The city of Akron is planning to create a seed fund that’s aimed at attracting out-of-region biomedical companies to the city and helping local startups grow.
Akron Mayor Don Plusquellic announced the plans to form the “Akron Development Corporation Seed Fund” in his State of the City address on Tuesday. “This seed fund will be directed at attracting early stage homegrown and other biomedical companies to set up operations in our accelerator and in the Akron Biomedical Corridor, then help them grow into their own space,” he said in the speech.
Cleveland-based health insurer Medical Mutual of Ohio is the fund’s first sponsor, having pledged $1 million toward it. Power supplier FirstEnergy has also committed to being an investor, but hasn’t specified a dollar amount.
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Bob Bowman, deputy mayor of economic development, said the city is targeting about $15 million for the fund’s size. “We’d like to get it in an area of robust capability, so to get into the area of $15 million would be great,” he said.
The seed fund is expected to make its first investment by this summer, and “maybe sooner,” Bowman said.
Funding for the seed venture would come from corporate donations and “other sources,” though Bowman declined to be more specific because he said the city is in the midst of negotiations.
Bowman said the fund is intended to help guide early stage companies through the “valley of death” period that occurs when a company is developing its product and not yet generating revenue. The investment from the city’s fund ideally would stabilize the companies and help them attract private capital. Most investment amounts would range from $100,000 to $250,000, Bowman said.
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“The frustration of trying to get companies through the valley of death is what prompted us to try to create the seed fund,” he said.
Companies receiving investment from the fund would locate in the Akron Global Business Accelerator, which holds 200,000 square feet of office, manufacturing, lab and conference space.
Akron has been endeavoring to grow its biomedical sector in recent years, with companies in the city including imaging firm FMI Technologies and Israeli diagnostics import NI Medical.
Also notable is the Austen BioInnovation Institute in Akron, which was established in 2008 to bolster the region’s innovation in healthcare. The Institute has set a goal of bringing 2,400 jobs and 60 biomedical companies to Akron within 10 years.
