This is the fourth blog in my #StartupCincy by the Numbers series. Please click to view Blog one for context about our city-wide data capture exercise that helps us run our programs. Blog two contains aggregate statistics and commentary about Cintrifuse’s member companies. Blog three outlines #StartupCincy’s funding needs and gaps and discusses what Cintrifuse is doing to make up the difference.
Each month at our New Member Orientation I ask, “How many of you have a need for expertise or knowledge outside the capabilities of you or your team?”
Every hand goes up.
That’s an inevitable truth of the game we’re in: entrepreneurs are forced to do as much as possible with extremely limited time, capital, and human resources.
Fortunately Cintrifuse understands the startup game. Our programs are designed to cover gaps on an entrepreneurial level while also supporting Cintrifuse’s broader mission to plug any gaps in the ecosystem.
To provide proper context about what gaps we need to fill, I’ll set the table for this final blog in the #StartupCincy by the Numbers series with a basic overview of Cincinnati’s startup ecosystem.
Since Cintrifuse isn’t the only group in town helping turn Cincinnati into an internationally respected startup community, I want to give everyone else a shout out.
After reviewing how the ecosystem comes together, I’ll provide commentary about how Cintrifuse’s programs help bridge the region’s gaps.
I’ll ultimately close with some thoughts about how our efforts discussed in these blogs helped us sharpen our programs while looking forward to the next efforts that will strengthen #StartupCincy for years to come!
It’s easy to assume people are aware of and understand the difference between the various resources available to startup entrepreneurs in Cincinnati. But you know what they say about assumptions.
I regularly meet with entrepreneurs, mentors, advisors, service providers, and individual angel investors who have a basic understanding of the players in #StartupCincy but they have no idea how we all play together. Not for lack of interest or curiosity; it’s just confusing without explanation.
So, let’s quickly catalog who’s who in Cincinnati’s startup ecosystem based on the following categories:
• Support and Networking Associations
I won’t dive into each entity in the ecosystem – there’s a lot! – instead, let’s look at each category, citing specific organizations as examples.
An accelerator is an entity that fast-forwards a startup’s growth by providing “Seed” funding (not a traditional Seed round in VC terms but small dollar amounts usually ranging from $20,000 – $100,000) along with education and access to service providers who help with branding, marketing, legal, etc. all within a defined time frame (16 weeks is standard).
Hundreds, even thousands of startups apply to accelerators but only a select few are accepted.
By the end of an accelerator program, startups should have a brand and a minimum viable product that’s ready to go-to-market. In a world where time is not our friend, accelerators are a great resource for any ecosystem’s entrepreneurs.
While there are some similarities between an incubator and an accelerator, the main difference is investment. Incubators don’t make investments in their startups whereas accelerators do.
However, like accelerators, incubators help with education and other programs that fast-forward a business’ growth.
Incubators typically have defined parameters meaning once you’ve “outgrown” it, the incubator’s job is done. Parameters can include number of employees, revenues, or time. That said, the time parameters for incubators usually aren’t as intense as an accelerator.
Universities, first and foremost, are talent pipelines for the region. For those unfamiliar with Cincinnati’s university scene, we have four major institutions along with several others not listed here.
Every year, thousands of new students enroll to these universities. We want them to stay! But we understand that to keep them here, we need to be a social and business destination!
3CDC is doing what they can to build the social scene, especially in OTR. Cintrifuse is helping with our efforts on the business side.
Beyond their traditional education programs, our local universities do a great job offering immersive events like their own accelerator programs and hack-a-thons. These programs give students a glimpse at what working in the startup world is really like.
For example, NKU’s INKUBATOR program is an accelerator that provides six to eight student-run startups $5,000 in seed funding during an intense 12 week summer session. It’s ranked in the top 5 in the world! Several companies including CompleteSet and Earthineer came out of this program and went on to raise Seed rounds from institutional investors.
Two other significant programs to highlight:
Cintrifuse works closely with all these institutions to provide internship opportunities as well.
After experiencing #StartupCincy as a student, Cintrifuse and our ecosystem partners encourage students to remain in our ecosystem as entrepreneurs or startup employees.
