Ohio Third Frontier Entrepreneurial Services Provider ... ESPP Evaluator's Final...

Prepared by:

Ohio Third Frontier

Entrepreneurial Services

Provider Program

(CY 2017-2018)

Evaluator’s Final Report

March 29, 2017

Entrepreneurial Services Provider (ESP) Program Evaluator’s Final Report

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Table of Contents 1 Executive Summary ..................................................................................................................................... 3

2 Entrepreneurial Services Provider Program Description ............................................................. 4

2.1 Purpose ..................................................................................................................................................................... 4

2.2 Components of an ESP Network .................................................................................................................... 4

2.3 OTF Commission Guidance .............................................................................................................................. 5

3 Evaluation Results ........................................................................................................................................ 6

3.1 ProMedica Innovations (PMI) ......................................................................................................................... 7

3.1.1 Organization, Governance, and Administration............................................................................. 8 3.1.2 Institutional Technology Commercialization (ITC) ...................................................................... 9

3.1.3 Venture Development Services (VDS) ............................................................................................. 10

3.1.4 Enterprise Development Services (EDS) ........................................................................................ 11

3.1.5 Cross-Cutting Activities .......................................................................................................................... 12

3.1.6 Metrics Projections .................................................................................................................................. 12

3.1.7 Budget ........................................................................................................................................................... 12

3.2 The Entrepreneurs Center (TEC)................................................................................................................. 14

3.2.1 Organization, Governance, and Administration........................................................................... 15

3.2.2 Institutional Technology Commercialization (ITC) .................................................................... 16

3.2.3 Venture Development Services (VDS) ............................................................................................. 16

3.2.4 Enterprise Development Services (EDS) ........................................................................................ 17

3.2.5 Cross-Cutting Activities .......................................................................................................................... 18

3.2.6 Metrics Projections .................................................................................................................................. 19

3.2.7 Budget ........................................................................................................................................................... 19

3.3 Quality Today, LLC ............................................................................................................................................. 21

Appendix 1: Evaluation Process and Criteria ........................................................................................... 22

Evaluation Criteria ........................................................................................................................................................... 22

Appendix 2: About Urban Venture Group (UVG) ..................................................................................... 24

UVG Company Background ........................................................................................................................................... 24

Nature of UVG Business Activities ............................................................................................................................. 24


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1 EXECUTIVE SUMMARY

Over the past decade, the Ohio Third Frontier (OTF) has built a national reputation of innovation

and entrepreneurship for the State of Ohio. A core program of the OTF has been the

Entrepreneurial Signature Program (ESP), now known as the Entrepreneurial Services Provider

Program. The ESP program has delivered substantial economic impacts throughout the state by

supporting regional networks of entrepreneurial resources and services. In 2016, the State issued a

request for proposals (RFP). The new embodiment of the ESP program retains the goals and vision

of its predecessors, while implementing a new framework for describing and implementing ESP

services.

The ESP Program RFP requires applicants to present their proposals in a different format than past

RFPs. Specifically, the RFP requires applicants to articulate three distinct types of client services:

• Institutional Technology Commercialization (ITC), which focuses on identifying

commercially relevant intellectual property and other assets;

• Venture Development Services (VDS), which support client company formation, initial

talent and capital attraction, and validating a core business case; and

• Enterprise Development Services (EDS), which support companies as they grow and

transition toward revenue sustainability and/or professional investment.

In addition, the applicants were given the opportunity to propose “Cross Cutting” activities such as

branding, inclusion, and attracting talent and capital. The RFP also includes specific criteria for

governance, oversight, metrics projections, and budget.

The evaluators reviewed applicant proposals using a rubric based on the merit criteria defined in

the RFP. The team members bring expertise spanning entrepreneurship, innovation, technology

transfer, and a variety of technical fields.

Three submissions were received:

• ProMedica Innovations (PMI) from Northwest Ohio is recommended for funding. PMI

brings substantial health science and medical technology development experience and

resources. PMI has partnered with the University of Toledo, who will lead non-medical

technology and innovation efforts. PMI has also attracted new partners to the network,

including Mercy Health and Bowling Green State University.

• The Entrepreneurs Center (TEC) from West Central Ohio is recommended for

funding. TEC emphasizes Institutional Technology Commercialization and Venture

Development Services, leveraging the region’s strong academic and Federal research base.

TEC has partnered with Wright State University, Nucleus Co-Share, and multiple other

collaborators.

• Funding is not recommended for Quality Today, LLC. Quality Today proposed curricula

and other resources to attract underserved, especially rural, individuals into Quality

Assurance (QA) careers. The scope and focus of the Quality Today submission does not align

well with ESP Program requirements. The evaluators do suggest the applicant continue

dialogue with the State to identify other possible avenues for collaboration or support.


