OTR thrives as hub for tech startups, but some worry it's too costly, concentrated in one spot

Mason, Blue Ash, Covington offer alternatives
Posted at 8:10 AM, Sep 24, 2017
and last updated 2017-09-24 08:10:30-04

CINCINNATI -- Walk past any number of storefronts on Main Street between Liberty and East 13th Street – in buildings that previously housed creative agencies, Internet of Things (IoT) startups and industrial design collectives -- and you’ll still sense the entrepreneurial spirit that helped reignite Over-the-Rhine.

Visit one of the popular coffee spots from Central Parkway to Vine Street and Broadway to Main and slide from one table to another for back-to-back meetings. By your second cortado, it’s clear that OTR continues to be Cincinnati’s preferred choice for creative business meetings.

Cincinnati’s version of Silicon Valley has firmly made its home in OTR thanks to increasing activity throughout the startup hub Union Hall and incoming tenants to the neighborhood like the OCEAN accelerator, a faith-based startup that recently graduated its third class.

However, tech leaders are feeling the squeeze of high rents and workspaces better suited for global tech giants like Amazon and scale-up, tech companies rather than early-stage startups. The walkable neighborhood where Cincinnati entrepreneurs would locate to live and build their tech startups may no longer be within reach.

“I think it’s a real challenge,” said Scott Jacobs, executive director at Queen City Angels, an angel capital investor group focused on early-stage companies. “I talked with a startup this morning, and they located on West 15th Street across Central Parkway. All of a sudden, they’re not really in OTR anymore and the rent just across the street was so much lower.

“The cost to operate in OTR is going up, and that fundamentally is a challenge for startups. They’re pinching their pennies and trying to be very efficient with capital.”

For Cincinnati’s startup ecosystem to reach its potential, Jacobs and other startup veterans believe it’s time for the tech hub to expand beyond OTR and into other, more affordable neighborhoods.

Alex Yastrebenetsky, CEO and founder of InfoTrust, a Blue Ash-based digital analytics consulting and technology company, agrees that Cincinnati’s nascent entrepreneur and startup communities have outgrown OTR. One reason InfoTrust is ranked as one of the best places to work in the United States, Yastrebenetsky said, is that he and his leadership team understand that scale-up companies like his need more than the cutting-edge, cultural vibe and late-night revelry that have made OTR a leading tourist destination.

“A fundamental problem with attracting longer-term, high-quality talent to OTR is that professionals with at least five-plus years of experience are most likely going to be at the stage of their lives where daycare and schools are extremely important,” he said.

He pointed out that Inc. Magazine 5000 companies like Vora Ventures, Sogeti and Microsoft are clustered in Blue Ash.

“Scale-up companies need a lot of real estate options, and Blue Ash has that in abundance,” Yastrebenetsky said. “Even though the Sycamore School District is pricey, there are a lot of suburban communities with outstanding school systems. The Blue Ash location makes it very easy for anybody from the eastern, northern or western part of town to get to the office without fighting traffic.”

Numerous startups have been launched and shuttered since WCPO Insider first identified OTR as Cincinnati’s tech hub back in 2015. At that time, the startup campus called Union Hall was still under construction.

Jacobs and Yastrebenetsky said the entrepreneur and startup communities need attainable, accessible and affordable choices beyond OTR. In order for the ecosystem to keep growing and move past Minneapolis, Detroit and St. Louis in Midwest tech startup rankings, they agree it’s time to aggressively expand outward from the urban basin.

In addition to Blue Ash, these neighborhoods and areas are the best candidates for becoming Greater Cincinnati’s next tech hub.

Fast-growing tech companies like Assurex Health, AtriCure and ConnXus continue to scale an innovation hub in Mason alongside startups liker Genetesis and corporate anchors Luxottica and the Procter & Gamble Mason Business Center. The city’s economic development team continues to develop the Warren County city as a preferred choice for bioscience and tech companies, including the 18 tech startups that have participated in the Mason Tech Elevator programs.

On the West Side, veteran technologist and data center manager Everett Thompson owns and operates I74 Wired, a 65,000-square-foot data and office park on Montana Avenue.

In Covington, Dotloop co-founder Adam Koehler continues to scale Northern Kentucky’s startup ecosystem with CovWorx, a complex that encourages collaboration between its creative tenants. 

Jacobs said Cincinnati business and political leaders are doing many things to support the growing startup and tech ecosystem.

He points to the recently opened Interstate 71 interchange at Martin Luther King Drive and key developments in the Uptown neighborhoods. Those include an innovation center, a new National Institute for Occupational Safety and Health (NIOSH) research laboratory and expansion at Cincinnati Children’s Hospital Medical Center.

Still, there are other cities and regions that rank ahead of Cincinnati with regard to infrastructure and support. These are the cities with assets and practices that tech leaders would like to bring to Greater Cincinnati:

  • Chattanooga, Tennessee, supports tech entrepreneurs and startups as America’s Gig City, offering 10-gigabit-per-second fiber service to residents and businesses.
  • St. Louis continues to establish itself as a tech energy hub via the Ameren Accelerator powered by the University of Missouri system and Capital Innovators.
  • Closer to Cincinnati, the University of Dayton and the Entrepreneur Center will partner on an 80,000-square-foot innovation hub alongside residential units, art studios and an incubator kitchen in downtown Dayton’s Arcade Building.

If the goal is for OTR to remain the tech hub for Cincinnati, if not Southwest Ohio, there are new tech office developments at 1100 Sycamore and 1415 Republic St., as well as the Strietmann Center at 235 W. 12th St. Some may even call them fixes that can help address the demand for workspaces in OTR.

Affordable residential units may be more challenging to solve.

“I think this idea of a startup house, a cohabitation space, would make OTR more affordable,” said Jacobs. “You know that show Silicon Valley on HBO? There are seven entrepreneurs living in one house. That’s where we are moving in OTR with regards to the costs to operate here.

“Union Hall still plays a key role because of the co-working space, but it’s important that the neighborhood remains a place where people can get started as an entrepreneur.”

Many hope the Silicon Midwest is affordable enough to offer a longer runway for startups.

It’s no longer about the need for an entrepreneur to find a bigger pond in Chicago or elsewhere. It’s about Cincinnati becoming a bigger pond and stretching beyond Central Parkway.

Beyond Over-the-Rhine

Looking for the best entrepreneur spaces to ignite your tech startup dreams? Here are some choice spots for collaboration, co-working and networking with fellow technologists:

  • Union Hall: This two-building complex in OTR is ground zero for startups and the leading workspace for tech entrepreneurs. Memberships are available. 1311 Vine St.
  • Tech Elevator: These collaborative spaces across three locations connect tech startups with Mason corporate anchors like Cintas and L3. 6000 S. Mason Montgomery Road. 
  • CovWorx: This co-working space stays true to Covington’s artisanal vibe by bringing together creative entrepreneurs, lifestyle businesses and tech startups. 1032 Madison Ave.