Venture Capital : Innovation + Job News

The idea for Embrace Pet Insurance began as the result of Laura Bennett and Alex Krooglik's project for the Wharton Business Plan Competition in 2003.

The two MBA students won, beating out a passel of bio-technology and technology ideas along the way. When both Bennett's husband and Krooglik moved to Cleveland to work for Progressive Insurance, so did Embrace Pet Insurance.

The Mayfield Village-based company started small, but proved it could compete with the big dogs right away. One advantage Embrace has over its competitors is that hereditary conditions are covered � expensive conditions such as hip dysplasia and cherry eye.

"A good claims experience is key to pet insurance," says Bennett, who also sits on the board of the North American Pet Health Insurance Association. "People get what they expect out of the product."

Business doubled in the last year. So did the staff � from 10 to 20 employees. Bennett says the company is growing at rapid pace. And the staff may double again.

Bennett who is originally from the U.K., says pet insurance is much more common across the pond than in the U.S. "Less than half of cats and dogs are insured here. The market as a whole is growing at 20 percent per year � that's in the down years of the economy."

That has attracted the interest of a host private investments and venture capital groups. JumpStart alone has invested $800,000 in Embrace.

"We are employing people with good and interesting jobs and we hope to continue to be a part of this exciting success story," she said, adding that the company is staying put. "I love Cleveland. I believe in this area."

Source: Laura Bennett, Embrace Pet Insurance
Writer: Colin McEwen

People who suffer from chronic pain could someday toss their painkillers into the garbage. For good.

Neuros Medical is developing a device that uses an electrode to deliver high-frequency stimulation to sensory nerves in the peripheral nervous system. Basically, pain signals in the spine just won't make it to the brain.

The Willoughby-based company was founded in 2008 using technology invented by two Case Western Reserve University doctors.

Jon Snyder, founder and CEO of Neuros Medical, says Northeast Ohio has become an international hub for researching � and producing � neurostimulation devices.

"There's a great amount of this type of technology being discovered and refined here, especially with institutions in the area like the Cleveland Clinic, University Hospitals, Case Western and the Functional Electrical Stimulation Center," Snyder says. "This region is very well-known for uncovering new uses for neurostimulation."

Neuros Medical is currently in the product-development stage, but the company's pace is moving quickly. Human studies are expected this year.

Investors have taken notice � to the tune of $1.8 million so far. That includes support from JumpStart ($275,000), North Coast Angel Fund ($200,000) and Ohio TechAngels ($200,000).

"In Ohio, we've got some great support organizations, to help companies get through their early stages of development," he says.

Neuros Medical employs three people, not including consultants that are hired regionally. Within the next few years, Snyder expects to have a product on the market � which will add even more jobs. However, the company could add as many as six positions within one year. "Maybe even more," he adds.

Source: Jon Snyder, Neuros Medical
Writer: Colin McEwen

Halo Coatings is hoping to cut through the red tape. Well, tapes of all colors.

The Norwalk-based company is rethinking how coatings are applied � retro-reflective, nano-technology powder coatings systems in particular. All with safety in mind.

The most practical uses for the technology are highways signs and bicycles � both currently use a reflective tape coating.

But really, the possibilities for Halo's patented reflective technology are endless. Think guardrails, poles, baby strollers and wheel chairs.

"There are things we haven't even thought of yet," says Halo Coatings CEO Aaron Bates. "We set out to work on the highway and on children's bicycles. But it's come so far so fast, we've now seen a whole gamut of applications where we can be used."

There are several advantages for Halo � in addition to being the first, and only, retro-reflective powder coating supplier in the world. Bates points out that the coating won't flake off Halo's products and is able to withstand extreme temperatures. "And you can be seen from a 1,000 feet away at night by a car traveling 70 mph."

"It's not only safer than any powder coating out there," Bates adds. "It's that there are no coatings in the world like this."

The company launched in 2008, added two large customers in 2009 and two more in 2010. Halo, a Rocket Ventures portfolio company, currently employs only a handful of employees, but in the next two years the company is expected to add as many as 15 jobs. Those positions include sales, tech-support, engineers, chemists and lab-techs. Bates expects the company to reach $100 million in sales within five years. "The question becomes 'how do we grow smart?'" he adds.

