JumpStart 2019 Economic Impact and Fiscal Impact Report

ABRIDGED REPORT • JUNE 2020

Prepared By

20 1 fis 9 ca ec l i on mp om ac ic tr a ep n d or t

Table of Contents INTRODUCTION ..................................................................................................................... 2 ECONOMIC IMPACT FINDINGS .............................................................................................. 3 TOTAL ECONOMIC IMPACT (JUMPSTART + PARTNERS) ................................................................................ 3 JUMPSTART’S THREE PRIMARY TYPES OF WORK ......................................................................................... 5 TECH STARTUPS & SMALL BUSINESSES ......................................................................................................... 8

ABOUT JUMPSTART ........................................................................................................... 10 ABOUT THIS REPORT ......................................................................................................... 12 WHAT IS AN ECONOMIC IMPACT ANALYSIS? .............................................................................................. 12 WHY DOES JUMPSTART COMMISSION AN ECONOMIC IMPACT ANALYSIS? ............................................ 13 DATA AND ANALYSIS ..................................................................................................................................... 13

1|Page

Introduction │ JumpStart 2019 Economic Impact Report

Introduction JumpStart Inc. is a Cleveland-based venture development organization that helps entrepreneurs start and grow companies. JumpStart’s work takes three primary forms: •

Providing Capital – JumpStart is an active venture capital investor and directly funds tech entrepreneurs with the capital they need to grow their startup businesses. JumpStart also provides grants and loans to selected small business clients.

•

Delivering Services – JumpStart provides business assistance services to help highpotential companies (both tech startups and traditional small businesses) navigate challenges, drive growth and create jobs.

•

Acting as a Strategic Partner – JumpStart works on behalf of private, public, and philanthropic funders deploying grants, managing collaborations with partner organizations and administering initiatives to achieve our mutual goals.

Silverlode Consulting was engaged by JumpStart Inc. to estimate the economic and fiscal impact of this work during calendar year 2019. IMPLAN, one of the most widely used and accepted methodologies for estimating regional economic impacts, was used to complete the analysis.

Data for the study was provided to Silverlode via surveys of companies who have been assisted by JumpStart and its Partners. These surveys were administered by JumpStart and its Partners. The companies surveyed provided the employment, payroll, revenue, and other operational data necessary to prepare this analysis.

This report includes an analysis of the impact of companies served by JumpStart and its collaborative Partners from three perspectives: •

Total Economic Impact (JumpStart + Partners) – The economic impact of the combined efforts of JumpStart and its Partners.

•

JumpStart’s Three Primary Types of Work – The economic impact of companies as delineated by: JumpStart Capital, JumpStart Services, and the work of JumpStart’s collaborative partners, which is funded through one of JumpStart’s many strategic partnerships.

•

Tech Startups & Small Businesses – The total economic impact of tech startups and of traditional small businesses served by JumpStart and its Partners.

2|Page

Economic Impact Findings │ JumpStart 2019 Economic Impact Report

Economic Impact Findings Total Economic Impact (JumpStart + Partners) The work JumpStart and its Partners did to help companies in 2019 directly and indirectly supported an estimated $1.3 billion of economic output, approximately $713 million of labor income, and close to 7,200 households in the States of Ohio and New York. The following table summarizes the estimated economic impact of surveyed companies assisted by JumpStart and its Partners in both Ohio and New York.

Total Economic Impact (JumpStart + Partners)

JumpStart + Partners Total Work Economic Impact 11,564 jobs

$83 million in annual state and local taxes

$713 million of annual labor income

$145 million in annual federal taxes

7,174 households supported

$1.3 billion of annual economic output

Companies led by people of color and women made significant contributions to this overall economic impact: •

Women-led companies accounted for $604 million of the total annual economic output and 5,780 of the total jobs.

•

Companies led by people of color created more than $200 million of the total annual economic output and more than 2,500 of the total jobs.