We covered investment in a significant way in Blog 3. Please reference that blog and Patrick Venturella’s amazing Syndicate Fund overview for specifics about the local funding scene and Cintrifuse’s role in bringing in outside investors.
Two quick shout outs for some of the region’s strongest investors:
These are not small accomplishments! We look to continue building on their success. The State of Ohio is also on board. The Ohio Third Frontier fund (OTF) offers many attractive options for low-interest loans and investment matching.
Support and Networking Associations
These are dozens of associations for entrepreneurs and others interested in #StartupCincy to get involved with like-minded individuals.
Take GCVA. Its events provide opportunities for founders to connect with funders for investment education and related opportunities. Their events come in three flavors:
1. After Hours Networking – Founders and funders come together in a casual, fun setting. Events are themed (for example, whiffle ball tournament) and occur once per month.
2. Joe Thirty – One startup presents its business to a group of industry-specific individuals, after which the audience provides feedback and assists with the founder’s “asks”.
3. GCVA Breakfast Club – Four fundraising startups each deliver an eight minute pitch to an audience of entrepreneurs, angel investors, and others interested in startups. Audience provides feedback about clarity and effectiveness of the pitch. This is not a general solicitation for funding (SEC frowns on that) but interested investors can use this event to check in on the region’s hottest startups.
These types of events are important because anyone can take part in them at any time. Said differently, they are a welcome point for anyone interested in getting involved in #StartupCincy!
About five years ago when Bob McDonald was CEO of P&G, he organized a cohort of smart, successful CEOs from local Fortune 500/1000 companies in town known as the CBC (Cincinnati Business Committee).
I mentioned talent in the last section – these forward thinkers realized too much of Cincinnati’s talent left the region.
Their objective in this meeting was to figure out what it would take to keep our existing talent here while also becoming a destination for new talent.The proposed answer was to build a thriving startup and entrepreneurial ecosystem.
But like a game of Jeopardy, having the answer still left the group with a big question. What will it take to create a thriving startup ecosystem?
To find the solution, a significant study was commissioned by the CBC and executed by McKinsey and Company. As a result of McKinsey’s findings, a new organization, Cintrifuse, was born.
Cintrifuse’s mission was two-fold from the beginning:
1. Connect startups to resources throughout #StartupCincy
2. Fill the gaps
In reality, because the ecosystem constantly changes as more startups, accelerators, investors, and associations come on board, this means we continually evolve based on the progressing needs of the ecosystem.
For example, last year we realized that our Speaker Series was superfluous. Many associations in town were holding similar events so we disbanded that program to focus our attention where it was needed.
As of June 2015, Cintrifuse is concentrating on three pillar initiatives designed to help our startup community fill gaps we’ve identified. Those three initiatives are:
1. Startup Talent
2. Funding Connections
3. Customer Connections
How Cintrifuse Brings It All Together
I mentioned Cintrifuse was born to keep existing talent here and drive more to the region.
But what talent do we want?
First and foremost, we want talented individuals with entrepreneurial DNA. Said differently, we want people who start companies.
Regardless if an entrepreneur’s business succeeds or fails, we believe the experiences he or she goes through trying to make it a success strengthens that entrepreneur’s skills so their next endeavor is that much more likely to succeed.
Our Advisory Services programs are designed to strengthen the capability of individual entrepreneurs while they work on their existing business.
One such Advisory Service program is Cintrifuse’s Advisor Network. The Advisor Network connects startups and individuals from the community who can provide “on-demand expertise”.
For example, this week you might need legal perspective about bringing on a co-founder; next week you might be interested in having a marketing guru look at your marketing collateral.
No matter your need, Cintrifuse’s Advisor Network is available any time you need to speak with someone about a pressing business challenge.
Cintrifuse’s Mentor program is similar but more formal. Select startups are paired with one to three mentors based on the business’ stated milestones over a 3 – 12 month timeframe.
As described in blogs one and two, we learned the best way to connect entrepreneurs to the right expertise was to have as much detail about both parties as possible. We believe we built the infrastructure to do so through our classification exercise.
