Cleveland is part of the “rust belt,” the moniker given to the upper Midwest because many of its factories and plants are no longer in operation. However, in 2004 Cleveland’s business leaders, government, and foundations created the nonprofit corporation JumpStart to help entrepreneurs. JumpStart invests only in companies that have the chance to grow between $30 million and $50 million in sales within five to seven years and have innovative products.
JumpStart has helped 40 companies who have the potential to create 2,400 jobs at an average salary of $65,000. Last year JumpStart spent $9 million last year, generated $75 million in local spending, and Cleveland made $8 million through payroll taxes.
Early stage investment starts at $250,000 and goes up to $600,000. The nonprofit corporation assigns an experienced CEO to help create a business plan. In order to qualify for JumpStart’s help, companies must have the following:
- A unique, breakthrough and protectable idea
- A large potential market for their business
- Leadership that is flexible and committed to growth
- A desire to raise additional investment capital
- An “exit” plan for the business
David Levine’s company, Wireless Environment, patented energy-efficient lightbulbs and received $400,000 from JumpStart. The company has two products on the market: an LED battery-powered hallway light and a motion-sensitive LED spotlight. Levine said of JumpStart, “I can call a business leader or a fellow inventor, and they will return my call. That’s why my wife and I have stayed.”
Chemist Claude Kennard, inventor of the technology behind MAR Systems, a water and gas purifying system, said JumpStart helped him learn how to deal with the investment community. “You need the ability to discuss and sell your concepts to the investment community.”
Robert Sawyer, director of the Midwest regional office for the Economic Development Administration, said, “In economic development today, identifying and recognizing entrepreneurs is one of the most important things that can be done for an economy. Odds are they’ll stay where their roots are, as long as they can get financing and find workers.”
The Whitehouse is taking notice of JumpStart. In October its chief executive Ray Leach met with Obama. “We basically have done something in Cleveland that no one thought could happen,” said Leach.
“If there isn’t someone willing to invest in these brand new first time entrepreneurs with new technologies, Northeast Ohio will never have its share of new high-growth, product-oriented and export-oriented companies.”
JumpStart based its nonprofit corporation on Pittsburgh’s Innovation Works program. Innovation Works invested over $40,000 million in more than 116 technology startups. The companies in turn have created thousands of jobs, and attracted over $600 million in the past nine years of Innovation Works existence.