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On the rise: Ohio's smaller cities become hotbed for tech startups

Pallas Systems in Springfield, Ohio
Pallas Systems in Springfield, Ohio - Bob Perkoski
Ohio's rural or less populated areas may not seem like centers of new ideas and innovation, but don't tell that to the entrepreneurs creating laser-edge technologies off the so-called "beaten path."

You don't have to be entrenched in one of Ohio's major urban centers to flourish in the high-tech realms of digital media, biotech, sustainable energy and more, maintain the heads of these fast-growing companies. The local incubators, venture capitalists and nonprofits supporting these companies are of a similar positive mindset.

"We tell companies they can be a big fish in a small pond," says Jennifer Simon, director of The Ohio University Innovation Center, which supports 31 startup clients spread throughout nearly 36,500 square feet of space.

The business launch pad is developing an "entrepreneurial ecosystem" in southeast Ohio, says Simon. Incubating a large number of small companies with high-paying jobs is the preferable model for a rural area seeking to redefine itself and kickstart a suffering regional economy. Just as critically, the state is equipping these businesses with the tools they need to grow.

"We have a responsibility to retain our own companies," Simon says. According to a 2010 study conducted by Ohio University, the innovation center created 78 jobs generating an estimated $3.8 million in labor income. These numbers aren't staggering, but do point to the importance of building sustainable industries and long-term wealth through startup technologies, a tack that other parts of the state are following as well.

hiVelocity recently caught up with a half dozen Ohio-based entrepreneurs striving to fulfill big business dreams in the smaller headspaces of Athens, Dayton and Youngstown.
Athens happenings (and Southeast Ohio)
Jean Marie Cackowski-Campbell
Founded 2004
Makin' it: This small software company, founded in Columbus and now residing in Athens, is currently developing Vuo, a "next-generation visual programming environment" enabling multimedia artists to create real-time audiovisual projects, data visualizations and apps.

At the start: Vuo is a new venture for Kosada, which had been previously developing desktop and mobile applications for Mac and iOS. With Vuo, the Finish word for "flow," the company is seeking to replace antiquated visual programming software.

"We found a gap in the market," says Cackowski-Campbell, whose company's new software will have a beta release this summer. "This was a move that nobody else out there was making."

Tech hotbed: The company has benefitted from its early-stage, Ohio University-based incubating partner, TechGROWTH Ohio. Cackowski-Campbell also points to the energetic innovation atmosphere around campus.

"The industry metrics and standards we learned were helpful," she says. "It's amazing to see how many people are interested in spurring innovation in Southeast Ohio."

Kyle McPeck, CEO
Founded 2006
The concept: A ticket brokerage firm now based at  the Muskingum County Business Incubator (MCBI), TicketCrush nets $3 million in annual sales providing ducats for concert, theater and sporting events.

In the beginning: McPeck was an Internet marketing veteran who found success working with ticketing giants StubHub and Ticketmaster. He took that knowledge in creating TicketCrush.com, and the company soon found success acting as an intermediary between buyers and ticket sellers.

"We're a bit like the New York Stock Exchange of tickets," he says.

Small town heroes: Now in Zanesville, McPeck was able to expand and hire new workers thanks to the help of business incubators. It helped that there were no other companies in the region scoring tickets for entertainment-hungry customers.

"Not being under the microscope of a larger city allowed us to expand," says McPeck. "There was nobody around here doing what we were doing."

The spoils of success has allowed TicketCrush.com to open a retail location and branch into other markets like event promotion. "We'll continue to expand and become more of a force in the industry," McPeck says.
Doing it in Dayton
Pallas Systems
Jack Berlekamp, president
Founded 2005
The biz: Pallas Systems provides advanced logistics instruments to workers testing  equipment on large vehicles or airplanes. The company's major focus is military aerospace.

Starting out: A former marketer, Berlekamp formed Pallas Systems to take advantage of knowledge garnered as a contractor for the armed forces. He learned how cumbersome electronic instruments designed to measure diagnostics in military equipment often failed in bad weather, or simply were unable to measure the wide array of problems that arose in complex machinery.

"It's a big deal to get that right, especially when you're remotely located in Afghanistan or the middle of the ocean," Berlekamp says.

The company president launched Pallas Systems in his Delaware County basement, soon moving from Columbus to Dayton to be near Wright-Patterson Air Force Base. Berlekamp's device, which he compares to Spock's tricorder from "Star Trek," is now in production. The company has a relationship with the European Aeronautic Defence and Space Company (EADS) and aims to roll out its product under the EADS banner.

