Ohio University is Leading Appalachia Out of the Economic Woods

Monday, September 16, 2013

If you were an entrepreneur living in southeastern Ohio 15 or 20 years ago, your first order of business might have been to relocate to Columbus, Cincinnati or Pittsburgh.

Not anymore. Over the past two decades, an elaborate ecosystem of entrepreneurial services and activities has blossomed around Ohio University, aided in part by a strategic, modest investment of state money called the Appalachian New Economy Partnership (ANEP).


The Appalachian New Economy Partnership Blooms

The ANEP first appeared during Governor Taft’s administration as a single line-item in the state budget with the stated purpose to “link Appalachia to the new economy.” It was a relatively low-stakes approach to economic development in the region that the state hadn’t really tried before. In the ensuing years, that line item has gradually shrunk from its original $1.5 million to its current $747,366, but it’s managed to survive both a major recession and three different gubernatorial administrations.

There’s a reason it continues to be funded. Ohio University and its various business partners have expertly turned ANEP funding into a network of programs and services that continue to expand and provide an undeniably positive impact to the regional and state economy.

“The ANEP has been instrumental in building a couple of things,” notes Dr. Mark Weinberg, Director of Ohio University's Voinovich School of Leadership and Public Affairs, “The most important thing has been building an entrepreneurial, venture capital, innovation platform for developing technology and companies in a region that just didn’t exist before.”

The Rise of TechGROWTH Ohio

By combining ANEP dollars with matching funds from the Third Frontier Project and other state/federal sources, Ohio University has been able to parlay the humble line item into higher-profile initiatives and programs such as TechGROWTH Ohio (TGO), which connects local entrepreneurs to funding and services that help grow their businesses. Programs like TGO serve on the front lines of business development – holding the hands of entrepreneurs as they navigate the critical early stages of a new or expanding business.

Since it started five years ago, TGO has helped southeastern Ohio businesses generate about $10 in economic returns for every $1 of state money invested. By its own count, TGO has worked with over 1,000 businesses and created or retained over 1,600 jobs in the region. Its role varies depending on the needs of the individual business – for one, it might help find low-cost manufacturing or office space, for another it might facilitate access to angel investment groups or find venture capital to keep a fledgling company up and running while coaching it through a business plan.


Lynn Gellermann, TGO's Executive Director, notes that, “There’s a good chance we can provide some service at some level for most business owners who approach us.” More often than not, TGO is able to facilitate funding for local businesses from Ohio-based sources, which in turn helps keep young companies in the state and provides a direct benefit to the region’s economy. As Gellerman notes, “Local businesses now get a level of assistance similar to what they could get in a big metropolitan area.”


IEA team_1.jpgA Center of Innovation


Ohio University also hosts the Innovation Center, a technology business incubator that provides entrepreneurs with everything from free consulting services for businesses in the early stages, to low-cost training for business-related skills and networking events. One of its more popular events is the annual Innovation Engine Accelerator, a 12-week summer program that provides up to $20,000 to six digital media startups and allows them to refine their business models and products, receive expert coaching and advice, and pitch their startups to investors at the end of the summer.


The program curriculum is based on the “lean startup” philosophy, popularized by Silicon Valley entrepreneur Eric Ries, which aims to shorten the development cycles of new companies and minimize the amount of funding needed to initially get a product up and running.


Not all of the companies that go through the program see the light of day, explains Gellermann, but “Each student has an experience that will affect their careers and their lives, the way they think and innovate – whether they wind up starting their own company or working for one.”


A Flare for Code

One of the more successful startup companies to benefit from an early relationship with TechGROWTH Ohio is Flare Code, a web development tool used especially by non-profit companies to quickly and inexpensively build mobile websites. The company was founded by Niklos Salontay and Ian Bowman-Henderson, two OU graduates whose idea started as a research paper in 2010, and then refined and developed with the assistance of the Innovation Center.

After winning a pitch competition at the 2011 OU Student Innovation Expo (a forerunner to the current Innovation Accelerator Program), the two founders worked with TGO’s resident business advisor Anna Jensen, who guided them through a successful round of funding. The loan that Flare Code received from TGO is convertible debt, which means that the company would not have to pay anything back unless the business was successful. The seed funding helped them develop the product and find initial markets.

According to Bowman-Henderson, OU and TGO were essential to the development of Flare Code. “In terms of being able to take a risk on a student-run company, they are the only people with an incentive to do that. “

But their interest goes beyond simply making money. “For TechGROWTH, there’s an interest in promoting young entrepreneurs,” says Bowman-Henderson. “They’re looking to promote entrepreneurship as an ideal, as an industry, rather than simply making their money back.”


The Next Big Idea is Already on Campus

Weinberg and Gellermann both believe that the role Ohio University will play in the future development of southeast Ohio goes well beyond building the local economy. By tying the lessons and philosophies of its economic development work back to the university’s educational mission, both believe that OU can foster a culture of innovation that cuts across disciplines. As Gellermann states, “We want to educate the next generation of innovation leaders, who will end up leading startups, governments, and not-for-profits.”

This goal is embodied in two OU centers whose missions are increasingly intertwined – the Center for Entrepreneurship (a partnership between the College of Business and the Voinovich School of Leadership and Public Affairs) and the Center for Public Strategy and Innovation.

As Weinberg sees it, the skills of entrepreneurship, particularly “lean startup” principles, can be applied to solve bigger social problems, well beyond the problem of turning a profit. “We need to create a social capital market similar to a business venture market,” he says, “and establish OU as a center for public and social innovation.”


It All Started with ANEP

A lot of the current economic growth of southeast Ohio, as well as the future plans for OU’s two centers, is directly or indirectly attributable to that initial small investment by the state. “ANEP has fueled capacity development here,” Weinberg states, “It’s helped us attract both financial and human capital.”

Gellermann can already see the difference all around him. “When I go to meetings, the level of talent in my colleagues, in my clients, has improved so vastly over the years. Attracting and developing talent – none of this works unless you can do those two things.”