With CEO in place, Cintrifuse seeks growth trajectory

More than two years into its launch, Cintrifuse can point to some impressive statistics including raising $57 million in its first fund; attracting 109 member companies and entrepreneurs; and recruiting 45 business leaders who are actively mentoring high potential startups.

Then there's the 30,000 square feet of redeveloped office space in Over-the-Rhine that will open this summer and house The Brandery, one of the nation's best accelerators, and CincyTech, the region's most powerful seed-stage investor.

The progress is important, but represents just the first few miles in a marathon to turbocharge the region's startup efforts. Cintrifuse will ultimately be judged on whether it's helping generate big wins – companies that create hundreds of jobs and significant wealth for investors who reinvest that capital into new startups.

If Cintrifuse, which recently named its new chief executive officer, can do that, it will be favorably compared to Cincinnati Center City Development Corporation (3CDC), another business-led initiative that's successfully been redeveloping swaths of Downtown and Over-the-Rhine over the last 10 years.

Anything less will be a disappointment for Cincinnati's top CEOs, who have put their muscle and millions of dollars into Cintrifuse, which launched in summer 2012.

The stakes are high, and attention is not limited to this region. Ohio Third Frontier, the state's multi-billion dollar initiative to build technology companies, is a critical source of funding for Cintrifuse, which has also attracted the attention of JobsOhio, the state's top economic development program.

Standing squarely in the spotlight is Wendy Lea, a Silicon Valley star with Mississippi roots who is entering her third week as Cintrifuse's CEO and isn't scared to Think Big. Lea's friends say she has a unique mix of intellect, experience and charm that should allow her to move easily between local CEOs who sit on her board and entrepreneurs working to build the P&Gs and Krogers of tomorrow.

That skillset will be critical, because Lea's success ultimately depends on whether Cintrifuse can become the bridge that consistently links high-potential startups with capital, and perhaps more importantly strategic business partners and large corporate customers.

"We're seeing a lot of good activity with customer connections, but haven't seen big outcomes yet," said Tim Schigel, who manages Cintrifuse's fund and is the founder and chairman of ShareThis.

"Big outcomes are when one of the pillar companies awards a game-changer contract that's sort of a kingmaker, something that says this company is now a potential global leader because it's been able to get business with a P&G, Kroger and Macy's. That hasn't quite happened yet."

Fund creating new connections, leading to investments

What is happening, Schigel says, is an unprecedented level of interest in this region from venture capitalists around the country. The reason is simple: Cintrifuse's $57 million fund, which has 15 limited partners including P&G, the University of Cincinnati, Kroger, Western & Southern Financial Group and Cincinnati Children's Hospital Medical Center, is a giant magnet.

Cintrifuse's first fund will make 10-12 investments into venture capital funds with specific areas of expertise. Those funds are not required to invest in local startups – the best firms would never agree to such a stipulation – but there's a natural incentive for them to evaluate young companies in the region.

To date, Cintrifuse has invested in five funds, two of which – Mercury Fund of Houston and Downtown's Allos Ventures – have subsequently put money into local companies.

Those numbers tell just half the story. Schigel and fund principle Sarah Adams Anderson have met with roughly 200 venture funds from across the country since January 2013, and Schigel is leveraging all of those new connections to benefit local startups.

When a venture capital fund visits Cincinnati, Schigel makes an introduction to multiple startups that might fit the fund's strategic profile. One success story is Chicago-based Hyde Park Venture Partners, which announced investments this year into local startups Sqrl and Ahalogy.

A strong multiplier effect is emerging. Cintrifuse has committed $16 million to those five funds and invested $4.7 million in them so far. Schigel says $8.2 million has come back to local startups from the Mercury and Allos investments, and introductions to firms like Hyde Park Venture Partners. He expects that number will hit $20 million by year's end.

"There's a lot of power there," Schigel said. "You can almost visualize this crossroads we're creating with funds coming through Cincinnati."

At the same time, Cintrifuse chief operating officer Nancy Koors spent much of the last year creating a formal structure to connect local startups with the region's swath of public and private companies. The LEAP program helps startups compete for corporate pilot projects, while the STEP program allows startups to identify top business prospects, and Cintrifuse then helps facilitate access.

Cintrifuse connected PlusBlue Solutions, a company that rents out portable batteries for mobile devices at sports and entertainment events, with the Cincinnati Reds this year as a customer, giving the startup potential access to additional Major League Baseball teams. W&S gave PlusBlue its first break in 2013, when it brought the service to the Western & Southern Open tennis tournament.

"Being a pioneer in a market, as PlusBlue is, new concept validation is very critical, and having well respected companies in our portfolio is a key to everything we have done and will do," said founder Michael Bagby.

With foundation in place, CEO ready to move quickly

The PlusBlue example illustrates how the model can work.

"That access to flagship customers – to be able to get some preferred, screened access to a Kroger, Procter, UC or Cincinnati Children's – is huge for an entrepreneur," said Michael Fisher, CEO of Cincinnati Children's.

"And what we're finding with partners and organizations like Cintrifuse and CincyTech is they do pre-screening and prepping, and that's made our interactions with startups more effective and more efficient. "

The question for Cintrifuse is whether its LEAP and STEP programs can facilitate multi-million dollar contracts that will turbocharge a startup's trajectory. A successful effort will significantly raise Cintrifuse's profile across the country as a new paradigm for public-private partnerships.

Cintrifuse is already on the radar in Columbus where JobsOhio, the state's program that's primarily focused on business attraction and expansion, is starting to spend time thinking about business creation and how its work complements Ohio Third Frontier.

Cintrifuse potentially provides a roadmap for the state to connect new businesses that Ohio Third Frontier has helped create with more established businesses working closely with JobsOhio. And as the state considers how to address a pending funding challenge – helping high-potential startups access the venture capital they'll need to keep growing – Cintrifuse's fund structure offers one possible solution.

"We talk about the need for additional capital and additional funding of these early stage companies. I think the efforts of Cintrifuse and some of the corporations behind it has been positive," said John Minor, president and chief investment officer of JobsOhio.

"When you look at corporate-based venture funding, and you look at Ohio, there are other states that are doing better. So when you have the P&Gs getting involved, that's positive."

So the pieces are in place for Lea, who has built companies from the ground up and is hardly intimated by the huge expectations. She shares them. The new CEO won't be happy with Cintrifuse simply being a force in the region or state. Lea expects Cintrifuse to deliver on its local promise while taking on a national profile.

"I have a real sense of urgency to build on the foundation that's been created. (The business community) had a vision, they assembled a team, they've got these assets together," she said.

"And now I need it to go a lot faster and be a lot stronger and more visible. Cintrifuse has a structure and it's very organized. We should be able to go fast."