A few fireworks, a lot of supporters at JumpStart community meeting

“This machine kills fascists!”

That blaring howl, made by entrepreneur Marc Canter while brandishing a laptop high over his head, was certainly the highlight from a sheer entertainment standpoint of a public “community engagement meeting” held by Cleveland venture development group JumpStart. (At the end of the meeting, Canter was escorted out by security after a few other outbursts.)

JumpStart maintained that it called the meeting to seek ideas on how Northeast Ohio could become more entrepreneur-friendly. But the real reason was more likely to take on a vocal cadre of critics — including Canter, the CEO of Digital City Mechanics and founder of the company that became MacroMedia — who had raised sharp questions about how the organization spends its (and taxpayers’) money.

But what the meeting lacked in entertainment (sans the much-appreciated and boisterous contributions of Canter), it made up for with nearly two hours of testimony in favor of JumpStart. The accolades came fast and furious from a wide swath of supporters, including a number of entrepreneurs who’ve received investment funding from the group. (It’s generally a good rule of thumb to avoid publicly criticizing people who are signing your checks. And with that, I should mention that MedCity Media, which publishes MedCityNews.com, is a JumpStart portfolio company.)

JumpStart’s early stage investments go to many of the region’s healthcare companies, so this debate had particular importance to Northeast Ohio’s medical industry. Plus, this very local debate could have a greater impact for JumpStart, which has won praises from the likes of President Obama and is now trying to expand the JumpStart model to additional states such as Minnesota. It’s likely stakeholders from the places JumpStart is trying to gain ground are trying to discern how serious these complaints are.

Critics like Mike Burkons and Ron Copfer got in a few jabs, but in the end were clearly frustrated by the sheer magnitude of supporters who stepped up to sing the praises of JumpStart. It’s clear the organization has a lot of fans and has helped lots of young Northeast Ohio companies with cash and business development services — something even its critics are forced to admit.

But the question isn’t whether JumpStart provides value to the region– it clearly does — but rather whether that value represents a good return on a nearly $28 million investment by Ohio taxpayers, Copfer said. Of the $60 million in funding JumpStart has received since its 2004 inception, a little more than half has come from the state and federal governments.

Rather than rehash each side’s arguments (because that’s already been done in plenty of news articles), JumpStart Chairman Doug Weintraub and JumpStart critic Mike Burkons shared their reactions to the meeting via video.

(And we’d be remiss not to credit the fine work of John Heaney for some humorous and insightful play-by-play of the meeting via Twitter hashtag #jumpstartrumble. Sample tweet: “Can the JumpStart opponents weather the corporate speak and tedium? Brutal combo at #jumpstartrumble”)

Doug Weintraub:

Mike Burkons:

JumpStart becomes target of criticism from local entrepreneurs (medcitynews.com)

Brandon Glenn MedCity News

Brandon Glenn is the Ohio bureau chief for MedCity News.

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Tags: Cleveland, dealflow, JumpStart, Northeast Ohio, Ohio

Comments Post a comment

Brandon,

Good and well balanced article. I hope that this forum and some of the emails that have been sent make the state and region really look into the best use of dollars to create the most impact.

Mike

Comment by Mike Burkons — March 22, 2011 @ 12:20 am

Brandon,

If you follow up on this topic, reach out to Jumpstart to see if they have a reason why my solution below would not be a good idea. I am interested in their feedback.

If Jumpstart really wants to ensure their numbers are accurate like they claimed last night, it is very simple and easy to do. Before you release your next economic impact report for 2010, go back and take another survey. Instead of it being returned and administered by Jumpstart, have an independent person send the following survey who it trustworthy and respected enough to keep company by company results confidential but has the power to verify the claims until their satisfaction. Here would be a simple 4 question survey that could clear everything up,

1. What was the total compensation paid to Northeast Ohio employees from your company in 2010?
2. On Dec 31, 2010, how many people did your company employ in Northeast Ohio?
3. How many local employees did this company have before Jumpstart’s investment?
4. Please list all of your investors and next to each investor, list what percentage of your results, impact and jobs you would attribute to each of them? At least this way, the company and not Jumpstart decides what percentage each investor should take credit for creating.

As there are only 53 companies, and four questions, this wouldn’t be burdensome and if you had to pay for this, it could probably be accomplished for less than last night’s meeting cost.

This is a simple solution and if I am missing something, please point it out. Anyone????

Comment by Mike Burkons — March 22, 2011 @ 11:11 am

When I came to Cleveland in 1998, there was little organized entrepreneurship here. We have now built a vibrant and growing entrepreneurial ecosystem, and JumpStart is at the center of that ecosystem. It would be hard to argue that we could have achieved what we have without them, or that what they have contributed has not been central to the result. As I travel the country, I am frequently asked to explain what we have done here with JumpStart, the Ohio Capital Fund, and The Third Frontier by people who would like their states to model programs after these. That is strong testimony to what we have done.

Comment by Jonathan Murray — March 22, 2011 @ 11:18 am

Mike, my comment would be that if you are concerned about the productivity of various uses of taxpayer resources, I am certain…certain, that there are many, many, many more programs that are far less productive than JumpStart.

In the interest of focus and efficiency, let’s look at those, too, or first.

Comment by Jonathan Murray — March 22, 2011 @ 12:20 pm

Jonathan,

What groups are you suggesting? I am not saying JS is unproductive. I am questioning their claims of what they have accomplished.

For Early Stage Funds I and II, there are objectives whether you have succeeded or failed and that is if you had a positive return to your investors. With groups like JS it isn’t so simple so to give them the benefit of the doubt, we can go by is the metric they tell us are important. However, we can’t ask to verify those claims?

In your line of work, would your investors simply believe that you are making money for them?

Comment by Mike Burkons — March 22, 2011 @ 2:37 pm

The Wall Street Journal had an article this morning about how the Social Security Disability Fund is out of money because dubious claims of disability are being validated by dubious providers of medical services. Disability decisions are made at the state and local level. The only jobs that fraudulent claims of disability create are fraudulent jobs for fraudulent providers of medical services. That has to be a worse return-on-investment than anything JumpStart has done. Why not demand accountability from that program?

Comment by Jonathan Murray — March 22, 2011 @ 9:59 pm

Jonathan,

I am not disagreeing with you about the problem you brought up. I hope there are people who understand this issue as well as I understand the JS/ 3rd Frontier issue and they are banging the drums loudly to force change. However, I am not one of them.

I can only speak to things which I am familiar with. This is important to me as someone who knows the challenges involved in starting a business and my hope is that my stance on this issue, gets the conversation started on whether we are using these $$$$ in the most effective and impactful possible way. Until we get accurate and reliable data on what our current efforts are really responsible for creating, it is hard to have this conversation.

If my suggestion in a comment above of a simple independant and verified 4 question survey was taken, then we can have some reliable data to have a discussion about. Until then, you can debate anything when the major premise of the debate is in question.

I appreciate your comments,

Mike

Comment by Mike Burkons — March 23, 2011 @ 6:11 pm