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CRAIN’S CLEVELAND BUSINESS
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Event will be investors’ paradise
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Cleveland conference is headlined by many big-name companies By MICHELLE PARK LAZETTE mpark@crain.com
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Usually, when Eric J. Holmes attends an investment conference to watch top executives present about their companies to investors such as him, he needs a plane ticket and a hotel room. Not this November. The portfolio manager’s travel to a Nov. 19 conference he plans to attend will cost him “a few calories.” For the first time in more than a decade, Cleveland will host an event that brings together institutional investors and companies in which they could invest. Organized by CFA Society Cleveland, the inaugural Midwest Investment Conference boasts some bigname presenters — among them aircraft parts maker TransDigm International Inc., Huntington Bancshares Inc. and polymer producer PolyOne Corp. — and is believed to be the first conference of its kind in this region since those hosted by McDonald & Co., the investment banking, brokerage and advisory firm acquired by KeyCorp in 1998, said Matt Dennis, a member and past president of the CFA Society.
The event has signed up 18 publicly traded companies that will present and meet one-on-one with investors at the Cleveland Convention Center. Registration opened in early September, and institutional investors hailing from Chicago, Indiana, Omaha, Neb., and Pennsylvania already are signed up, Mr. Dennis said. CFA Society Cleveland, a 430member nonprofit trade group for investment professionals, plans to cap the event’s attendance at 200 investors, said Mr. Dennis, senior managing director for Clear Perspective Group, a Medina investor relations consulting firm. Staging a conference in the city presents an opportunity “you don’t get as much in Cleveland” — to interact with other investors locally, said Mr. Holmes, who is portfolio manager, value strategies, for Foundry Partners LLC and attends one or two investment conferences a year, usually in New York. Minneapolis-based Foundry, which has an office in Cleveland, serves institutional investors, primarily pension funds. “It just costs me a few calories to walk over to the convention center,” Mr. Holmes said. “It’s very convenient for me.” In today’s investing world, Mr. Dennis said, investors are going directly to the issuers of public stock “more than they ever have,” and they want access to management. “The need” for events such as this, he said, “is there more than ever.”
Even though the presenting companies pay to present — $2,200 to be exact — a local conference saves them money, too, compared with traveling elsewhere, Mr. Dennis said. “This is one (opportunity) right in their own backyard, so it’s very economical for companies … to attend the conference right here and have qualified investors hearing their stories,” he said.
‘Business will be done’ The format of this conference is not unlike that of those hosted by McDonald & Co. all those years ago: Investors will indicate which companies they’d like to meet with by priority, and will be paired as possible based on the presenters’ preferences. Bill Hegarty, who previously worked for McDonald & Co. and now is chief investment officer for McDonald Partners, a full-service brokerage and investment advisory firm in Cleveland, is pleased to see this type of conference return to the city. “It brings a lot of bright, seasoned people together with company managements, but it also brings those people who’ve been in business for 30, 40 years as analysts (and) portfolio managers with some younger, newer, still-learning analysts (and) portfolio managers,” Mr. Hegarty said. “The real power of those forums is the bringing together of attendees to exchange in ideas,” he said. “Business will be done. It will be a catalyst for some type of action.” ■
Youngstown incubator is expanding Startups in region could benefit from plan to start fund By CHUCK SODER csoder@crain.com
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The Youngstown Business Incubator is working to form a fund that would invest in young tech companies in the Mahoning Valley and surrounding areas, including Cleveland and Pittsburgh. The incubator has identified a lot of people who are “extremely interested” in investing in the fund, which would invest in young software companies and other hightech startups within reasonable driving distance of Youngstown, according to Jim Cossler, the incubator’s leader and “chief evangelist.” “If we’ve got a really hot startup that’s in Bay Village or Westlake, that’s close enough,” Mr. Cossler said. Among the interested parties are investors who have financed some of the 32 software companies housed in the incubator’s fourbuilding campus on West Federal Street in Youngstown. The incubator also is seeing interest from Mahoning Valley natives who have found success in other regions as well as people who’ve donated to the incubator’s ongoing capital campaign, Mr. Cossler said. The process of raising donations for the $2.5 million capital campaign — which has raised $2 million over the past six months — made incubator staff realize its net-
work is filled with people willing to make investments, Mr. Cossler said. “What we’re hearing on making those calls is, ‘Yeah, you know, I’d love to give you a gift, but I’d also like to invest in some of your companies. Can you make some introductions for us?’ ” he said. The fund has yet to be created. However, George Buzzy, who would manage the fund, said plans call for the fund to make investments in the range of $50,000 to $200,000 in each company, while holding an equal amount in reserve for follow-on investments. The fund aims to raise money from individuals and organizations, Mr. Buzzy said. The fund would have a preference for investing in startups developing software for businesses, which is the Youngstown Business Incubator’s sweet spot. However, it also would invest in other “interesting, fast-growing, technologybased companies,” said Mr. Buzzy, who is an entrepreneur-in-residence at early-stage entrepreneurship nonprofit JumpStart Inc. He works with information technology startups, including those at the Youngstown Business Incubator and a smaller, Hudson-based incubator called TECHudson. The fund would avoid startups trying to commercialize pharmaceuticals and certain medical devices that need to go through lengthy testing and regulatory approval processes, said Mr. Buzzy, who also is a partner with two local investment firms, AG Partners and Blue Olive Partners.
Digging up dollars In addition to making money, the
fund also looks to meet a need in Northeast Ohio’s economy, he said. Mr. Buzzy said he believes there are a lot of companies in Northeast Ohio’s startup community that are worthy of investment but can’t find the cash. “Demand certainly exceeds supply,” he said. Local companies that receive early-stage financing today may face challenges tomorrow. In Northeast Ohio and nationwide, the venture capital firms that many startups rely on have had a hard time raising money lately. That situation “poses a challenge not just to a YBI fund but certainly to funds like ours,” said Clay Rankin, managing member of North Coast Angel Fund, which invests in Ohio startups using contributions from individual investors. Nowadays, Mr. Rankin’s fund is putting more focus on making sure its startups can survive longer before they need money from larger investors, Mr. Rankin said. He described an instance in which North Coast Angel Fund helped one of its portfolio companies round up more cash from existing investors to get the company to the point where it can attract new investors. Despite that challenge, Mr. Rankin said he encourages the Youngstown Business Incubator’s efforts. Like Mr. Buzzy, he said the incubator’s effort could help the local capital supply catch up with demand from local startups that deserve the money. “I think there are many more companies and ideas that are percolating in the region … than I think there is adequate capital to support them,” Mr. Rankin said. ■
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Volume 34, Number 40 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2013 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136