it must be a good business. It's the ability to execute against the business plan that most of the inexperienced students would not pick up on. In fact, that's been facilitated by three decades of universities across the county who promote that capstone experience in their programs with the business plan writing course. And it's one reason we use business plans as exercises, but we don't have a course that focuses on writing a business plan. I think the biggest misconception among outside entrepreneurs is how hard it is to attract the resources they need. They think a creative idea will naturally draw the right resources. And, it's also an experience problem. If Ohio lacks anything besides critical risk capital, it lacks investible senior management teams. We really struggle to put strong experienced managerial teams in place to lead companies into next levels of growth. Are you working in that area -- to strengthen management teams?
We just launched a pilot initiative. We're just now putting the resources together and putting our team's advisory groups together. Do you have a new venture capital report coming out soon?
We are supposed to have the report out by April 1. Can you give us a sneak preview?
I wish I could. We're assembling the data now and I know our regional partners tell us it looks better than last year, but I haven't seen it. But the word we keep getting back is that 2010 was a more robust year than '09 and they expect '11 to be even better than that.Any other thoughts that you have on Ohio's entrepreneur climate?
We're intrigued to see what Gov. Kasich's plans are and how they may lead to or support the kinds of things we're trying to do -- or how we can better support some of his ambitions. I hope he continues on with the Third Frontier initiative. We know it needs to be tweaked. But it's been a great backdrop for the state of Ohio. I was at a presentation by the Mission Bay Capital Group, which is a small venture fund inside the University of California at San Francisco, and they used Ohio's Third Frontier as an example of what's missing in the state of California. And I thought, how ironic is that? I come to northern California to get insights on how to build out infrastructure and they're referencing the Third Frontier.