Local Entrepreneurs Appear Before State Legislators to Urge Renewal of Ohio Third Frontier

Startups from around the state, including three Central Ohio companies, were called upon this week to testify before the Ohio State House of Representative’s Committee on Economic Development concerning the impact the Ohio Third Frontier has had on their business formation efforts and the economic health of the state.  

State legislators are considering various options for renewal of the Ohio Third Frontier, which was originally authorized as a bond issue in November 2005.  To date, the program has, according to a recent independent study, generated 41,300 jobs and $6.6 billion in economic activity – on an investment of $681 million in state expenditures.  The program will run out of funding in 2011.  Although legislators on both sides of the aisle agree that the program more than warrants renewal, at question is both the timing of when the bond initiative should be put on the ballot and at what level of funding?  House members, led by Jay Goyal, D-Mansfield, have proposed a bond issue in the amount of $1 billion be put on the ballot for May of 2010. 

Startup companies at various stages of formation spoke before the House Economic Development Committee Tuesday and Wednesday of this week as legislators considered their testimony in support of House Joint Resolution 12 (HJR12).  

“Support from the Ohio Third Frontier was instrumental in helping us develop our flagship product, RevRunner,” said Ray Shealy, former CEO of HTP, Inc.

In 2004, HTP became the first recipient of funding through the Innovation Ohio Loan Fund (IOLF), a program made possible through the Ohio Third Frontier to assist existing Ohio companies develop next generation products based on intellectual property and innovation. IOLF provides low-interest loans, typically interest-only for the first two years, to support companies whose collateral lies more in innovation than in bricks and mortar.  Two years later, the company received a subsequent IOLF loan to purchase hardware and software and to fund the hiring of developers to continue advancing RevRunner and the entire suite of HTP software products and services for the healthcare industry. 

In total, HTP received $2.5 million in loans from this Third Frontier-supported program which Shealy says he is proud to report were paid off in full and with interest at the time the company was acquired by RelayHealth, a McKesson Company, the largest healthcare focused-company in the world.   

The acquisition by McKesson meant the retention of 85 high-paying jobs in Central Ohio and the continued building of the region’s reputation as a leader in healthcare information technology and electronic medical records.   

Throughout its early stages of company formation, HTP also benefitted from other Ohio Third Frontier programs as well, including the BioOhio Omeris fund, part of the Edison BioTechnology Fund, TechColumbus and the Ohio TechAngels.

“The program support represented by Ohio Third Frontier is much more than funding,” says Shealy.  “The resources, coaching, mentoring and business connections we received were invaluable in helping us achieve a thoughtful, strategic growth that subsequently led to the McKesson acquisition.”

According to an independent report compiled by Stanford Research Institute (SRI) the Ohio Third Frontier can be credited with creating and retaining high-paying jobs, generating significant economic activity and dramatically increasing the availability of early-stage capital such as that needed to fuel the growth of startups. In fact, between 2004-2008, VC investments in Ohio grew 13.2 percent (from $243 million to $445.6 million) which was more than double the annual growth rate of VC investments across the US during the same five-year period.

“I urge you to support the renewal of the Ohio Third Frontier program at as robust a level as is fiscally responsible,” said Shealy before the House Committee.  “Without it, I can assure that HTP and its current 85 employees would not have been successful at fully developing this industry-defining technology, and that some other innovator in the South or on the East Coast would be capturing this market, instead of an Ohio-based technology startup.”

Deliberation continues in the House of Representatives on HJR 12 before moving on to the Senate.  In addition to Shealy, two other Central Ohio startups (InsightETE, Inc. and Minimally Invasive Devices, LLC) testified this week.  You can read about their testimonies and the impact the Ohio Third Frontier has had on their business formation efforts over the next two weeks in TechWeek.

For full details on HJR 12 as it goes through committee, click here.