Source: Aaron Bates, Halo Coatings
Writer: Colin McEwen

JumpStart, formed in 2004 to give fledgling companies in northeast Ohio the resources needed to eventually fly on their own, has seen its first portfolio company leave the nest.

Yardi Systems, a Santa Barbara, Calif. company with offices in Broadview Heights, announced May 5 that it had acquired DIY Real Estate, a Broadview Heights-based property management software developer.

JumpStart, through its JumpStart Ventures arm, invested $340,000 in DIY in fall of 2008. The sale provides a return "in the 20 to 30 percent range," says Cathy Belk, JumpStart's chief marketing officer.

"The JumpStart Ventures group invests in companies with the full intention that we are the first investor and that the company will eventually have an exit event," Belk says. "We started working actively with them in the fall of 2008, so it wasn't that long ago."

She notes that an average time for a venture-backed company to exit through either merger or acquisition, or through an initial public offering, is a little more than eight years. "And we are an investor that comes in earlier than a venture capital firm."

Bob Lasser, Managing Director of Danville Partners and former chairman of DIY, says the company enjoyed more than 100 percent compounded growth between 2007, when it was formed, and 2009. He says the company's three Cleveland-area employees intend to remain and that there are plans to add additional support personnel.

JumpStart, based in Cleveland, is a non-profit organization that provides resources and assistance to entrepreneurs leading high-potential early-stage companies. JumpStart Ventures has made 60 investments in 47 companies.

Belk says "This is the first of many (exits) that we want to duplicate," adding that another couple of JumpStart-invested companies could follow suit later this year. "The model's coming full circle."

Sources: Cathy Belk, JumpStart, and Bob Lasser, Danville Partners
Writer: Gene Monteith

Spun off from Eveready in 2003, Blue Spark Technologies finally finds itself on the cusp of a new market for printed battery technology.

The idea is a battery that is thin, flexible and produced using familiar printing and production methods.

The technology was initially pursued by Eveready's Energizer group, whose research labs were, like Blue Spark, located in Westlake. When the industry reshuffled its priorities in 2002-2003, Blue Spark was spun off, backed by venture capital from Cleveland-based Early Stage Partners.

Today, the company is focused on a battery that will power a new breed of radio-frequency identification (RFID) chip -- chips that are affixed to an item and tracked using a reader.

In fact, a Finnish company with an automatic vehicle identification system is close to integrating Blue Spark's technology, and CEO Gary Johnson says that means the company could soon start reaping revenues. 

"They could be used for toll collection . . . it could be used to integrate the vehicle registration into the tag, and so forth," says Johnson.

In September, Blue Spark and U.K.-based Novalia, which designs printed electronics products, announced a marketing agreement to create and launch new kinds of interactive printed media. The idea is to make items like singing greeting cards more interactive with the consumer and to make them cheaper to produce at high volumes.

Matt Ream, Blue Spark's vice president of marketing, says "the most exciting thing is we're on the cusp of something big, some pretty big market growth."

The company completed series A financing in 2007, raising $6.2 million in a round led by SunBridge Partners; it closed a $1.5-million series B round last year. It currently has eight full-time and five part-time employees.

Sources: Gary Johnson and Matt Ream, Blue Spark
Writer: Gene Monteith

A million times each year in this country a pregnant woman who is not remotely ready for a healthy delivery believes she is entering preterm labor. The best way to determine if the expecting mother is in fact in labor is to take an accurate measurement of cervical length. To do this requires an expensive transvaginal ultrasound performed by a trained professional.

Chagrin Falls-based CerviLenz is marketing an inexpensive, easy-to-use disposable device that quickly and accurately measures vaginal cervical length. Invented by a practicing obstetrician, the device is the first and only of its kind.

