Columbus businessman Dwight Smith likes to bring up a conversation he had with TechColumbus’ Tom Walker last summer. Walker had just completed his first year as CEO of the technology start-up organization, leading a charge to focus it exclusively on helping entrepreneurs develop their businesses and shed any activities that got in the way of that work.
“I told Tom he sure got a lot done in his first two years,” joked Smith, TechColumbus’ board chairman at the time, referring to the sweeping overhaul that Walker and his leadership team had made since Walker’s arrival in August 2012. Key among the changes were getting out of the events business, cutting the staff size by nearly half, lining up more corporate support, and finding new sources of venture funding for technology-driven ideas with high growth potential.
Today, Smith is convinced TechColumbus is on the right track. As proof, he points to the creation of three new funds to provide capital to tech start-ups, a big jump in the number of entrepreneurs being aided by TechColumbus, and broader buy-in from the corporate community in what the organization wants to accomplish.
“Nobody makes that amount of change in that short of time without bringing a lot of people on board (to help),” said Smith, founder and CEO of Sophisticated Systems Inc., an information technology management firm in Columbus. “Tom’s done that. He clearly understands how to accelerate business and create a model and culture that provides services to give these (companies) a fighting chance to succeed. I’m overjoyed with what’s been done.”
The wheels of change began turning when TechColumbus CEO Ted Ford resigned at the end of 2011. Ford had been on board since TechColumbus was created in 2005 through a merger of the Columbus Technology Council and Business Technology Center. In announcing his resignation, he said he wanted to do other things in his career – he now is CEO of Advanced Energy Economy Ohio – and that new leadership could bring a different perspective to TechColumbus.
Smith insists Ford was not pushed out by the board and continues to praise him for putting TechColumbus on solid ground.
“I have tremendous respect for Ted and what he did for TechColumbus,” Smith said. “He did a wonderful job of standing up an organization and (building) what we do today. He made critical contributions to TechColumbus. We’re indebted to him for that.”
In searching for Ford’s successor, board members looked for candidates who could work with them in finding ways to provide more capital and support services for tech startups. That led them to Walker, who had made a name for himself as a founder and executive with i2E Inc., a nationally recognized enterprise in Oklahoma City that develops and invests in high-growth, startup companies in Oklahoma, Walker’s home state.
Walker had been with i2E since 1998, signing on after a seven-year stint as a business development manager with Battelle in Tulsa, Okla. During his recruitment by the TechColumbus board and in meetings with leaders in central Ohio, Walker said he was impressed by the passion those people showed for supporting tech startups. He also liked that the board did not have a specific plan for reorganizing TechColumbus, opting instead to work through that process with the new CEO. There was also the appeal of embarking on what he calls a “new adventure” in a community that looked like a great place in which to live.
After his hiring, Walker and the board decided TechColumbus needed a laser focus on investing in and supporting early-stage companies with major growth potential. That led to the big step of shutting down TechColumbus’ events business – it had grown to about 200 networking events and programs a year – and any other activities not tied directly to managing investments in startups and providing support services to entrepreneurs such as those offered at TechColumbus’ business accelerator off Kinnear Road near Ohio State University. Some of the events have been picked up by other organizations, including the Columbus Chamber of Commerce, which adopted the annual Tech Tomorrow program.
As a result of the shift, TechColumbus pared its staff from 43 employees to 22 today. Making the cuts was challenging, Walker said, but many of those affected were able to find jobs elsewhere during the transition to the new model. “We didn’t come in and turn out lights on day one,” he said. “We had the benefit of some time and worked together.”
Walker said it was also clear TechColumbus needed to ramp up its efforts to attract more capital to support tech startups. He uses a chart to make that point when he’s out selling his organization’s revamped model to business people and government officials. It shows Columbus had $64 million in venture capital funding for high-growth companies in 2012 compared to $240 million in Indianapolis, $194 million in Cleveland, $160 million in Pittsburgh, and $99 million in Cincinnati.