Moving to the other area of Startup Talent, entrepreneurs needing “talent for hire” can utilize Cintrifuse’s recruiting program.
This program is also designed with an individual startup’s needs and the region’s broader needs in mind.
We’re working with local universities, BigCo alumni groups, and startup entrepreneurs no longer in business to increase the available quality and quantity of in-demand skills for startups. Not surprisingly, there is a heavy emphasis on tech talent as that’s what most startups need.
Christina Swift and Jordan Vogel regularly speak at MIS, Analytics, Computer Science, and Entrepreneurship classes to find talent interested in working with a startup. Christina also frequently attends Meetups and other events to let experienced professionals know there’s opportunity for them in the startup world.
So far they’ve had tremendous success, placing 14 interns and full-time hires in startups during the first half of the year!
As these interns and full-time hires gain experience, it’s our hope they’ll stay in the ecosystem as startup founders someday.
Funding Connections and Customer Connections
If you look back to the image at the beginning of the “Cintrifuse 101” section, you’ll see Cintrifuse and a couple of our Syndicate Fund investments at the top of the diagram.
That’s not to indicate Cintrifuse is above all the other local groups. Couldn’t be further from the truth! Rather, it’s because we’re bringing in groups from outside the region to fill our gaps.
Cintrifuse’s Funding Connections program leverages our Fund and the expertise of those involved to educate and connect startups to the right funding sources given their industry, solution category and sub-category, and investment stage.
Going through this segmentation exercise strengthened our Funding Connections program in a couple ways.
First, now we have a detailed understanding of where our startups play. This does a couple things for us. The most obvious is we now have a better way to communicate with VCs – whether it’s our investment funds or VCs within our network – about who’s doing what in #StartupCincy. It was a simple fix but one we had to make to be an effective bridge between startups and potential funders.
Furthermore, when startups need additional assistance developing an investment pitch for investors in a particular field, we can match them with the right mentors/advisors as discussed in the last section.
Second, we now leverage our Syndicate Fund to fill technological gaps in the region by bringing in startups from outside the area.
Take Digital Security. We have ONE digital security company in our member base: Morphick. While there may be a couple more floating around in the ecosystem, the fact remains this is a hot market and we are lacking in exposure. So, as we look to make investments, we can look at our potential investments’ underlying portfolios to see if we can bring in more digital security companies from elsewhere.
Related to our Customer Connections program, our investment in the Mercury Fund has increased our exposure to PaaS Cloud Computing companies, an area #StartupCincy was slim. One of their portfolio companies, Datical from Austin, Texas, came to our Innovation Xchange in April and is engaged in pilot conversations with Cincinnati Children’s Hospital, P&G, and Sibcy-Cline Realtors.
Of course we source startups locally but we also leverage the startups from our Syndicate Funds because if they get a pilot with P&G, it’s likely they’ll set up a satellite office here. That’s bringing new talent to the region while creating unexpected value for our BigCos by maximizing our Funding relationships!
Going through the exercise I wrote about in the first blog helped us understand who our constituents are, so much so that we’ve actually changed “The Green Monster”. Now it’s more of a target.
In the past couple months, we identified critical components of who you are what what you do. Now we want to know where you are on your journey.
It’s our goal to get more companies in the “sweet spot” where milestones such as hiring an employee, receiving a funding round, or engaging one of our Big Cos in a pilot have been achieved.
Additionally, we will begin to put specific emphasis on two targeted areas:
• Venture Building – commercializing underutilized intellectual property within BigCos and turning it into a startup business.
• Consumer Healthcare – leveraging two significant strengths of Cincinnati, consumer product goods and healthcare (technology, therapeutics, and life sciences).
Both of these topics will be covered by Jeff Carr, Cintrifuse’s Executive-in-Residence who has a tremendous amount of experience in both areas. He will write a series of blogs similar to what I’ve done throughout the summer.
Please be on the lookout for these blogs to understand what Cintrifuse is doing to help build #StartupCincy’s New Economy in 2016 and beyond!