"Because the interventions to prevent or delay preterm birth are very toxic, dangerous and expensive since they require a two- to three-day hospital stay, you want to be careful not to misdiagnose," explains Dean Koch, CerviLenz president. "Our device allows for easy and objective measurement of the cervix to allow for a better selection of who is likely to benefit from intervention and who is not really in labor. By managing the situation effectively, we can make sure the mother is in the right setting, maximizing the baby's chances for a good outcome."

Down the road, adds Koch, the devices can be used throughout a woman's pregnancy to screen for those who are at risk for premature pregnancies. New findings prove that by administering progesterone therapy, doctors can cut the risk of early births by half.

CerviLenz, which has received financial backing from JumpStart, North Coast Angel Fund, Chrysalis Ventures, Aboretum Ventures and others, is adding staffers in the field and will soon reach 12 employees. The devices are manufactured in Ohio.

JumpStart will lead the way on a new Ohio program to give minority-owned, women-owned and inner city businesses the technical and financial assistance they need to create jobs.

The Cleveland-based not-for-profit venture development organization today will formally unveil Launch100, a five-year program in collaboration with the Ohio Department of Development and 15 state-funded business assistance organizations. Scheduled attendees at the kickoff include Gov.Ted Strickland and State Rep. Sandra Williams.

Darrin Redus, chief economic inclusion officer for JumpStart and president of JumpStart Inclusion Advisors, says his organization will lead a 12- to 18-month pilot aimed at proving the effectiveness of such a program in advance of a statewide roll-out. He says the program will extend JumpStart's reach beyond its traditional technology-based portfolio.

"We were coming across high-potential opportunities led by women and minorities that may or may not be in some of those core emerging technologies but still represented very high growth potential businesses," Redus says. "So . . . we began to have conversation with the state around wouldn't it be great to try to position Ohio as a leader in growing minority firms?"

Participating companies must meet a number of initial criteria, including potential for sales growth, job-creation and market potential. They must be minority-owned, women-owned or operate in the inner city. Assisting promising inner-city business, regardless of ownership, is key, JumpStart says, noting a report by The Initiative for a Competitive Inner City that found growing inner city firms hire inner city residents at almost twice the rate of other inner city firms -- and six times the rate regionally.

JumpStart, which serves a 21-county area, hopes to engage 12 to 15 companies over the course of the pilot; the eventual goal statewide is 100.

Sources: Darrin Redus and Cathy Belk, JumpStart
Writer: Gene Monteith

More than $1 billion in venture capital has been invested in northeast Ohio companies during the past five years -- a commitment to growing firms that, in time, could result in more than 40,000 jobs.

Not just that, but 2009 seed funding for the newest northeast Ohio firms was the highest in four years.

That's the lowdown as presented Tuesday by the Venture Capital Advisory Task Force, a group of regional venture community members who have been formally tracking such investments since 2006.

While the report isn't all rosy -- total venture capital investment was down significantly between 2008 and 2009 -- VC leaders said they're encouraged by the fact that 2009 seed stage investment -- $18 million spread among 27 companies -- is rising while national numbers remain flat. They call it a sign that state job-creation programs are working.

The regional task force report shows that the largest single investment sector in northeast Ohio was in healthcare, in which $729 million was invested in 69 companies. The second largest sector was "cleantech," in which 33 companies benefited from $115 in equity capital.

Cathy Belk, chief marketing officer for Jumpstart, a venture development organization that accelerates the progress of early-stage businesses in northeast Ohio, says the report demonstrates the important role the Ohio Third Frontier, the Ohio Investment Tax Credit Program and the Ohio Capital Fund have played in growing Ohio jobs. She says it also points to the need to keep those funding sources available for future entrepreneurs.

The report mirrors an announcement by the Ohio Third Frontier Tuesday that seed and early stage investments in Ohio increased by 67 percent in 2008 while national numbers declined about 20 percent.

Source: Cathy Belk, Jumpstart, and wire sources
Writer: Gene Monteith

As a urological surgeon for OhioHealth, Wayne Poll knew there must be a way to keep his laparoscopic lenses clear without constantly having to stop and clean them. While it took him 10 years to bring that vision to fruition, Poll's FloShield is now in the marketplace.