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2 ENTREPRENEURIAL SERVICES PROVIDER PROGRAM DESCRIPTION

2.1 Purpose

The Ohio Third Frontier (OTF) is a $2.1 billion economic development initiative to support

technology, entrepreneurship, and job growth in the state of Ohio. The objectives of OTF are to

enable strategic approaches to support the development and growth of entrepreneurial

communities, and in turn generate and accelerate significant economic impacts in Ohio. These

impacts are created in the form of new Ohio jobs, investment capital attracted to the state, and

product sales.

The centerpiece of the OTF is the Entrepreneurial Services Provider (ESP) Program, which supports

regional entrepreneurial service networks within Ohio. The ESP networks provide entrepreneurs

with access to technology, business assistance, capital, and talent that can turn high-potential

technology into thriving Ohio companies.

The ESP mission is to advance high-potential, technology based companies. The ESP Program and

its applicants identify and address the key needs of entrepreneurs in the region. ESP funding

enables the continued success of effective services and organizations; the growth and development

of existing activities and programs to multiply their positive impacts on Ohio; and the

implementation of new services and programs to fill existing gaps in the entrepreneurial

ecosystem.

2.2 Components of an ESP Network

An ESP network consists of a Lead Applicant

partnered with a variety of stakeholder

organizations. The partners collectively provide

services, expertise, capital, and other resources

to client companies and other regional

innovation stakeholders. The overall integration

of components of an ESP are depicted in Figure 1.

The Lead Applicant is responsible for managing

the ESP network and establishing Governance and Oversight structure for the regional ESP. The

Lead Applicant tracks and reports economic

impact metrics and manages budget and financial

reporting to the State. The Lead Applicant also

leads the region’s strategy, including defining

“Cross Cutting” activities (such as branding,

marketing, outreach, and client tracking).

ESP services delivered to clients are gated by stage of innovation: Institutional Technology

Commercialization (ITC), Venture Development Services (VDS), and Enterprise Development

Services (EDS):

• Institutional Technology Commercialization (ITC). The purpose of the Institutional

Technology Commercialization (ITC) Service Component is to create value from early stage

Figure 1: Components of an ESP

Cross-Cutting Services (CC)

Institutional Technology Commercial-ization (ITC)

Venture Development

Services (VDS)

Enterprise Development

Services (EDS)

Metrics Projections

Budget Reasonableness

Governance, Oversight, and Management

Increasing Company Maturity


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intellectual property. Goals and activities of this component include engaging with regional

research institutions, health care systems, and other sources of technology to promote deal

flow, identifying and validating technology, streamlining with licensing, and providing initial

validation funding.

• Venture Development Services (VDS). Venture Development Services (VDS) engage

enterprises at the earliest stages of company formation. Focused on building “first customer”

relationships, VDS services may include incubation space, accelerator programs, prototyping

services, mentoring, Entrepreneurs-in-Residence (EIRs), early stage seed capital, and

professional services such as legal assistance for company incorporation.

• Enterprise Development Services (EDS). Enterprise Development Services (EDS) include

high-quality services for high-potential, high-growth clients. The services provided at this stage

of development are focused on enabling firms to achieve rapid growth and sustainability. The

primary goals of EDS are capital access, in-depth customer access, specialized mentoring, access

to talent to fill roles in growing companies, and delivery of high-value professional services,

including legal, regulatory, quality assurance, or marketing assistance.

2.3 OTF Commission Guidance

The OTF commission directed the creation of the newest ESP Program RFP with explicit guidance

that merit criteria and the review process used should reflect the early stage of development of the

ESP networks in Northwest and West Central Ohio. For instance, applicants are not required to

propose services in all component areas, and all service components need not be fully addressed for

a positive funding recommendation to be made.

The evaluators have fully incorporated this guidance into the review process and

recommendations. In some cases, shortcomings have been identified by the evaluators. Articulation

of potential risks or issues does not mean the applicant cannot overcome these obstacles as they

implement a new ESP. The goal, therefore, is to ensure applicants and DSA are each aware of

potential hurdles as plans are implemented.


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3 EVALUATION RESULTS

Funding is recommended for ProMedica Innovations (Northwest Ohio) in the amount of

$4,375,000. This amount is augmented with cash cost share in the amount of $4,263,000 and

donated services of $112,000, for a total project budget of $8,750,000. Funding is recommended for

The Entrepreneur’s Center (West Central Ohio) in the amount of $2,900,000. This amount is

augmented with cash cost share in the amount of $2,689,000 and donated services of $511,000, for

a total project budget of $6,100,000. Funding is not recommended for Quality Now, LLC

(Southwest Ohio).

Table 1: ESP Program Evaluation Findings

Applicant

Funding

Recommendation State Funding Total Budget

ProMedica Innovations (NWO) Recommended $4,375,000 $8,750,000

TEC (WCO) Recommended $2,900,000 $6,100,000

Quality Now (SWO) Not Recommended - -

The merit review results for each applicant are summarized in the following sections.


