A new $1.5 million fund to attract and establish biomedical companies in Akron will soon be taking applications.
The Akron BioInvestments Funds LLC, a fund created by the city of Akron through its Akron Development Corp., will help Akron compete with other cities to attract businesses, Akron Mayor Don Plusquellic told a crowd of hundreds at the annual JumpStart community meeting at the John S. Knight Center.
Plusquellic said it has not been a secret that Akron has placed a significant focus on attracting biomedical companies, including the creation of the BioMedical Corridor, which the city established in 2006. The $1.5 million fund was previously announced during Plusquellic’s State of the City address in March. Most of the initial investments have been made by private organizations including Medical Mutual, which gave $1 million, FirstEnergy, Cascade Capital and Northeast Ohio Medical University (NEOMED). Plusquellic said the city hopes the fund can grow.
“We know that funding money should not be the only attraction for companies, however we are competing with many other cities and regions for new companies,” said Plusquellic. “We want one of our differentiators to be the speed with which we can respond. This fund will help us significantly.”
The funds will be used to target national and international companies that focus on orthopedics, wound healing, cardiovascular science, the use of biomaterials, the use of medical information technology and the development of medical devices. All companies receiving investment must commit to maintain an Akron headquarters, or plan to establish a material presence in Akron, with an emphasis on the Biomedical Corridor.
The fund will be composed of two parts:
• $1.25 million in the Rapid Commercialization Loan Fund, which will support the commercialization of high potential biomedical early stage technologies by providing low-interest loans to companies that are close to commercialization, will create at least 10 jobs in Akron within three years, and will commit to a long-term presence in Akron. Loans will be in the range of $100,000 to $250,000 with the option of converting to equity stake in the company, said Deputy Mayor Bob Bowman.
• $250,000 will be used for grants of $25,000 in the Product Development Fund, which will support the demonstration and validation of high-potential biomedical start-up companies by providing funds for proof of concept, prototyping, market assessment and business plan development, among other things. This fund will operate in collaboration with the Austen BioInnovation Institute in Akron and its Global Organization of Orthopaedic Device and Tissue Engineering Collaboration (GOODTEC) initiative.
The funds will be managed by a board of managers representing local health-care institutions, universities, government, private businesses and regional organizations. Cascade Capital will act as fund manager.
The city has entered a partnership with JumpStart and BioEnterprise to take the applications and screen applications, specific evaluations of the target technologies and market potential and entrepreneurial support.
Bowman said the fund will help a lot of companies that want to come to Akron and commercialize technology, do clinical trials or seek FDA approval.
The fund will give the city a leg up in recruiting the companies, he said.
“It also helps accelerate things. It’s amazing how much time it takes for angel investors to invest,” said Bowman. Often, if investors see another source of investment, it encourages them to invest also.
The announcement of the funds was in the middle of the JumpStart community meeting and also during the Northeast Ohio Entrepreneur Expo, which included 10 participants from Summit County and featured companies hoping for potential investors and partners or greater recognition.
Ray Leach, chief executive officer of JumpStart, the Cleveland nonprofit group that mentors and invests in early-stage companies, said the Akron BioInvestments Funds will be good for his hometown of Akron.
“Funding really makes a significant difference in helping these companies to decide to take root in a city like Akron,” he said. “This is a great foundation for how we can accelerate growth.”
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her on Twitter at www.twitter.com/blinfisher and see all her stories at www.ohio.com/betty
