Phil Brennan is a renaissance man. An Irishman who now calls Akron, Ohio home, he's been an actor, a brand manager and a Fortune 50 business leader, having launched more than 200 new products into the marketplace over the course of his career.
Since 2006, he has added "cleantech entrepreneur" to his resume. As the CEO of Echogen Power Systems, Phil is leading a 20-person team in the final stages of commercializing a thermal heat engine. When placed into a factory smokestack, the engine harvests the heat escaping out of the smokestack, converting it into electricity used to power the factory and, depending on the size of the heat engine, homes in the neighboring area.
Stories like this are common in entrepreneurial hotbeds like Silicon Valley, Boston, San Diego and Seattle. But in Akron, Ohio?
You bet. Surprising as it might be, Ohio is one of several states in the Midwest where successful entrepreneurial companies are charting the way for a new economy and demonstrating that high-growth entrepreneurship can happen anywhere when a region plays on its existing strengths.
Venture capital investment activity is a good proxy for high-growth entrepreneurship because venture capitalists invest in companies bringing transformative ideas to market. Consider the facts about venture capital investing:
While all this activity is still eclipsed by the activity in Silicon Valley, it's the start -- actually, more than the start -- of a transformation occurring across the Midwest. And it's probably why the CEOs of venture-backed companies were most bullish on company growth in the Midwest compared to any other region in the U.S. (excluding Silicon Valley, New York and New England), as reported by the NVCA in its 2011 predictions survey.
Though there are many reasons why innovation and entrepreneurship are starting to thrive in the Midwest, three of them in particular are creating a tremendous impact.
Manufacturing still matters in the Midwest. While there's no doubt in anyone's mind that the Midwest's economy will never again be based entirely on manufacturing, like it was a century ago, it does offer a highly skilled manufacturing workforce, which is a great asset when entrepreneurs need to actually make their innovations. Highly advanced MRI imaging equipment, new electric cars, and Phil Brennan's heat engine are just a few examples of the innovative technologies leveraging this strength.
There are other practical reasons why the Midwest increasingly looks attractive as a place to start and grow a business. The cost of living -- which means the cost of rent, expected salaries for top talent, and the cost of purchasing a home -- is lower than in other parts of the country. The Midwest also has geographic proximity to over 60 percent of the U.S. population, a big asset when you need to ship huge new cleantech or advanced energy products to customers.
The Midwest wants the type of activity that Silicon Valley has. But it isn't Silicon Valley, and that's okay -- it shouldn't be. The rise of high-growth entrepreneurship and supportive ecosystems are not paint-by-numbers prescriptive. Just as Silicon Valley's future was built on the promise of the semi-conductor industry, the Midwest's radically disruptive innovations are being built on regional assets. And by playing to those strengths, the Midwest is enabling its rebirth.
Follow Ray Leach on Twitter: www.twitter.com/jsamerica
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WOO HOO
What exactly do you think Jumpstart does for our region. Instead of investing in promising startups like they claimed their mission was when they started, last year, $9.1m of their state funded $12.2m budget went to fund their high salaries, overhead and headcount. THE CEO OF THIS STATE FUNDED NON PROFIT PAYS HIMSELF $428K AND THE TOP TEN BRING HOME $2.3M.
Even if you believe their claims, since their inception in 2004, they claim they created a little over 400 jobs. Since they spent over $85m, that is a cost of $200k per job they created and they have a way of including jobs that they had little or nothing to do with.
They have invested in 53 companies since 2004, many have failed, many of the ones that are alive would exist with out them and they have had one positive exit netting them a $70k profit on a $250k investment.
So DirectProf, would you thank your financail advisor if turned $85m into $320k in 7 years? That is what Jumpstart has done for the taxpayers of Ohio who pay for the high salaries at this Non profit.
BTW, why do they have a five person marketing team. They don't sell anything. The way an economic development groups gets PR is helping companies, not promoting themselves. However, when you haven't had any real successes in 7 years, $85m, 53 investments, you need to spin these results to continue to live off the Government.
So I totally agree with you!
So they aren't reincarnating Silicon Valley. More like Detroit and Cleveland. More power to them.
Perhaps most important, however, was the fact that California law allowed entrepreneurs to start new companies without fear of being stopped by restrictive covenants in their employment contracts. It could easily be argued that before the advent of Silicon Valley, the area with the greatest "high tech" concentration was in Minnesota, with its computer companies (Control Data, Honeywell, and later Cray Research, for example), 3M Company and other innovative firms. However, an employee with a great new idea couldn't just leave and start a new company because Minnesota law supported restrictive covenants in employment contracts. By contrast, California policy was to limit severely the applicability of restrictive covenants. Without that legal policy, there never would have been the migration from Shockley Semiconductor to Fairchild Camera & Instrument to National Semiconductor to Intel that formed the basis for the "Silicon" in Silicon Valley.
Now it's silicon and biotech.Very expensive, small object development
You really need to look at what Jumpstart has accomplished since it started in 2004. They have spent over $85m of mostly gov funded money, only invested $20m of that into actual startups and the rest has gone to fund their high overhead and salaries. They have invested in 53 companies in which they have had on positive exit netting them $320k on their $250k investment. I don't know what you consider a success.
Oh that rights, all the jobs they have created. If you believe them (which you shouldn't) they created a little over 400 direct jobs since 2004. With their budget, that is almost $200k per job. Also, they count all of their high paying jobs towards than number and they have a funny way of taking credit for jobs that they had little if anything to do with.
I also think you should fact check Ray's Bio. Over the past year, he has been publically called out for not having any real experience in startups and his bio here is different than the one on his Jumpstart page, which changed dramatically after people questioned it.
The point is, $9.1m of Jumpstart's $12.2 budget(mostly funded by tax dollars) goes this groups overhead instead of into companies. The CEO pays himself $428k and the top ten bring in $2.3m In Cleveland, it is well known of this scan and the only good jobs they created are their own.
The only reason you hear so much about jumpstart and not other similar groups around the region is because no other group would even think of hiring a five person full time marketing team and spend so much of their time and resourses promoting themselves. If Jumpstart actually produced real results, they wouldn't need such a PR and marketing budget.