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1Mby1M Virtual Accelerator Investor Forum: With Bill Baumel of Ohio Innovation Fund (Part 3)

Posted on Sunday, Dec 16th 2018

Sramana Mitra: In your experience in the venture capital industry, you must have realized that the bulk of the exits in the industry happen in the $50 million to $60 million price point. Unless you can build businesses capital efficiently, you don’t really make money of those exits.

Bill Baumel: Bingo. We are exactly focused on that. We love the billion-dollar exit. It’s tough to make money in a $10 million to $20 million sale but when you start getting into the $50 million to $100 million range, you start getting nice returns there. Hopefully, a few of them can achieve close to a billion.

Sramana Mitra: I strongly suggest that you take a look at these spotlights on Colorado and Utah. There are two or three unicorns but there are lots of other kinds of successes and lots of activities. As you said, there are hundreds of companies with small amounts of financing as well as hundreds that are bootstrapped success story. That’s really what creates a robust regional startup hub.

Bill Baumel: I agree. If a Wiretap is acquired for a few hundred million dollars or for some amount and then those founders do something else, next thing you know there’re 10 startups coming out of Wiretap.

Sramana Mitra: We’ve talked a lot about what is in your portfolio. Can you double-click down on the pipeline? What have you seen in the last 18 months in your deal flow? What trends are those pointing to?

Bill Baumel: I would say we are seeing people with bigger ideas now. It used to be you’d get a business plan. There was a sense that if you had a good idea, you could spend five to 10 years to execute on it. Now, we’re seeing more big ideas and a lot more sense of urgency. As we continue to invest, there’s more of an understanding of the process of building a venture. That’s one of the key things that we do as an innovation fund.

One of our key things is to grow successful companies, validate the market, and have a number of successful exits, maybe not all unicorns. Another part of that is some entrepreneurs are seasoned, but for the rest, these are their first startups. We also partner with our universities. We have about 20 interns per year at the Ohio Innovation Fund. We have another 30 to 50 interns that intern at our portfolio companies. We’re trying to build up an infrastructure.

As we do, word of mouth is spreading dramatically. We’re now seeing students from Kenyan College and Ohio University coming to us with business ideas. We had our first idea pitch competition at Kent State. Ohio is about 50% med tech and 50% tech. We’re seeing more and more well-thought out and strong business plans.

Sramana Mitra: In med tech, you must also see lots of digital health and not just pharma and medical devices. Digital health is booming right now.

Bill Baumel: We have one company out of Cleveland. We do have one pharma company that’s grown quite rapidly. We have another one that’s really interesting in the personalized medicine area. Over the last couple of years, they have grown from nothing to $35 million in revenue. One last thing I’ll say about that is another reward beyond mentoring the students is, a part of Appalachia is in Ohio. Over the last 10 years or so, there’s one company that was built up and was sold. It had a hundred employees. Over the last couple of years, we have built up two companies with a hundred plus employees. That’s part of the impact that we’re having in Ohio – allowing the next generation to not have to leave for the coast. We’re very pleased to provide the opportunity and the demand. They really enjoy entrepreneurship and innovation and having that impact. That’s a big part of what our fund does.

We have another software company down in Cincinnati that is the leading partner of SAP Arriba. They provide supply chain management for diversity initiatives. We’ve been really pleased with the progress.

Sramana Mitra: This is really exciting to hear – the activities that are simmering in Ohio. Thank you for your time.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Bill Baumel of Ohio Innovation Fund
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