On July 1^st, Ohio Department of Development staff will travel to Northeast Ohio to announce and discuss the FY 2009 Third Frontier Program Plan and requests for proposals that will be issued within the next 12 months.  Norm Chagnon, Executive Director of the Third Frontier Commission will present the FY 2009 plan.  John Griffin, Director, and Deb Cummings, Assistant Director of the Technology and Innovation Division from the Ohio Department of Development will also be available to answer questions about the FY 2009 plan.

Some of the programs that will be discussed include: Research and Commercialization, Wright Projects, Advanced Energy and Fuel Cells.    

The programmatic offerings should have appeal to a very diverse regional audience.  We hope you plan to attend the briefing to learn more about Third Frontier funding opportunities available in 2009. There is no cost to attend this meeting, though pre-registration is requested. Please RSVP to Olivia Robinson Bulls at orobinson-bulls@nortech.org by June 27^th.

Third Frontier Public Briefing: 2009 Funding Opportunities

Date:  July 1, 2008
Time:  8:30 a.m. Continental Breakfast;  9:00 a.m. -10:30 a.m. Presentation and Q&A
Location:  Doubletree Hotel, 6200 Quarry Lane, Independence, OH 44131 Get Directions
RSVP:  Olivia Robinson Bulls at orobinson-bulls@nortech.org by June 27^th
Questions?:  Contact Kelly South at 216-241-8458

Sponsored by: NorTech

You’ve poured your heart and soul (and maybe your savings account) into your startup for the last couple years.  You’ve endured countless discouraging comments and kept your dream alive.   You’ve begged and borrowed from family and friends for the money to move that dream forward.  If you’re smart, you probably contacted one of the regional technology incubators for free assistance on your business plan and strategy.  Whether on your own, with the assistance of regional support organizations, or just dumb luck, you’ve caught the eye of an individual or group who is interested in investing in your start-up.  Dollar signs are floating in front of your eyes as the realization of years of hard work is within your grasp.

Then comes the “term sheet”. 

Per Wikipedia, a term sheet:

A term sheet is a bullet-point document outlining the material terms and conditions of a business agreement. After a Term Sheet has been “executed”, it guides legal counsel in the preparation of a proposed “final agreement”. It then guides, but is not necessarily binding, as the signatories negotiate, usually with legal counsel, the final terms of their agreement.

The problem for many entrepreneurs is the language contained in the term sheet.  Prepared by legal on behalf of the potential investors, most entrepreneurs will find themselves at a disadvantage at this stage.  Hopefully, by the time you are at this stage you have a legal advisor on your team or advisory board that can help you navigate the term sheet.

This is an extremely important step in the development of your start-up, and decisions made in your funding rounds can have long-lasting impacts on your venture.   Educating yourself on the key concepts and terms found in the documents that will be put in front of you can go a long way to making decisions you can live with down the road.

Crib Sheet: The Term Sheet Glossary is an excellent, well-written article outlining the ten key terms the author (an attorney to multiple company founders) is most often requested to explain.  If you are confused on your pre-money versus post-money valuation, or what a liquidation multiple is, then this article is a good place to start.  Be sure to scan the comments, the author shares a basic capitilization template you might find interesting.

If you’re looking for more detailed explanation on term sheet lingo, then check out the Term Sheet Series Wrap Up page on Feld Thoughts, a blog written by an early stage investor who is also an entrepreneur.

NEOinc hopes you find these resources useful.  We wouldn’t suggest these articles could ever replace expert counsel, but understanding and preparation on your part is recommended, should you get to this point.

 Innovation Fund Media Announcement 

Presenting awards to technology-based start up companies in Northeast Ohio
and announcing a generous contribution to the
Innovation Fund from First Place Bank!

 Wednesday, June 4, 2008
12:00 p.m. to 1:30 p.m.

Entrepreneurship Innovation Center on the
campus of Lorain County Community College.
(Lunch will be provided.)

The Innovation Fund, administered by the Lorain County Community College Foundation, cordially invites you to a media announcement where the newest recipients of the Innovation Fund will be presented.  In addition to these awards, we will be celebrating a significant contribution towards the Innovation Fund from one of our newest partners.

Please RSVP by visiting www.lorainccc.edu/ifund. 

For directions, please visit:  www.lorainccc.edu/map. 

For questions or more information please contact the LCCC Foundation at 440-366-4039.

 Funding support provided by Ohio’s Third Frontier ESP Program
as well as our newest partner, First Place Bank! 

As reported this week in the Plain Dealer, the Ohio Capital Fund, a “fund of funds” established to help increase private investment in Ohio companies, has committed $25 million to four VC funds.  The funds focus on early stage life science and IT companies.

The four funds are Arboretum Ventures out of Ann Arbor, MI; Radius Ventures in New York; Charter Life Sciences in Cincinnati and Palo Alto, CA; and Fletcher Spaght Ventures in Boston.

