Despite the recession, venture capital investing in Northeast Ohio showed significant growth from 2007 to 2011 over the previous five years.
A big-picture look at venture capital deals in the region over the past five years found that Northeast Ohio tech-based companies raised $961 million from venture capitalists and angel investors between 2007 and 2011. That’s a 133 percent increase in the number of deals and a 26 percent increase in the number of dollars raised over the previous five-year period.
The new data comes from information collected from investors by BioEnterprise and JumpStart Inc. and compiled in the 2007-2011 Greater Cleveland Venture Capital Overview, published by the Northeast Ohio Venture Capital Advisory Task Force.
But the percentage of those dollars going to healthcare companies doesn’t seem to have gone up recently. A 2009 report compiled by JumpStart, BioEnterprise and NorTech found that two in three VC dollars put into Northeast Ohio companies from 2005 to 2009 went to the healthcare industry. The 2007-2011 report notes that 61 percent of VC dollars went to healthcare companies, primarily medical devices ($243 million) and healthcare services and IT ($265 million).
Biotechnology companies, which in the Midwest scooped up almost half of the healthcare venture capital dollars raised in the first half of 2012, accounted for only $79 million between 2007 and 2011 in Northeast Ohio.
Overall, $587 million was invested in 83 healthcare companies between 2007 and 2011, compared to $729 million in 69 healthcare companies from 2005 to 2009, hinting that 2008-2009 were particularly hard years, and that deal size may be going down.
But that could be because more than half of the companies receiving funding were seed-stage companies getting smaller investments. Notably, 71 percent of them were clients of incubators and accelerators that are part of the region’s Third Frontier Entrepreneurial Signature Program. Two-thirds of investors in Northeast Ohio companies were based outside of the state.
“The activity we’re already seeing in 2012 — both in investing and in exits — is reflective of the momentum shown in this five-year report and I predict there is another strong year ahead,” said Bill Trainor, co-founder and managing director of Mutual Capital Partners Funds I & II, in a statement.
During that time, 16 venture-backed companies exited in deals worth $2.6 billion, according to the report. Those included Edgepark Medical Supplies, which sold to a private equity firm for $850 million in 2010, and MemberHealth Inc., bought by Universal America for $630 million in 2007.
[Photo from the 2007-2011 Greater Cleveland Venture Capital Overview]