"I tried going to companies with my ideas, and I did that for ten years," says Poll, whose Columbus-based Minimally Invasive Devices gained FDA clearance for the product last year. "But I was constantly frustrated. I got to know some people and entered the Ohio State University (Fisher College of Business) 2006 business plan competition, and we won it. That got us some momentum and we started to raise money."

With the help of TechColumbus, a technology business incubator serving a 15-county area in Central Ohio, MID raised an initial $200,000 in start-up capital and a total of $2.4 million in angel funds, a portion of which came from funds supported by the Ohio Third Frontier. In October, following FDA approval of FloShield, the company raised $2 million in Series B funding.

FloShield works by keeping air flowing around the end of the scope, blowing away debris that can obscure a clear image at the surgical site. Poll says the company, so far, has sold about 600 of the devices and has introduced a new product, FloShield Plus, that uses a saline solution to clear the lens.

MID was founded in 2006 and grew from one employee to five this year. Poll serves as MID's founder and chief executive officer and as director of innovation for the OhioHealth system.

Source: Wayne Poll, Minimally Invasive Devices
Writer: Gene Monteith

Ohio is emerging as a national hub for the growth of minority and female-owned businesses as well as those in the inner city, says Cathy Belk.

Want evidence? Consider the choice of Cleveland for a Dec. 3 conference that is expected to draw 250 entrepreneurs from throughout the Midwest.

Belk, chief marketing officer for Jumpstart Inc. -- the northeast Ohio venture development organization that accelerates the progress of high growth early-stage businesses -- says the conference is unique in its focus.

"This is definitely the first of its kind in Cleveland which focuses on minority, female and inner city early stage companies and raising capital for them," she says.

Titled "Transforming the Landscape of Business in America: A Minority Business Early-Stage Capital Summit," the summit is a partnership between JumpStart, The Initiative for a Competitive Inner City (ICIC), The Institute for Entrepreneurial Thinking, and The Marathon Club.

Two panels will feature expert angel investors and venture investors to help emerging companies understand what it takes to find capital.

Speakers will include Deborah Shufrin, senior vice president and director of programs, ICIC, who will focus on her organization's partnership with the Obama Administration in fulfilling the administration's Urban Strategy. Serial entrepreneur William Pickard will give the luncheon keynote address. Pickard organized the Detroit partners of the MGM Grand Casino in Detroit and owns a significant stake in five African-American newspapers, several automotive companies, and multiple McDonald's restaurant franchises.

The event also will feature investor pitch presentations, open to all attendees, from six of Northeast Ohio's most promising minority entrepreneurs.

For more information or to register, go here.

Source: Cathy Belk, Jumpstart Inc.
Writer: Gene Monteith

If you've got a suspicious bump, you'll want a doctor to look at it. The question is, if it comes time for a biopsy, would you rather make two stops -- first, to your family doc, then to the dermatologist -- or one? And would you rather go home with stitches or a quick closure that creates less blood?

The folks at CleveX believe that patients will prefer the latter. And doctors seem to agree.

The Columbus-based company recently signed an exclusive national distribution agreement and its first stocking order for $180,000 worth of its ExiClip, making it one of a small, but growing, group of Ohio biomedical startups that are off the drawing board and into the marketplace.

Sam Finkelstein, CleveX's chief executive officer, says the device reduces the time a physician needs to do a biopsy from the traditional 20 to 30 minutes to less than five. It does so with a small, hand-held tool that removes the skin and closes it up in one single motion.

"You can clip, cut and close in ten seconds," Finkelstein says, adding that docs still must take time to anesthetize the area.

According to Finkelstein, the company first tested ExiClip with dermatologists, who said they would prefer to do fewer biopsies so they could concentrate on other parts of their practice. They steered CleveX toward primary care docs and OBGYNs, who often send patients to specialists because of the time it traditionally takes to remove a skin lesion and stitch it up.

Last year, CleveX raised more than $1.9 million from angel and venture investors. The company employees 10, but Finkelstein says "we expect to increase personnel, and, depending on sales, it would not be unrealistic to expect us to double."

Source: Sam Finkelstein, CleveX
Writer: Gene Monteith