Cleveland Clinic, JumpStart invest $500k in wound therapy startup

I thought that Jumpstart was set up to invest in new companies that are too early for them to attract other investors. This is basically making another investment in Juventas Therapeutics (the parent company).

Hasn’t the parent company already raised $8m and much of it from government tax dollars like Jumpstart? If you are telling me that this new product from this well funded company wouldn’t have happened without Jumpstart’s investment, then the parent company obviously doesn’t have enough confidence in it to put their own money behind it.

Good luck to this company and I hope they succeed, but once again, this seems like another mis use of our tax dollars that go to fund Jumpstart.

Comment by Burton Dorion — February 7, 2011 @ 5:28 pm

I just read the actual Crain’s Cleveland that was delivered today and once again, they did puff piece on Jumpstart. I think they said that Jumpstart backed up its talk by putting its own money into startups. Lets clear a couple things up. The vast majority of Jumpstart’s $12.2m budget comes from the State of Ohio taxpayers so they really didn’t put their own money up, they put our money up. Secondly, out of their $12.2m budget, only $3.1m was invested in startups and the rest went to fund their high salaries, head count and overhead.

They are lucky they have fooled the folks at ODOD as this is taxpayer funded “non profit” because if this was a donor supported non profit, they would be lucky to get 25% of that budget because people don’t like to donate to non profits where the CEO pays himself $428k, the top ten people bring in over $2.3m and only 25% of the money reaches its stated mission.

Also,their results has been miserable. If you look back at the articles Crain’s wrote when Jumpstart was launched, they claimed that within a few years, they wouldn’t need outside money as it would be an “evergreen” fund and they could continue and grow through the positive investments returns from their early investments. The problem with that is in 7 years, over $85m spent (although $60m was on overhead), investments in 53 companies, they have had one positive exit where they recieved $320k for their $250k investment. I don’t think too many people would claim this was something that warrented praise.

If you are wondering why Jumpstart is getting recognition, look at how much money and resources they spend at promoting and marketing themselves. They have five people whose main job is marketing. Since they don’t sell anything, why is this. There are groups all over the country like Jumpstart who do much more with much less. The reason you don’t hear about them is because they would never think of dedicating their limited resources to marketing themselves.

Even if you believe Jumpstarts claims, after 7 years and $85m, they created a little over 400 direct jobs. If you actually tried to fact check those numbers and took away their own jobs that they created for themselves, it would be much less. However, even at their stated numbers, it costs about $200k for every job created. As this group is mostly taxpayer funded, if you put this money back in the taxpayers pockets, it is very likely the same amount of jobs would be created with their increased spending power.

Jumpstart is a house of cards built on their own marketing. When it comes tumbling down, people will look at paper’s like yours and instead of asking hard questions, you reprinted their press releases and helped them spin their poor performance and spending.

Comment by angel investor — February 8, 2011 @ 5:28 pm