3|Page

Economic Impact Findings │ JumpStart 2019 Economic Impact Report

At the highest level, this analysis shows the work of JumpStart and its Partners has had an immense economic and fiscal impact on the state of Ohio. Their footprint in New York, while still in its early stages, is also economically meaningful.

Adding the 2019 annual economic output estimate of $1.3 billion to previous economic impact studies shows the work of JumpStart and its Partners has directly and indirectly supported more than $7.9 billion of total economic output since 20101.

In addition to generating jobs and taxes for communities, technology companies supported

by JumpStart and its Partners held 1,064 patents and had 1,003 patents pending in 2019.

1

JumpStart provided the economic impact estimates for 2010 through 2017.

4|Page

Economic Impact Findings │ JumpStart 2019 Economic Impact Report

JumpStart’s Three Primary Types of Work JumpStart communicates its work to the market using three primary categories—capital, services and work with collaborative partners (funded through one of JumpStart’s many strategic partnerships).

Total Impact of JumpStart Capital The following table summarizes the estimated economic impact of technology companies that have been funded directly by one of JumpStart’s venture capital funds.

JumpStart’s active portfolio companies in 2019 directly and indirectly supported an estimated $363 million of economic output, approximately $188 million of labor income, and more than 1,700 households in Ohio.

JumpStart Funded Companies Economic Impact 2,804 jobs

$18 million in annual state and local taxes

$188 million of annual labor income

$38 million in annual federal taxes

1,740 households supported

$363 million of annual economic output

Women-led companies accounted for $188 million of this total annual economic output and 1,437 of the total jobs. Companies led by people of color created more than $33 million of the total annual economic output and 476 of the total jobs.

5|Page

Economic Impact Findings │ JumpStart 2019 Economic Impact Report

Total Impact of JumpStart Services The following table summarizes the estimated economic impact of companies (both tech startups and traditional small businesses) that have received business assistance services directly from JumpStart, removing any data from any companies assisted solely by collaborative partner organizations.

Companies that were provided technical assistance by JumpStart supported an estimated $739 million of economic output, approximately $379 million of labor income, and close to 3,900 households in Ohio.

JumpStart Total Work Economic Impact 6,272 jobs

$36 million in annual state and local taxes

$379 million of annual labor income

$76 million in annual federal taxes

3,891 households supported

$739 million of annual economic output

Women-led companies accounted for $332 million of this total annual economic output and 2,946 of the total jobs. Companies led by people of color created more than $71 million of the total annual economic output and 935 of the total jobs.

6|Page

Economic Impact Findings │ JumpStart 2019 Economic Impact Report

Total Impact of JumpStart’s Collaborative Partners The following table summarizes the estimated economic impact of companies (both tech startups and traditional small businesses) that have received funding and/or business assistance from JumpStart’s collaborative partners, removing data from any companies assisted solely by JumpStart.

Technology companies receiving technical assistance from JumpStart’s Partners in 2019 directly and indirectly supported an estimated $942 million of economic output, approximately $502 million of labor income, and more than 4,800 households in the States of Ohio and New York.

JumpStart Collaborative Partner Work Economic Impact 7,759 jobs

$60 in annual state and local taxes

$502 million of annual labor income

$102 million in annual federal taxes

4,814 households supported

$942 million of annual economic output

Women-led companies accounted for $417 million of this total annual economic output and 3,833 of the total jobs. Companies led by people of color created more than $148 million of the total annual economic output and 1,460 of the total jobs.

7|Page

Economic Impact Findings │ JumpStart 2019 Economic Impact Report

Tech Startups & Small Businesses JumpStart and its various partners work with a combination of tech-based startups and traditional small businesses. To help meet the specific requirements and expectations of various organizational funders, these models divide this work into separate categories.

Total Impact of Tech Startups The following table summarizes the estimated economic impact of all tech-focused companies assisted by JumpStart and its Partners through the ESP program in Ohio.

Technology companies receiving technical assistance from JumpStart and its Partners in 2019 directly and indirectly supported an estimated $901 million of economic output, approximately $450 million of labor income, and more than 4,400 households in Ohio.

