Cleveland Startup Scene: Summer 2017

I came home to Cleveland for the summer and although I grew up in the area, I didn’t know much about the city’s startup scene. While home, one of my goals was to get introduced to entrepreneurs and ask them what they thought about starting a company in Cleveland and why Cleveland over somewhere like the Silicon Valley or New York. Why isn’t the city perceived as a place of innovation and is entrepreneurship a growing trend in the city? I had talks with people ranging from startup founders to the CEO of a VC firm and was surprised by what I learned.
Here are my three main takeaways:
1. Despite past economic failures, the Cleveland startup scene is on the rise.
The economic and demographic history of Cleveland didn’t set up the city to be a hub for innovation, yet as of late the city’s entrepreneurs have been hard at work and succeeding.
Let me explain. Cleveland was one of the fastest growing cities in the 1920s and 30s because of an abundance of jobs in iron, steel, chemicals and machine manufacturing. New businesses were being formed and there was constant innovation because of the competitive work scene, so the entrepreneurship environment was self-sustaining.
When the industrial jobs left, however, so did the people. Jobs were moved overseas or automated and companies failed to adjust. So while innovation brought Cleveland up, it also led to its downfall. Many of the richer folks moved to the suburbs and left the city to decline steadily starting around 1950. The key word here is steadily. No major moves were set into motion for the city to invest in technology and innovation because there was no need to before and there was not a sudden downfall in fortunes.
Let’s contrast Cleveland with Pittsburgh, a city that suffered a swifter economic decline around the same time. This sudden and visible downturn led to increased efforts by the city to invest in technology and improve universities like Carnegie Mellon. Now we see that Pittsburgh is a rapidly growing hub for entrepreneurs and Carnegie Mellon repeatedly produces top engineering talent.
Cleveland continued to decline until economic recovery in the 80s, but the city was left a shell of its former innovative self. Although not set up as well for success, the city has seen an increasing amount of exciting new businesses.
Take CoverMyMeds, a software company that automates prescription approval, for example. It was sold for over a billion dollars recently.
The VC firm JumpStart Inc. was started in 2003 and has a non-profit segment focused on helping out local communities and startups. I attended Startup Scaleup 2017, an entrepreneurship conference hosted by JumpStart, and there were co-founders and business owners everywhere I looked. The speakers at the event were successful entrepreneurs themselves as were the people in the audience. I casually struck up conversation with someone sitting next to me and learned he was the founder of a peer-to-peer insurance lending startup.
People are creating businesses in Cleveland and they are succeeding.
2. “Top talent” doesn’t come to Cleveland and successful individuals often leave the city, but those who stay are committed to helping the city grow.
It’s hard attracting outsiders to Cleveland. While the burgeoning startup scene helps, most people who work in Cleveland are from the area or they move to the city out of necessity instead of choice.
There’s no easy solution to the problem of drawing in talent. Investment in local colleges like Case Western Reserve University helps, but this is not a quick-fix to the problem.
Still there are bright people who want to help and witness the city’s startup scene grow. I chatted with Reginald Cash who left Cleveland for Wall Street but decided to come back home to start a company. He explained that while he had to make a lot of flights to San Francisco and the network of investors and VC’s in Cleveland was lacking, it felt good to come back home.
People from Cleveland love the city and want to see it succeed.
3. The resources for startups in Cleveland are rising fast.
At Startup Scaleup I was lucky enough to listen to a panel with John Locke of Accel Partners and two founders who started their companies in Ohio. The discussion was called Silicon Valley Money, Midwest Zip Code and they spoke on a noticeable shift in investing outside of Silicon Valley. VC’s are realizing that they can make great returns off startups in places like Cleveland where innovative companies sometimes go unnoticed.
JumpStart recently received $24 million in funding from KeyBank to help local businesses.
FlashStarts is a business accelerator founded in 2012 hosted in StartMart, a co-working, entrepreneurial space located in Cleveland’s iconic Terminal Tower.
Startups are hot in Cleveland and organizations are making efforts to support entrepreneurship.
The Cleveland startup scene embodies the recent rise of Cleveland — the Cavaliers won a championship and the RNC was hosted here in 2016. People from the area, including myself, have a sense of pride in seeing Cleveland improve. It’s not Silicon Valley, but I’m optimistic about my city’s future.
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