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.

These SBIR / STTR Workshops will show you how

The Ohio Aerospace Institute (OAI) and TechLift are presenting a series of workshops on the Federal SBIR and STTR programs.  The Department of Defense (DoD) SBIR and STTR programs fund a billion dollars each year in early-stage R&D projects at small technology companies - projects that serve a DoD need and have commercial applications.

• The SBIR Program provides up to $850,000 in early-stage R&D funding directly to small technology companies (or individual entrepreneurs who form a company).
• The STTR Program provides up to $850,000 in early-stage R&D funding directly to small companies working cooperatively with researchers at universities and other research institutions.

Small companies retain the intellectual property rights to technologies they develop under these programs.  Funding is awarded competitively, but the process is streamlined and user-friendly.

Knowing the ins and outs of how the program works, how best to apply, and what you need to do in order to increase your odds of an award is the basis of the OAI/TechLift workshops.  In each of the workshops, you will learn:

• How to use SBIR and STTR as a business development tool in your company
• The basics of the DOD SBIR/STTR Program, its breadth and potential reward to you
• How to develop a DOD SBIR/STTR proposal that answers the need with logical flow
• What DOD SBIR reviewers look for, pitfalls to avoid & pointers to better your efforts
• How to access technical information about prior R&D awards
• Decide whether you can/should compete for SBIR/STTR or other government funds 

• How to partner with TechLift and OAI to increase your commercialization opportunities

Three workshop dates are being offered:

Fri., April 4th, 2008
10:00 a.m. – 2:00 p.m.
Akron Global Business Accelerator
526 S. Main Street
Akron, Ohio 44311

Thu., April 10th, 2008
10:00 a.m. – 2:00 p.m.
Great Lakes Innovation and Development Enterprise (GLIDE)
Lorain County Community College
151 Innovation Drive, Suite 210
Elyria, Ohio 44035 Fri., April 11th, 2008
10:00 a.m. - 2:00 p.m.
The Youngstown Business Incubator (YBI)
241 Federal Plaza West
Youngstown, Ohio 44503

EVENT INFO:

Lunch will be provided. Cost: $25 for OAI Members & TechLift Partners; $40 for Non-Members.  NEOinc is a TechLift partner.  If you are a tenant in one of our incubators, you are eligible for the reduced pricing.

Online registration will be available soon, please visit http://www.oai.org/ (networking and events)
By e-mail: patriciagrospiron@oai.org and monicadumitriu@oai.org
By phone: Patricia Grospiron, 440-962-3216 and Monica Dumitriu, 440-962-3141

Ready to take the next step?

OAI and TechLift are also offering an Intensive Workshop on SBIR / TTIR & Grant Funding Proposal Preparation.  This workshop is a day and a half and will focus on:

• Detailed instruction on proposal preparation

• Technical & commercialization plans
• Proposal submission procedures
• Overview of all agencies, including DOD, DOE, & NSF

This intensive workshop will take place April 28th and 29th at the OAI facility (click for directions).  Registration contacts are the same as above.  There are four options for this workshop:

• Option 1: One day of SBIR training, Mon., 12-5 p.m. or Tue., 9 a.m. – noon
  Cost: $125 for OAI Members & TechLift partners; $250 for Non-Members
• Option 2: One day of SBIR training + 1/2 day on commercialization
  Cost: $150 for Members & TechLift partners; $300 for Non-Members
• Option 3: One day of SBIR training + project summary review*
  Cost: $175 for Members & TechLift partners; $350 for Non-Members 
• Option 4: Same day + 1/2 day on commercialization + project summary review*
  Cost: $200 for Members & TechLift partners; $400 for Non-Members

*Note: The outline details for the project summary will be provided during the workshop.

Reminder:   March 31, 2008 is the deadline for the next applicant cycle for the Lorain County Community College Innovation Fund.   

Successful applicants should expect to see awarded funds shortly after July 1, 2008.   As you know the application process is done via the web.

 If you have any questions, contact GLIDE at 440-366-4310.

On the heels of previous announcements of venture capital firms opening offices in Northeast Ohio, the Plain Dealer is reporting yet another.  RiverVest Venture Partners out of St. Louis has announced plans to open an office in Cleveland around the first of the year:

RiverVest co-founder and managing director Tom Melzer is convinced his firm will find investment opportunities in Northeast Ohio.   “If we’re going to open an office in a particular geography, there has to be a critical mass of activity,” said Melzer, formerly president of the Federal Reserve Bank of St. Louis. “There definitely is that going on in Northeast Ohio.”

Critical Mass.  Northeast Ohio.  That sounds good!

RiverVest is an early-stage investor managing $150M in assets focused on promising medical-device, biotechnology and health-care companies.   Their plans are to open their office at BioEnterprise and have tapped Karen Spilizewski of BioEnterprise to be a part-time Vice President running their new office.  RiverVest joins three other VC firms and a hedge fund at the BioEnterprise location.

NEOinc congratulates Karen and all of Northeast Ohio on this exciting announcement.

Read RiverVest’s official press release.

As announced just this morning (12/21/2007), NanoMimetics was awarded $25,000 from the GLIDE Innovation Fund.

The Innovation Fund of the Lorain County Community College Foundation, established in 2007, is a regional fund focused on supporting technology-based entrepreneurial endeavors and emerging technology-based businesses.  NanoMimetics, a NEOinc incubator tenant in the MAGNET Incubation Program, receives this grant as part of the inaguaral class of recipients.

The award is an “A Grant”, awarded by the fund to validate technology concepts.  NanoMimetics intends to take their technology, a surface-modification polymer, and extend it from it’s current medical orientation into marine applications.  The technology prevents undersirable adhesion to the surfaces it is applied to.  As identified by NanoMimetics in their application to the fund, “there is a clear, unmet need in the boating industry for a safe and effective coating that can prevent the attachment of undesirable organisms (fouling) on the hulls of boats.”  NanoMimetics coating has shown benefits in medical applications, is expected to be manufactured at a lower cost than current coatings, and is non-toxic.

NEOinc and MAGNET congratulate Roger and his team and wish them continued success in their enterprise.

Advance Northeast Ohio recently announced that a Pittsburgh-based company, iNetworks, had decided to open an office in the Midtown area of Cleveland.  As reported, the company, which operates a $100M BioOpportunity fund, cites the following as the basis for making the decision to open for business in Northeast Ohio:

“The Cleveland Clinic, Case Western Reserve University and the thriving life sciences community in Cleveland and the rest of Ohio are dynamically moving forward the development and commercialization of cutting-edge life science technologies based in Ohio. iNetworks is excited to be part of this emergence, by investing in companies located in Ohio and participating in the relocation of companies seeking to be near the outstanding resources and world-class medical and scientific personnel in Ohio.

Pradeep Khosla, Managing Director-Technology for iNetworks and also Dean of the College of Engineering at Carnegie Mellon University, said ‘Cleveland is one of the geographic regions poised to succeed with the convergence of two areas of historic strength, healthcare on the one hand and information technology and other forms of engineering on the other. This convergence is where we see Cleveland and other parts of Ohio succeeding in the life science technology field.’”

Advance Northeast Ohio cites the importance of this development as another example of venture capitalists from outside the region bringing their knowledge and money into Northeast Ohio.  As they correctly state one measure of a region’s economic prospects is whether money from outside the region is being invested. 

NEOinc is proud to be one of the organizations specifically cited as helping to build an environment of success for early stage companies key to attracting investment sources from outside our region.

We have not met the iNetworks folks yet.  Once we have more information on their BioOpportunity fund, we will provide additional details here.