Policy

Ohio biotech industry celebrates state incentives left intact

Ohio left the Technology Investment Tax Credit, Ohio Venture Capital Fund and Innovation Ohio Loan Fund intact. Advocates who work with those projects said they can leverage economic problems nationally to draw in more business, maximize funding and lure venture investors into the state they may not have otherwise.

COLUMBUS, Ohio — While health-care providers were suffering, economic development officials in the medical industry said Ohio’s budget positioned them to take advantage of other states’ cutbacks.

Ohio left the Technology Investment Tax Credit, Ohio Venture Capital Fund and Innovation Ohio Loan Fund intact. Advocates who work with those projects said they can leverage economic problems nationally to draw in more business, maximize funding and lure venture investors into the state they may not have otherwise.

“As I look at my colleagues’ programs across the country — Massachusetts, New York and even Pennsylvania — their investments in technology and economic growth have faced a significant reduction,” said Baiju Shah, president of BioEnterprise. “That’s a real opportunity for Ohio and in an environment we’re continuing state investing in its future.”

The dynamics of private equity have changed in the past year, however. Industry experts predict many venture firms will either fold or significantly contract, and venture investing is down.Venture capital investing has dropped to its lowest levels since 2003 and private-equity fund-raising in the first half of 2009 is down by more than two-thirds, according to Dow Jones Private Equity Analyst.

However, early-stage investing — the wheelhouse for most of the state’s life science sector — has grown in Ohio. A study released this month (pdf) by Ohio State University said seed and early-stage venture investing were up 50 percent in 2008. Nationally, such investments had dropped 20 percent.

In addition, health-care funds continue to raise money. Midwest-based Venture Investors recently announced its plans to raise a new fund, and other new funds include Excel Venture Management; 5AM Ventures; ABS Capital Partners and Blood Sweat & Capital; as well as Essex Woodlands and Google Health.

The pipeline of venture funds coming to Ohio “is growing because of the national trends,” said Paul Cohn, vice president and regional director of The Ohio Capital Fund. “Because it’s so difficult for the funds themselves we have more funds coming to us and willing to open up an Ohio office if we consider investing in them.”

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