Tech ESP Total Work Economic Impact 7,138 jobs

$43 in annual state and local taxes

$450 million of annual labor income

$91 million in annual federal taxes

4,428 households supported

$901 million of annual economic output

Women-led companies accounted for $383 million of this total annual economic output and 3,258 of the total jobs. Companies led by people of color created more than $55 million of the total annual economic output and 678 of the total jobs.

8|Page

Economic Impact Findings │ JumpStart 2019 Economic Impact Report

Total Impact of Small Businesses The following table summarizes the estimated economic impact of all traditional small businesses assisted by JumpStart and its Partners in Ohio and New York Small businesses receiving technical assistance from JumpStart and its Partners in 2019 directly and indirectly supported an estimated $286 million of economic output, more than $112 million of labor income, and an estimated 1,900 households in the States of Ohio and New York in 2019.

Small Businesses Total Work Economic Impact 2,997 jobs

$18 in annual state and local taxes

$112 million of annual labor income

$23 million in annual federal taxes

1,859 households supported

$286 million of annual economic output

Women-led companies accounted for $177 million of this total annual economic output and 1,865 of the total jobs. Companies led by people of color created more than $132 million of the total annual economic output and 1,674 of the total jobs.

For more detailed data, see the full 2019 Economic and Fiscal Impact Report, which includes full analysis of the impact of companies served by JumpStart and its collaborative Partners as represented by 111 different independent economic impact models.

9|Page

About JumpStart │ JumpStart 2019 Economic Impact Report

About JumpStart JumpStart Services and Funding JumpStart is a venture development organization that combines the principles of (private) venture capital and (non-profit) economic development to help entrepreneurs start and grow companies. JumpStart helps entrepreneurs by providing access to capital and business assistance and by serving as a value-added partner for other entrepreneurial focused organizations. The Cleveland Foundation, KeyBank, the Burton D. Morgan Foundation, and the Ohio Third Frontier provide tremendous support for JumpStart’s operations.

JumpStart provides business assistance to entrepreneurs and small businesses, access to capital for startups through equity investments, partner services including grantmaking and collaborations for third party funders, and strategic initiatives for community stakeholders.

JumpStart and its Partners Today, JumpStart Inc. works as an investor and a direct service provider to high-potential companies. Through its strategic partnerships with funders, JumpStart also helps support many additional collaborative partners across Ohio and New York in their work helping companies.

Technology companies are served directly by JumpStart and/or one of the collaborative partners who make up the Northeast Ohio Startup Network2 and the Northwest Ohio Startup Network.3 This closely connected network of support organizations are funded in part by Ohio Third Frontier and organized under the Entrepreneurial Services Provider (ESP) Program to support the 21 counties in the Northeast Ohio region as well as the 18 counties of Northwest Ohio.

Small businesses seeking assistance are served directly by JumpStart’s Core City: Cleveland program and its Northwest Ohio Small Business Support Services. They are also served through other collaborative partners JumpStart supports through the Cleveland Business 2

Northeast Ohio ESP Network Partners include BioEnterprise, Inc., BioHio Research Park, Bounce Innovation Hub, Braintree

Business Development Center, FlashStarts Inc., Great Lakes Innovation and Development Enterprise (GLIDE), The Manufacturing Advocacy & Growth Network (MAGNET), Northeast Ohio Medical University (NEOMED), Ohio Aerospace Institute (OAI), Tech Belt Energy Innovation Center (TBEIC), University of Akron Research Foundation (UARF), and Youngstown Business Incubator (YBI).

3

Northwest Ohio ESP Network Partners include the University of Toledo (UT), ProMedica, Mercy Health, and Bowling Green State

University (BGSU).

10 | P a g e

About JumpStart │ JumpStart 2019 Economic Impact Report

Growth Collaborative and the KeyBank Business Boost & Build program. The KeyBank Business Boost & Build program works in four regions across New York (Albany, Buffalo, Rochester, and Syracuse) and also includes The KeyBank Center for Technology, Innovation and Inclusive Growth, which works across Ohio (the center's work in Akron, Toledo, Dayton, Columbus and Cincinnati are included in this report).

