As managing director of StartInCLE, Ed Buchholz helps founders build great companies. But keeping those companies in Cleveland isn’t easy.
“We’ve stepped away from valuing the people who are starting the businesses that could become great companies,” says Buchholz, who finds that many Clevelanders would rather bid for things like Amazon’s HQ2 project than build the next Amazon. “This is our potential. When that 22-year-old graduates from Case Western and has a great idea, but thinks that if he or she needs to raise money, they’ll have to move to San Francisco. If that’s the reality, we’re shipping our Amazons to San Francisco and New York every day.”
Buchholz himself has founded three venture-backed software companies and has dedicated his life to mentoring and supporting entrepreneurs (he spoke with 600 just last year). The 18-year entrepreneur now helps others realize their dreams with StartInCLE, a platform to support area startups.
In this week’s Dealmaker Q&A, we talk with Buchholz about some of the challenges faced by Cleveland’s startup community and how the region can attract and empower quality startups.
Where is Cleveland falling short in supporting startups?
A lot of the organizations that support the startup community are primarily driven by economic development interests. They certainly have broader educational, societal and community goals. But the primary driver for most of these organizations is economic development. Let’s create jobs.
Don’t get me wrong, capital is important. When you’re trying to close a funding round to make payroll, and if you don’t you’ll have to fire 30 percent of your staff, it’s beyond critical. If you’re willing to metaphorically jump off a cliff with just an idea of what a plane is going to look like, and try to build it on the way down, you’re a special individual and you deserve the support of your peers and your community.
So as important as capital is a support system that can guide founders through difficult times. Not just tax incentives, not just dollars from investment organizations to do economic development. We need to make an effort to have a more founder-centric or at least founder-first mentality. I’m trying to provide a network where founders can help each other and members of the corporate world, members of the economic development class, can interact with each other in a more direct fashion — and in ways that are beyond just writing a check.
How do founders personally contribute to the lack of communication?
We have a geographical divide. There are 10-15 co-working spaces in our region. LaunchHouse is full of smart entrepreneurs, but the smart entrepreneurs never talk to the smart entrepreneurs who are in StartMart in Tower City, and they never talk to the ones at TechHive. Why would they, they’re in different parts of town.
There is a series of divides that need to be bridged. TechPint has as many as 300 people from all different peer groups getting together to have a pint and some snacks once a quarter. We do a founder dinner every month where, on average, we have 30 startup founders who come from all over the region, sit down for two to three hours with food and drinks and talk to each other. We have almost zero programming. It’s just facilitating that serendipitous conversation.
Let’s talk about capital. What’s a flaw in how startups in Cleveland are being funded?
One of our biggest challenges is that we have grown to rely on the same organizations for funding, and a lot of people view them as the only source. I’ve talked to many founders over the past year who think the only way they can raise money for their company — because they are based in Northeast Ohio — is to get money from JumpStart. That’s extremely difficult to do. JumpStart can’t invest in every company.
Founders need to be talking to so many other capital sources to fund their business. It’s cultural and educational. There are kids who are 20-something coming out of Case and they are extremely bright. But they just don’t know any better. That’s a big part of what has to be combated.
How can we improve the outlook for our startup community?
So much of the discussion locally around our economy and driving job growth has been focused on the Amazon HQ2 bid. Why don’t we take a slightly longer view? We know it’s going to take seven to 10 years for a company starting out to become anything close to Amazon. But why don’t we take a longer view and figure out how we can attract Jeff Bezos when he was just at a desk with the Amazon.com banner hanging above him?
It’s maybe 1,000 to 1, or 10,000 to 1. But if we can bring 1,000 quality startups to our region, or even empower 1,000 of the ones we have to have better outcomes and to grow and hire people, honestly that’s better. Those companies will care about us. We won’t be HQ2. We’ll be HQ1 and their home. That’s the best thing we can ask for: to grow five or six companies that have 3,000 or 10,000 or 15,000 employees. We’ve done it before.