TechColumbus and its funding partners have been trying to close that gap with the launch of three venture funds since December. The first was the $1 million Technology Concept Fund for investments in early-stage innovations developed at Ohio State with funding from the university and Ohio Third Frontier program. Then came a new $7.32 million Ohio TechAngels Fund, raised from 97 private investors and the Third Frontier program, that will invest in 14 new ventures over the next three years. The third piece is up to $8 million for a Catalyst Fund created with investments by Ohio State, Nationwide Children’s Hospital, Third Frontier and TechColumbus. A fourth new fund is also in the works, but Walker declined to provide details.
Add it up, and TechColumbus expects to be managing about $20 million in new venture funds this year, boosting its overall total to $40 million.
“That’s huge for the region when you think about that much fresh capital for innovation-based entrepreneurs,” Walker said. “That bodes well for Columbus.”
He also credits his organization’s more focused approach with boosting the number of “engaged companies” -- ones receiving advice, access to capital, space in the business accelerator or other TechColumbus support – to 150. That’s a 75-percent increase compared to a year ago.
The companies getting a leg up with TechColumbus’ assistance cover a broad spectrum. Azoti, for example, offers an Internet platform that connects local food producers with buyers such as schools, churches, and other aggregated pools of customers. In medicine, Cardiox is developing technology that enables a low-cost, minimally invasive procedure for cardiac shunt detection. Immobly makes phone apps based on technology licensed out of Ohio State, including an app, “Buckeyes Now,” for college football. InfoMotion Sports Technologies has been getting national press for its 94Fifty smart basketball that uses imbedded sensors to help players improve their skills.
TechColumbus has also made strides in drawing more central Ohio corporations to help it meet its mission, adding 34 corporate partners to help fund the organization’s operations since Walker came on board. He is also especially excited about TechColumbus’ Expert Network in which more than 30 area law, accounting and marketing firms provide free consulting services to TechColumbus clients. Those firms have made commitments of $2 million over time, which Walker sees as a signal the corporate community wants to help be a catalyst for tech startups.
Such support is a big deal to Simple-Fill President Rob Underhill. His startup, which is working with Ohio State engineers to commercialize technology to compress natural gas to fuel vehicles, has received pro-bono legal services from Porter Wright Morris & Arthur LLP, one of Columbus’ largest law firms. Simple-Fill was also the first company to get an investment from the Technology Concept Fund, landing an undisclosed amount in February.
Underhill had previously been involved with TechColumbus when he was chief financial officer at Velocys plc, a Battelle spinoff in Dublin developing gas-to-liquids technology in the energy sector. He said TechColumbus is fulfilling its mission better than ever, especially in the counseling it provides to startups such as Simple-Fill.
“They have a whole host of resources for the entrepreneur,” Underhill said. “It’s a one-stop shop. They understand all the issues a startup goes through. These guys are all entrepreneurs at heart.”
For example, seed-stage venture capital specialist Wayne Embree is one of Underhill’s advisors. He joined TechColumbus as executive vice president in September 2012 after working two years with Walker at i2E in Oklahoma City. Embree has also been cofounder and managing partner of Reference Capital Management LLC, a seed-stage venture firm in Portland, Ore., since 1986. He is one of a number of experienced startup hands hired by TechColumbus in the past year and a half.
“We have people practicing here who have done this and in some cases done it repeatedly,” Embree said. “We have the scar tissue to show for it.”
While recognizing the Columbus region has never been awash in VC funding for startups, Embree believes there is potential to turn that around. “It’s a candy store because of Ohio State, (Nationwide) Children’s, Battelle, OhioHealth and the critical mass of technology here,” he said. “For the size of this area, I’m not sure I have ever seen anywhere to match it. The opportunities are phenomenal.”
Also bullish about TechColumbus’ future is John Sydnor, a financial and technology executive with more than 15 years of experience in early-stage venture operations, mostly in the Chicago area. He signed on a year ago as TechColumbus’ senior vice president for venture acceleration and strategic initiatives.
Sydnor said the changes made at TechColumbus have the organization running more like a private investment fund. The addition of the venture funds in recent months shows the new model is starting to work, and he thinks the next extension will be attracting even more new capital to the region.
“Columbus is a gem but really an under-the-covers gem,” Sydnor said. “It’s not as well-known as it should be. Part of our job is really selling the value of Columbus and have it be a destination for business formation and capital attraction. It can be done.”