JumpStart Evolution JumpStart was founded in 2004 with a mission to accelerate the growth of startups via funding and technical assistance. Today JumpStart is focused on the economic transformation of communities. This evolution in mission intersects with numerous aspects of the organization’s work, including: •

Work with Traditional Small Businesses – JumpStart has transitioned from focusing solely on helping tech startups to helping all businesses. Section four of this report is dedicated to quantifying the impact of this work with traditional small businesses outside the tech-space.

•

Partner Work – JumpStart works as both a sole practitioner and an ecosystem partner, serving as a value-added partner for third-party funders to deploy grants, manage collaborations, and help administer economic development and workforce initiatives. JumpStart deployed approximately $8.4 million in grant funding to 54 organizations on behalf of its partners and funders in 2019 alone. Today, the organization manages the Northeast Ohio and Northwest Ohio Startup Networks (tech-focused) and on behalf of the State of Ohio also supports many additional collaborative partners working with small businesses through the KeyBank Business Boost & Build program.

•

Place Based Assistance – JumpStart has always worked across Northeast Ohio and invests across the state from specific venture capital funds. The organization opened an office in Toledo in 2019 to serve entrepreneurs in Northwest Ohio. JumpStart has also concentrated specific programs on targeted local communities including the City of Cleveland, communities in upstate New York, and disconnected neighborhoods in communities across Ohio including Dayton, Cincinnati and Akron.

•

Diversity and Inclusion – JumpStart has an intentional focus on diversity and inclusion in all of its work, from the composition of its own staff and board to the companies it funds and supports. In 2019, JumpStart engaged more than 1,100 companies, 50% of which were led by women and 42% of which were led by people of color. JumpStart and its Partners collectively engaged more than 1,900 companies, 52% of which were led by women and people of color.

11 | P a g e

About this Report │ JumpStart 2019 Economic Impact Report

About this Report What is an Economic Impact Analysis?

Economic impact analysis provides a comprehensive look at how an organization, industry, or event affects the economy of a region. All economic activities create “ripples” in the economy that are referred to as indirect and induced effects. These ripple effects are quantified by using an analysis known as Regional Input-Output Analysis.

Economic and fiscal impacts can be divided into component parts, which are referred to as Direct, Indirect, and Induced and can be described as follows: •

Direct – Activity attributable to companies supported by JumpStart and its Partners (employees, their associated payroll, etc.) as reported by the companies. In this report, direct jobs include both those employed and employed as contractors by the companies served by JumpStart and its Partners.

•

Indirect – The economic activity of the entities that provide goods and services to the companies supported by JumpStart and its Partners, such as suppliers and service providers.

•

Induced – Activity arising from employee (both Direct and Indirect) spending.

Imagine an entrepreneur owns a fitness studio. She joins JumpStart’s Core City: Cleveland Impact program and works with JumpStart mentors to develop her business plan and rebrand her business. The fitness studio subsequently experiences a 50% increase in sales and hires new employees. Those are direct impacts. If the fitness studio purchases new exercise bikes, the jobs and revenue associated with the purchased bikes are indirect impacts of the company supported by JumpStart’s services. When the employees of both the fitness studio and the bike manufacturer use their paychecks to buy groceries, this household spending is part of the induced impacts from the company supported by JumpStart’s services.

12 | P a g e

About this Report │ JumpStart 2019 Economic Impact Report

Why Does JumpStart Commission an Economic Impact Analysis?

The purpose of the JumpStart economic impact analysis is to quantify the impact of the services and funding provided by JumpStart and its Partners and to communicate this impact to investors, Partners, companies, government representatives, JumpStart employees, and the general public. In essence, this report answers the question: How does JumpStart help transform communities?

