World class: Tri-State startups show an ability to draw far-flung investors and a lot of money

2017 shapes up to attract well over $100 million
Posted at 8:00 AM, Oct 12, 2017
and last updated 2017-10-12 08:00:05-04

CINCINNATI -- Look at a map of where investments in Tri-State startups have come from in the past five years, and you might be struck by how big that map is.

It has to take in the entire world, because investments have come from all over the United States, and also from Ireland, Switzerland, China, Nigeria and Chile -- every inhabited continent except Australia.

"It really shows the breadth and quality of companies we have in the StartupCincy community," said Ian Frampton, a fund analyst with Cincinnati startup advocate Cintrifuse. Frampton put together the data for such a map using information from PitchBook, a Seattle company that compiles data about private capital markets.

The fact that investors are looking to Cincinnati from overseas is evidence that the pool of investors is becoming bigger, which would be good news for local startups.

Further evidence comes from looking at how frequently investors involved in deals here don't have their headquarters in the Tri-State.

For example, in 2012, there were 58 instances of firms investing in local startups. Thirty-four of them were from firms located in the Tri-State.

But from January through August 2017, there were 50 instances of firms investing in local startups. Only 10 of them were from firms headquartered in Cincinnati.

The numbers complied from PitchBook are definite evidence that the local startup community is making progress attracting outside dollars, said Cintrifuse marketing manager Henry Molski.

But is investment increasing?

According to PitchBook, over the past five years, the lowest investment year was $60 million in 2012. Since then, the trend has been generally up, with a couple of big swings.

Over the past five years, the biggest investment year was 2014, when $135 million was invested in local startups. Those numbers could have been skewed, however, by a couple of big deals: $37 million to Assurex Health and $22 million to Aerpio Therapeutics.

This year is on track to be a healthy one for investments.

For the first three quarters of 2017, almost $50 million has been invested. That's more than the $43 million invested in the first three quarters of 2016, when a total of $126 million was invested.

Those amounts are likely on the low side, Frampton said, because PitchBook likely doesn't capture all the investments made.

Not surprisingly, the most active local investor has been CincyTech, which has invested in local startups at least 64 times over the past five years. Some of those involve multiple investments in the same company.

The North Coast Angel Fund from Mayfield Heights, Ohio, a Cleveland suburb, has been one of the most active investors from outside the Tri-State. It has invested in local startups 12 times.

For more information about who's investing in local startups and where they are from, see the attached map, which was made using PitchBook data complied by Cintrifuse.