Dayton flyer: Pallas Systems is currently housed in Springfield's National Environmental Technology Incubator. The company received invaluable help from the Dayton Development Coalition (DDC) incubator as well as  funding from Ohio Third Frontier's Entrepreneurial Signature Program, Berlekamp notes.

"Dayton being an aerospace hub gives us a talent pool to draw from," he says. "DDC put us on a strategic path and helped us build relationships, while also pointing us to other markets."
Composite Technical Services
Enrico Ferri, CEO
Founded 2009
Raison d'être: The company, built on technology licensed from partner Cimtech labs, SEPMA and VEM in Italy, produces customizable bio-based resins, flame retardants, moisture resistant coatings, and high performance adhesives for commercial use.

How it's done: "We have the ability to extract value from waste," says Ferri. Specifically, the CEO is talking about the out a resin that comes from cashew nut shells and is used in applications including  plastics and epoxy hardeners. Thanks to Mother Nature, the special chemical structure of the resin makes it inherently flame resistant.

Taking these natural waste by-products and transforming them into something useful is what makes CTS unique, says Ferri. The CEO also enjoys the challenge of battling for turf with industry behemoths like Dow and DuPont.

"There's no question our product can be the future of material technology, but we have to determine if the timing is right," he says. "We're still figuring out the applications that are going to work best."

Staying home: Despite the question marks, CTS is uniquely positioned not just in the market, but physically as well, Ferri believes. The company operates out of the National Composite Center in Kettering, near Dayton. In 2010, CTS received a $25,000 tech grant from the Dayton Development Coalition. Being surrounded by a trio of universities is yet another energizer for a company that would like to turn raw materials into everyday products.

"This is an industry that can provide long-term economic growth for the region," says Ferri. "We are here to stay."
Forever Youngstown
Equipment Appraisal Services
Kipp Krukowski, owner
Founded 2010
The angle: Equipment Appraisal Services conducts accredited, onsite machinery and equipment appraisals for bank financing collateral, asset allocation, estate settlements and more.

What's in the name: The company's reports are consistent with the Uniform Standards of Professional Appraisal Practice (USPAP) set forth by Congress. In other words, without a qualified appraisal report, a prospective equipment seller may just get an unwanted visit from the IRS.

Equipment Appraisal Services is an offshoot of a business brokerage company Krukowski grew and then sold. "I saw this as a side business at first, but it took off," the Lisbon native says.

Krukowski's admittedly "unsexy" venture has been so lucrative he's readying the launch of a free-to-use equipment auction website that is  "a combination of Craig's List and eBay," he notes. "There's no fee for the buyer or seller."

Why Y-town: Equipment Appraisal Services is located in the Youngstown Business Incubator, which provided the company with the resources and connections it needed to flourish, Krukowski says. The entrepreneur had thoughts of moving his company to a larger urban area, but what the incubator was offering was too good to pass up.

"Youngstown has a small-town feel, but it's big enough for us to make ourselves known," says Krukowski.
Grale Technologies
Michael Garvey, president and CEO
Doing it well: Grale Technologies has created a multi-sensor laser scanner based system that allows for extremely precise and accurate digital inspection of parts from industries including,  prosthetics, aerospace and national defense. This advanced measurement system is designed to improve quality and reduce manufacturing costs associated with the manufacture or repair these products.
In layman's terms, Grale's tech can split a human hair with infinitesimal accuracy. This type of exactness "has been the grand challenge of manufacturing for years," says Garvey, of Warren. "We are the first to solve it."

Origin story: Garvey is a third-generation manufacturer. In 1918, his grandfather founded Trumbull Bronze, a company that produced bronze castings for the U.S. steel industry. Garvey's father, meanwhile, was a chemical engineer in the foundry business. Grale is a spin-off of M-7 Technologies, an "application house" for the types of tech Grale is currently developing.

There's an enormous install base for this technology, Garvey maintains, to the tune of $50 to $100 million in annual revenue once the laser scanner product takes off.

Youngstown proud: In 2009, the magazine Entrepreneur named Youngstown a top-ten city to start a business. Garvey can get with that thinking, as he's received local backing from the city of Youngstown as well as from organizations including YBI. Additional assistance has come from state-based supporters like Congressman Tim Ryan.

"There's an insatiable appetite for challenge in this environment," Garvey says. "We're responsible to the people who believed in us. We want to create value in the community."

Pallas and Composite Technical Service photos by Bob Perkoski
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