Previous JumpStart economic impact studies captured the impact of JumpStart and its Partners within their original scope of providing capital and services solely for tech entrepreneurs. The 2018 impact study and this 2019 study include the organization’s recent and notable expansions in programming, geographic reach, and partnerships—largely in support of expanding to service more small businesses.

Data and Analysis Silverlode Consulting was engaged by JumpStart to estimate the economic and fiscal impact of the companies served by JumpStart and its Partners during calendar year 2019.

Survey Data JumpStart administered surveys to all companies who received services and funding from JumpStart and its Partners as part of the Northeast Ohio and Northwest Ohio Entrepreneurial Services Provider (ESP) programs or the programs focuses on small businesses, including JumpStart’s Core City: Cleveland, Northwest Ohio Small Business Support Services, and Cleveland Business Growth Collaborative. Grantees under the KeyBank Business Boost & Build: NY and The KeyBank Center for Technology, Innovation and Inclusive Growth collected data from clients served by those programs and reported the data to JumpStart.

All of the following criteria (as reported by the companies) were required for a company to be included in the modeling for this report: 1. A valid NAICS code was provided (The North American Industry Classification System is the standard used by Federal statistical agencies to classify companies according to type of economic activity).

2. At least one job was reported for 2019.

3. At least one of the following was provided: 2019 payroll or sales.

13 | P a g e

About this Report │ JumpStart 2019 Economic Impact Report

Of the 1,225 companies which responded to the surveys, 701 (57%) provided sufficient information to be included in the economic impact modeling. This is expected, as almost all of the companies without modelable data are very young and do not yet have direct jobs, payroll, and/or sales to report. JumpStart will continue to service and survey these companies to measure their growth over time. These companies will be included in future economic impact analyses and should eventually be included in future economic models as they grow and create direct jobs, payroll, and revenues.

IMPLAN IMPLAN (IMpacts for PLANning), one of the most well-respected and widely used methodologies for assessing regional economic impacts, was used to estimate the annual impact of the operating activities for companies served by JumpStart and its Partners. 2018 IMPLAN data, the most current data available at the time, was used for this study.

Economic and fiscal impacts can be divided into component parts, which are referred to as Direct, Indirect, and Induced and can be described as follows: •

Direct – Activity attributable to companies supported by JumpStart and its Partners (employees, their associated payroll, etc.) as reported by the companies. In this report, direct jobs include both those employed and contracted by the companies served by JumpStart and its Partners.

•

Indirect – The economic activity of the entities that provide goods and services to the companies supported by JumpStart and its Partners, such as suppliers and service providers.

•

Induced – Activity arising from employee (both Direct and Indirect) spending.

Data Quality JumpStart administered surveys to all companies who received services and funding from JumpStart and its Partners as part of the Northeast Ohio and Northwest Ohio Entrepreneurial Services Provider (ESP) programs or the programs focused on small businesses, including JumpStart’s Core City: Cleveland, Northwest Ohio Small Business Support Services, and Cleveland Business Growth Collaborative. Data was collected from surveys administered electronically to program participants by JumpStart using Qualtrics.

14 | P a g e

About this Report │ JumpStart 2019 Economic Impact Report

Grantees under the KeyBank Business Boost & Build: NY and The KeyBank Center for Technology, Innovation and Inclusive Growth collected data from clients served by those programs and reported the data to JumpStart. As a result, the available survey data varied significantly by program. For example, in the instances of The KeyBank Center for Technology, Innovation and Inclusive Growth programs and the Northwest Ohio Small Business Support Services programs, very little information about the payroll of the participating companies was available. As these programs mature, it is anticipated that the data will improve.

In instances where a company included enough information to be included in IMPLAN modeling, but provided incomplete data (e.g., job count, payroll, or revenue was missing), the missing data was assumed to be zero.

Additional information can be found in the unabridged version of the 2019 Economic and Fiscal Impact Report. This unabridged report includes an analysis of the impact of companies served by JumpStart and its collaborative Partners via 111 different “slices,” each representing independent economic impact models.

15 | P a g e