Economic Development

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Valley Growth Ventures Eyes Investments by Midyear

March 13, 2018

YOUNGSTOWN, Ohio – Valley Growth Ventures could make four investments in early stage companies during the first half of the year, the venture capital fund’s manager said Monday afternoon.

Valley Growth Ventures, a micro-venture capital investment fund formed by several Mahoning Valley partners in 2016, announced yesterday morning that it had raised $6 million from 44 investors in Ohio and across the country.

The fund is working with an early-stage company that it hopes to fund within the next month. “That would be our first deal,” said Ernie Knight, fund manager. The fund is looking “very closely” at four or five prospects, and he anticipates making three or four investments during the first half of 2018, he said.

Founding partners include the Youngstown Business incubator, Tech Belt Energy Innovation Center, Youngstown State University Research Foundation, Mahoning County Economic Development Corp. and Mercy Health.

The fund raised $3 million privately to match the $3 million secured from the state of Ohio. It can make investments in early stage companies throughout Ohio, with a preference for startups in northeastern Ohio and the Mahoning Valley more specifically.

“It’s been a tremendous accomplishment for us collectively to be able to get this program fully funded,” Barb Ewing, YBI’s CEO, said.

The fund will be used to assist existing companies to grow more quickly and as a tool to attract companies to the Valley, Ewing said.

“We know that we lose deals to communities that have these types of programs in place,” she said. “The truism is that deals follow money, and if you don’t have money to invest you don’t have the same tools that other communities have.”

The fund’s model is based on leveraging the background and experience of the founding partners: business-to-business software, information technology, advanced materials, energy and health care. It also is focused on startups that are either developing a product or has just achieved market entry, Knight said.

Knight could not identify investors in the fund beyond the founding partners due to confidentiality agreements. Among those known to have invested is Patrick McKenna of the West Coast venture capital firm High Ridge Venture Partners, who pledged $50,000 toward the fund.

The founding partners, in addition to their financial contributions, are all providing in-kind support services “so we can do more with less” and “get more bang for our buck,” Knight said.

Beyond the money, the other resources that the founding partners can provide – counseling, connections and technical assistance – are “a big piece of this,” Ewing added. “It’s more than just about the money for these companies,” she remarked.

“The investments will be relatively small by international standards,” she said. The expectation is that the local partners will need to help companies raise other money by identifying angel investors and other funding sources, and by building a larger network of potential dollars to put more money into the local ecosystem, she said.

The next steps are continuing to identify projects for investment, getting money deployed into startups and “making those companies successful,” Ewing said.

Published by The Business Journal, Youngstown, Ohio.