OhioX aims to catalyze tech industry's struggling growth - Crain's Cleveland Business

Beyond a decent biotech industry and a handful of standout startups, Ohio generally has struggled to attract, grow and retain tech-focused companies and the people building them.

That's where OhioX wants to step in.

Launching officially on Monday, Dec. 9, OhioX is the state's first nonprofit association designed to promote and support technology, innovation and all that encompasses in the business sector.

Such an initiative comes at a pivotal time not just for the state overall but for Northeast Ohio in particular, where the bulk of the group's organizers are based and where initiatives to spur regional economic growth through tech-based enterprises often feel somewhat mismatched with the reality of the support ecosystem here.

"As more and more people had similar ideas of what can we do to unite Ohio and those people who are interested in and committed to growing the Ohio economy through technology and innovation, we sensed an opportunity for a really powerful role for a nonprofit organization such as this," said Chris Berry, OhioX president. "It's all about uniting people, and how we promote and share ideas and connect companies."

Organizers include Berry and co- founders Jessica Gritzan, chief operating officer of North Canton's Squirrels LLC; David Croft, an attorney with Meyers Roman Friedberg & Lewis who works with startup companies and specializes in blockchain; and Ari Lewis, a co-founder of Grasshopper Capital, a venture capital firm now investing in blockchain-focused companies that originally slanted more toward cryptocurrency when it launched in 2017.

Lewis, a young but outspoken critic of the region's shortcomings in its support of the tech industry, recently moved back to Cleveland — where he now authors the Cleveland Tech newsletter — from New York to launch tech consultancy Green Block Group earlier this year with Berry, an Akron native stationed in Columbus who's worked under John Boehner and in the state treasury office for Josh Mandel.

Through writing the tech newsletter and working on Green Block, Lewis said he came to realize how fragmented the tech ecosystem is here and the role that something along the lines of OhioX could play in that.

There's a curious duality at play when it comes to the tech industry in this region, which underscores the need for something like OhioX.

On one hand, there are bits and pieces that show potential for a booming tech industry here. Not least of these is the low cost of operating a business here compared to the tech centers of the coasts, and the general quality of life that comes with a comparatively cheaper cost of living in the Midwest.

Ohio also is the 24th-most innovative state in America, according to Bloomberg's 2019 State Innovation Index. Combine those factors with the fact that, according to a spring survey by Brunswick Group, two-fifths of people ages 18-34 living in San Francisco and working in the tech field reported plans to leave Silicon Valley in the next 12 months — possibly because of deteriorating quality of life, according to another survey, and high costs — and there's a sense that markets like this could pick up those workers and entrepreneurs.

That's all the more significant when considering Flashstarts Inc., the 7-year-old startup business accelerator and micro venture capital firm, last week announced it will change its focus to consulting and advisory as it sees a slowdown in startup activity nationwide. That decline is even greater in Northeast Ohio, according to CEO Charles Stack, suggesting better promotion of the state as hospitable ground for startups could make more of an impact.

On the other hand — while not discounting the impact and support networks of groups like JumpStart Inc., BioEnterprise and MAGNET, among others — Ohio often fumbles when it comes to living up to its potential in the tech sector.

Initiatives like the one surrounding Blockland, which dreams of a Cleveland tech mecca, sometimes feel mismatched with reality when considering the region's struggles to grow and retain new tech companies. That can be be chalked up to any number of nuanced reasons — a shortage of general support and motivated investors among them.

Some founders, though, want more than just a check and may complain of a lack of wherewithal in the ecosystem here that goes beyond the vailability of capital.

"Northeast Ohio money, it's awful to say, but it's dumb money," Joel Clark, president and co-founder of Akron-based RV-share, a startup offering an online platform for peer-to-peer RV rentals, told Crain's in 2018. "No one who knows what they're doing will take money from here. Old money around here doesn't understand tech valuation. And even if someone is successful that takes old money from around here, there's little chance they would see eye-to-eye from a valuation standpoint."

OhioX said its priorities will be shaped by members as they come on board. (Berry said there will be a "progressive" membership model, which starts at $100 and goes as high as $5,000, with something at the higher level including sponsorship opportunities.)

In regard to the organization, Gritzan said her mind is on education, noting she wants the group to work with schools and colleges on preparing students for the future workforce as it relates to tech. The hope is that could improve retention of talent and inspire new entrepreneurs.

Promoting what various existing companies do within the business world and how they could work with one another could have impact as well. OhioX might be the missing conduit for that. The OhioX name was inspired by early talks about forming the group, during which folks like Berry would map out the regions of the state the group intended to connect, the result resembling an X.

"(Squirrels) just celebrated our 11th anniversary, and probably 90% of the state doesn't even know we're here," Gritzan said. "It's frustrating."

Access to good capital is a struggle as well, she added, explaining how Squirrels — which focuses on developing wireless screen-mirroring software — falls into a "no-man's land" for investment. She said the company is too profitable to draw lower-level investments but not profitable enough to attract larger ones.

"We want to be able to connect with the right people instead of shooting darts in the dark and hoping we hit something," Gritzan said.

Croft agreed that financing is a complicated situation in this market.

"Investors in this region want to give a little but take a lot and it almost chokes the company to death because of the terms they place on the investment," he said. "You don't find that on the coasts. Investors are more educated on how tech companies work (there)."

From advocacy to education to serving as a liaison between startups, established business, investors, entrepreneurs and everyone in between, OhioX aims to become what it feels is a missing piece for growing a thriving tech industry in Ohio.

"I think this is really needed in our area and long overdue," Croft said.