TIGER Talk Recap: Solving the Capital Crunch
Many people think the hardest part of starting a business is when you’re just getting started. David Robinson, principal and founder of the Montrose Group, LLC, begs to differ. He says the hardest part of starting a business is when you’re actually in the market, but you haven’t launched into large-scale production because you’re in need of two things: skilled workers and capital.
David was Innovate New Albany’s TIGER Talk speaker on September 29, presenting “Solving the Capital Crunch” to a group of business professionals and entrepreneurs. TIGER Talks are offered at Innovate New Albany free of charge throughout the month and educate entrepreneurs in the topics of technology, innovation, growth, entrepreneurship and responsibility.
Because of changes in federal regulations, companies in need of capital are relying less on banks for financing. David said that funding opportunities are available, but are largely based on a company’s stage of business. He defined five stages of business creation, and the types of funding businesses could be eligible to receive in each stage.
Stage 1: The Idea
David said most financing in this stage is through the “Three F’s” – friends, families and fools. These are the people you know that believe in what you are doing, and think you have a good idea. Unique to Ohio, there are also funding options from Ohio Third Frontier’s (link: https://development.ohio.gov/bs_thirdfrontier/) Technology Validation and Start-Up Fund (https://development.ohio.gov/bs_thirdfrontier/tvsf.htm) or Rev 1 Ventures (link: https://www.rev1ventures.com).
Stage 2: Incubation
Since companies in this stage don’t have assets to lean on, a traditional bank won’t be a funding option. David said the good news is Ohio has a healthy level of regional venture capital funds, funded by Ohio Third Frontier, who can help fund local companies. Companies like Bizdom (http://www.rockventures.com/city-initiatives/cleveland/), Mutual Capital Partners (https://www.mutualcapitalpartners.com), Cincinnati Children’s (https://www.cincinnatichildrens.org), Cleveland Clinic (https://my.clevelandclinic.org), and Lorain County Community College (https://www.lorainccc.edu) are all examples. David said to look for venture capital funds not just in your geographical region, but also the ones that are in your industry.
Stage 3: Products/Services
Now that you are manufacturing your product or providing your service, angel investors become a funding option. David said there are angel investors in Columbus interested in making investments in companies at this stage. Examples in Ohio are Ohio Tech Angels (https://www.rev1ventures.com/investments/techangel-fund/), Queen City Angels (https://qca.com), North Coast Angels (http://www.northcoastangelfund.com) and East Central Ohio Tech Angels (http://www.ecotaf.net).
Stage 4: Market
In this stage, you’ve demonstrated that your product works and now you have a large order to fill. As soon as you start creating jobs, you have transformed from a high tech venture capital-oriented company to an economic development project. Access to tax incentives, tax abatements, tax credits, government loans and grants grows exponentially in this stage. JOBS Ohio has a whole range of programs that are well funded, and are a great source for financing, such as JOBS Ohio Growth program, and Jobs Ohio Revitalization loan programs. Examples of companies who have received financing from JOBS Ohio are Corvac Composites LLC (http://corvaccomposites.com), Dana (http://www.dana.com), and 7 Signal (http://7signal.com).
Additionally, funds are available through the EB-5 Immigrant Investor Program (https://www.uscis.gov/eb-5), created by Congress in 1990 to stimulate the US economy via foreign investors. Through it, entrepreneurs and their families are eligible to apply for a green card if they make the necessary investment in a commercial enterprise in the US.
For more information about investments and ways to solve the capital crunch, contact David at email@example.com, or visit his website (http://montrosegroupllc.com).
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