EXCLUSIVE: CincyTech surpasses major milestone

Cincinnati seed capital investor CincyTech has reached a landmark milestone a decade after making its first investment.

Over-the-Rhine-based CincyTech has topped $1 billion in total impact from its investments in local startups. It's the first time CincyTech has reached that level.

That impact, which will be announced Wednesday at CincyTech's annual Big Breakfast + Startup Showcase, breaks down this way since it made its first investment in 2007:

  • $596.2 million in co-investments and follow-on investments
  • $358 million in revenues generated by its portfolio companies
  • $100 million in investment returns for its local investors.

The $1.05 billion in impact is a result of the $46.3 million CincyTech has invested in 73 startups, an amount that's not included in the totals. Its portfolio companies have created 1,040 jobs.

"This is a validation of what is a great human capital base in this region," CincyTech CEO Mike Venerable told me. "We're producing entrepreneurs, founders and researchers that match up with anywhere in the world. We have money here that votes with its feet. This is a validation of the product here."

Venerable was quick to credit Bob Coy, his predecessor who was CincyTech's CEO for nearly a decade before stepping down Jan. 1. Coy brought CincyTech's business model to Cincinnati and oversaw it through the raising of four investment funds. CincyTech raised its $31 million fourth fund – its largest by far – last year. 

He credited Ohio's Third Frontier program to boost startup activity, too. Third Frontier provides matching dollars to CincyTech for investments. 

While it's difficult to compare CincyTech's impact in Cincinnati to other cities that have different types of organizations involved, Venerable said CincyTech's role in the local startup community is significant because of its local focus.

"It's important to have an investor who's parochial, who's a homer," Venerable said. "Always 90 percent of our money will be deployed locally."

The revenue is a significant indicator of the success of local startups, Venerable said.

"It shows we have winners that continue to grow," he said.

CincyTech is just one piece of a fast-growing Cincinnati startup community that includes companies like the Brandery and Cintrifuse that help startups get off the ground. That support, along with CincyTech's capital and expertise, helps pave the way for more entrepreneurs to launch companies with high growth potential here.

"The most encouraging thing is we see better deals and find better opportunities to invest than we did two years ago, and two years ago it was better than four years ago," Venerable said. "There's a richness there."

Others involved in the Cincinnati startup community say CincyTech has been a critical piece in putting Greater Cincinnati on the startup map. It has helped attract entrepreneurs and capital from outside the region as well as keeping both in the region. Startups don't have to jump to one of the coasts for funding anymore.

"CincyTech's impact has been monumental," said David Willbrand, chair of Cincinnati law firm Thompson Hine's Early Stage & Emerging Company Practice. 

The state money CincyTech gets from Third Frontier gives it an advantage, he said. CincyTech can get involved with startups in ways that other investors can't. 

"That assistance is not ornamental," he said. "For instance, without CincyTech's active engagement at key points, Assurex Health would have failed during the 2009-2011 era. It would not have survived to have grown into the company it became, which sold at a healthy multiple in 2016."

He also pointed to CincyTech's people. Venerable has been involved from the beginning, along with Bob Coy, who was CEO for years. Now, Doug Groh and John Rice lend their expertise to finding promising startups and helping them grow. 

"CincyTech has recruited, attracted and deployed outstanding professionals," Willbrand said. "And it's these professionals who have bolstered the founding teams of our local startups and changed their trajectories."


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