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Beyond the Pitch

Being #1 Takes Investment Capital

Investment Capital

We had a big announcement last week.

PitchBook announced that Rev1 Ventures ranked #1 on the list of top VC investors in the Great Lakes region* since 2012.

It’s likely that our 2014 performance—we invested $4 million in 18 amazing companies—pushed us to the top of the chart.

But we don’t plan on being a one-hit wonder. We expect to continue to lead the way.

Rev1 is doing more deals than we’ve ever done.

We’ve invested in 23 startups so far this year, and we’re on a path to drive that total to 25+ by New Year’s Eve. That’s a 40 percent increase.

The reason Rev1 Ventures is leading the region and making so many investments is because there are so many investable deals to do. Columbus is ranked the #1 fastest growing city for startup activity in the 2015 The Kauffman Index of Startup Activity. We have all the ingredients to build great startups, and we’re creating a pipeline that isn’t going to quit.

Regionally, the state of Ohio is also doing well.

With 282 completed deals, Ohio ranks a close second to Illinois (290), which is driven largely by the Chicago Metro area.

Ohio venture firms held four of the top 10 positions on the PitchBook list with CincyTech (4), Shaker LaunchHouse (6), and JumpStart (10), in addition to Rev1.

But PitchBook also reported some less than rosy news for the region.

Of the 632 investors active in the region since 2012 (who have been averaging about 300 investments a year), only 142 (22%) have completed investments in the last six months.

As a result, the total number of closed VC investments is likely to be down for the first time in six years.

This is a significant decline—and it should be a concern to all of us—no matter how our individual funds rank.

Fewer investments lead to a smaller pool of investment capital.

Deals beget deals. Funds beget funds.

That’s why California took almost 60 percent of all VC funding in 2014, and why 30 percent of all angel investment consistently occurs in California and New England.

So even though there is good news about Ohio’s momentum, we haven’t even scratched the surface of the capital required to support the opportunity that exists in this state.

We have investable startups today that are being squeezed for lack of early stage capital.

And it’s not just new companies. Many of the 18 startups that Rev1 invested in in 2014 will need follow-on capital. So will our new crop of 2015 portfolio companies.

That’s good news. That means that the vision that drove Ohio Third Frontier decades ago was right.

Ohio’s young companies to need and deserve more capital because they are sustainable and growing.

But it won’t be there for them, not unless we continue to create more regional investment funds.

This is a shout out to others in Ohio who care about job and wealth creation.

This isn’t to take away from our progress and accomplishments as a state in a larger region that has done many things right. The growth of new companies in Ohio is significant. We must have access to local venture capital to continue that momentum.

But if you hear anyone say that our state doesn’t need more venture funds, challenge them. Ask them for the real data showing that there’s no need for more venture capital. Then share with them all the reasons that Central Ohio and the state need and will benefit from increased venture capital.

More venture funds at the Series A stage and beyond creates opportunities for companies to grow, create jobs, expand revenue, and attract additional capital from outside the state.

That creates wealth for Ohioans through profitable exits and produces serial entrepreneurs who start new companies, causing the virtuous cycle to begin again.

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