CINCINNATI - Access to capital is crucial for startup ventures. Access to customers, is even better.
That's why the Cintrifuse, a regional hub for startups, is focusing on both as it builds a Cincinnati ecosystem where entrepreneurs can capitalize on the innovations of medical researchers, marketing experts and others.
"If we have a viable candidate, they will definitely get to the front of the line for assessment. They will definitely get a look," Tim Schigel, fund of funds manager for Cintrifuse. "Whether they win business is not a guarantee that anyone can make. But I think we do have good commitments that our companies will be placed in high priority, which is great."
In an exclusive interview with WCPO Digital, Schigel said the involvement of Cincinnati's "pillar companies" is one thing that will set Cintrifuse apart from other accelerators in other cities. Those pillar companies are likely to include Macy's Inc., Kroger Co. and Procter & Gamble Co., although P&G is the only company among those three to announce its involvement in Cintrifuse. A Macy's spokesman said the company is not a financial contributor but has agreed to help "in other ways."
Schigel is a Cincinnati venture capital veteran whose California-based startup, ShareThis, has reached about 100 employees and could be headed for an IPO . Schigel is the chairman of ShareThis and still devotes a significant amount of his time to the venture, but he took on the Cintrifuse job in part because he wanted to spend more time in Madeira with his family.
Schigel was hired to manage an investment pool of up to $100 million. The money will be invested spanning the next three years in eight to 10 venture capital firms nationwide. The goal is to get those nationally focused firms more involved in Cincinnati's entrepreneurial community. The fund of funds has closed an initial round of $40 million. P&G, the University of Cincinnati and Western & Southern Financial Group have publicly announced their involvement in the fund, but others are expected to confirm their involvement over time.
"Kroger will support Cintrifuse. We have not yet," said Kroger Media Relations Director Keith Dailey.
But it's not just money that local corporations are willing to share.
In what Schigel described as a somewhat surprising development, Cincinnati's biggest companies have offered to share their insights on the market potential of local startups, not only with entrepreneurs, but also with venture capital firms who agree to consider investments in Cintrifuse companies.
"If I'm a venture fund on the west coast, would I love to have a strategic investor do some market due diligence on my company? Give me feedback before I invest? They will provide access to help companies get feedback, validation, potential market tests, potential access to customers. What we want to do is build a programmatic way for them to see what's out there as well as for them to provide this collaboration," Schigel said.
That approach is novel among business accelerators nationwide, said Christopher Rizik, CEO and fund manager of the Renaissance Venture Capital Fund. The Michigan-based fund of funds is one of the accelerators on which Cintrifuse is modeled. Rizik said the involvement of Cincinnati's best marketing brains will be a competitive advantage for Cincinnati and is one reason "people are talking about Cintrifuse" throughout the Midwest.
"There are lots of incubators around the nation, but very few have a connection to the market," Rizik said. "They tend to be focused more on technology development. The risk that usually gets underestimated is the market risk. Does the market really want this? What is the need for it?"
The approach was inspired by P&G's Connect + Develop program, in which the Cincinnati-based consumer products giant invites innovative ideas from entrepreneurs that can be incorporated into P&G's brand strategies. Cintrifuse CEO Jeff Weedman managed Connect + Develop before P&G loaned him to the Cintrifuse effort. And he intends to manage the Cintrifuse process in a way that's productive for entrepreneurs, investors and corporate partners.
‘We do not envision unfettered huge volumes of unreviewed companies pestering existing businesses," Weedman said. "That's to no one's advantage. But if we can do a good job of hooking up the companies that should be in touch with other businesses, and we do it in a way that shortens the time and clutter of that connection, that's a benefit to everyone."