Arboretum Ventures and Radius Ventures recently opened Cleveland offices because of the investment.  Fletcher Spaght opened a Columbus office.

Do you need funding to help develop a new product?

If so, MAGNET has loan funding that helps entrepreneurs or small businesses bring their ideas to reality.

MAGNET administers the New Product Development and Entrepreneurship Program, Product Innovation Loan Fundon behalf of the Cuyahoga County Department of Development.  In the last three years, the fund has provided over $3 million for new product development in Northeast Ohio and additional funds are now available.

The process is competitive.  Applicants will have their submissions reviewed and approved by a committee consisting of local business leaders, venture capitalist, designers, entrepreneurs and representatives from Cuyahoga County.  Applications for the current funding round are being accepted with a submission deadline of NOON EDT on Friday, April 25, 2008.  Loans of up to $115,000 can be made in phased increments ranging from $15,000 to $60,000 depending upon how much development has already been completed and what remains to be done.

The loans have an interest rate of 3.5%.  There are no interest or principal payments for the first three years after disbursement.  Small companies of less than $50 million in sales as well as entrepreneurs can use this money to fund their product development process for such activities as market research, patent services, industrial design, engineering and prototyping efforts.

Full details of the program along with application forms are available at http://www.magnetwork.org/programs/cuyahoga-loan-fund.htm.

If you have further questions you can contact Barbara Paul by phone at 216-432-5322, or by email at barbara.paul@magnetwork.org

NEOinc has published the second of our “Real World” guides, this one on financing your business start-up.  With practical advice on the three main sources of capital, and guidance on when you should use each, any entrepreneur with questions in this area should reference our write-up.

No overview, however detailed, can address every situation or answer every question.  If you are a technology-oriented start-up in Northeast Ohio and would like personal help working through your financing options, please contact your nearest NEOinc location for further assistance.

As reported recently in the Plain Dealer, fraud involving loan and grant schemes targeted at small businesses trying to raise capital is on the rise. 

Click the link above to read the full article if you wish.  Most of the scams sounded fairly familiar; like paying processing fees for loans that never show up or paying for “help” getting government loans then not getting the loan.

 The article lists several good pointers for not getting scammed, and suggests checking the Small Business Administration website for information on resources available to business seeking funding.   We know of another organization in town that can help you navigate your regional funding options.  They’re called NEOinc and here’s their Contact Us page.

Sorry - couldn’t resist.  (Give us a call though!)

Are you currently working on an idea centered around location based services, social networking, mCommerce (including advertising and payments), communication, or entertainment?  Have you ever thought of porting your idea / application to the iPod or iTouch?  A new investment fund has been formed that might be right up your alley.

Straight from the website:

“KPCB’s iFund™ is a $100M investment initiative that will fund market-changing ideas and products that extend the revolutionary new iPhone and iPod touch platform. The iFund™ is agnostic to size and stage of investment and will invest in companies building applications, services and components.”

More details can be found on the website, and you can visit the iFund FAQ here.

If so, MAGNET has loan funding that helps entrepreneurs or small businesses bring their ideas to reality.

MAGNET administers the New Product Development and Entrepreneurship Program, Product Innovation Loan Fund on behalf of the Cuyahoga County Department of Development.  In the last three years, the fund has provided over $3 million for new product development in Northeast Ohio and additional funds are now available. Continued

State of Ohio’s GrowNOW program gives small business owners a three percent reduction on bank loan rates, saving up to $24,000 over two years.  It’s easy to apply and to be approved when you link your loan to creating or retaining jobs in the state.

Through GrowNOW, Ohio Treasurer Richard Cordray is making available $1 million every business day for small businesses and the state’s economy. GrowNOW lowers the interest rate on bank loans by three percent for small businesses that are creating jobs or keeping jobs in hometowns for Ohioans. Affordable borrowing through the state’s eligible banks allows business owners financial stability while working through critical growth periods.

How does it work?

1. Small business owner applies for a bank loan.  A list of participating banks can be found on the GrowNOW website.

2. Bank approves the loan and establishes an interest rate with applicant.

3. Bank and small business owner apply for a GrowNOW interest rate reduction.  The application is online at the GrowNOW website.

4. If approved, the Ohio Treasury places a certificate of deposit with the bank at a three percent reduced interest rate.

5. The bank agrees to pass along the interest savings to the small business owner’s loan.

6. GrowNOW saves a small business owner up to $24,000 in interest over the first two years of the loan.  (Create or save one full-time or two part-time jobs for every $50,000 requested, up to $400,000).

How do you qualify?

Qualifications are basic, realistic, and should apply to almost all regional entrepreneurs:

• Less than 150 employees

• Majority of employees must be Ohio residents

• Organized for profit

• Offices and operating facilities in Ohio

In the earlier stages of your startup, bootstrapping with your own investments is highly recommended versus outside investment or venture capital.  You keep control of your business and don’t lose focus pursuing outsider’s money.  If you are at this stage, don’t forget to take advantage of this great program.