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3.1 ProMedica Innovations (PMI)

ProMedica Innovations (PMI) is the Lead Applicant for the Northwest Ohio region. PMI is creating

an internal division called NextTech, which will be charged with leading and advancing the region’s

ESP network. Major collaborators include The University of Toledo (UT), Mercy Health Partners,

and Bowling Green State University (BGSU). In addition, JumpStart, the Lead Applicant for the

Northeast Ohio ESP, is a key partner of the Northwest Ohio ESP. ProMedica Innovations and Mercy

Health will focus on health care and health IT opportunities, while UT is charged with leading non-

medical efforts.

PMI brings significant investment and technical capabilities related to commercialization of medical

technology. The University of Toledo also brings a long-standing, effective incubator. In addition,

PMI’s proposal has attracted investment from a new regional innovation player, Mercy Health, and

a regional university that had not previously partnered with the ESP Program, BGSU. Attracting the

participation of new collaborators is viewed positively. These key strengths serve as the foundation

of the NWO ESP, and the basis for substantive proposed economic impact metrics.

In the previous review cycle, evaluators

expressed concerns about the

independence of NextTech from PMI. In

this proposal, PMI has proposed a more

independent governance structure,

including an independent Governing

Board for NextTech. PMI has committed to

adopting policies and procedures to

identify and resolve potential conflicts of

interest. These are each significant

improvements over the prior proposal.

PMI has met the requirements

established in the new RFP. For this

reason, funding is recommended.

Reductions are recommended in specific

funding elements, including personnel and

purchased services. Concerns remain

about management experience and structure, and budget reasonableness, as detailed below. The

evaluators recommend that PMI and its partners thoughtfully and thoroughly address each

concern, and that DSA work with the team to verify effectiveness and compliance.

The merit evaluation results are presented in Table 3.

Table 2: ProMedica Innovations Funding

Recommendation Summary

Recommended Total Budget $8,750,000 Requested Total Budget $10,074,837

Difference ($1,324,837)

State Funds $4,375,000

Requested State Funds $5,035,510

Difference ($660,510)

Total Cost Share $4,375,000

Cash Cost Share $4,263,000

Donated Services $112,000

2017 Total Budget $3,750,000

2017 State Funds $1,875,000

2018 Total Budget $5,000,000

2018 State Funds $2,500,000


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Table 3: ESP Program Evaluation Findings O

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Exceeds Requirements Meets Requirements Does Not Meet Requirements

3.1.1 Organization, Governance, and Administration

The overall organizational and governance structure and intent of the proposed ESP meet the

requirements of the RFP. Several concerns were identified that should be addressed in order to

ensure smooth establishment and effective operation of the ESP, as detailed below.

ProMedica Innovations will form an internal unit called “NextTech” that will manage the ESP.

PMI articulated a concrete goal and timeline for establishing NextTech as an independently

operating entity. NextTech will have a five-seat Governing Board, consisting of one representative

from each of the four collaborators and a fifth, independent representative. The Governing Board

will oversee the ESP director, staff, and a set of Working Group(s), which will be created to establish

processes and manage the day-to-day activities of the ESP. This oversight alleviates many of the

Conflict of Interest concerns expressed during the previous review. ProMedica Innovations will

provide administrative and ‘back office’ support. This structure provides a path to establishing the

independence of NextTech, and PMI confirmed during Q&A their interest in making NextTech fully

independent as expediently as possible.

The core staffing plan for the ESP has weaknesses that reflect its early stage of development. The

newly named ESP Director has valuable experience in managing relationships among large

organizations, which will be necessary to support the emerging ESP network. However, he has

limited direct innovation and entrepreneurship experience. The staffing plan also includes a large

fraction of newly hired staff, who will need to be on-boarded.

The applicant demonstrates good knowledge of gaps and assets within the region, and the

proposal is generally responsive to both the regional network and the intent of the ESP Program

and Service Components. The ESP is focused on ‘ecosystem building’, engagement, and enhancing

newly formed connections within the community. Each collaborator is tasked with creating a

common suite of client services. JumpStart, the Northeast Ohio ESP lead, has been contracted to

provide support in establishing ESP operations. The applicant acknowledges that access to capital

and talent are barriers for NWO, which lags behind other regions in the state.

A key strategic risk was identified with respect to how the partners will work together. There is a

clear division between PMI and Mercy around specific health technology types they intend to

support. UT and BGSU will be relied upon to engage clients outside of healthcare markets. Dividing

partners’ roles by market sector, and staffing each with independent, parallel resources, creates the


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potential for the partners to become siloed. The evaluators have significant concerns about the

ability and commitment of the collaborators to work in a truly integrated fashion. The applicant has

established a governance board and working groups that, if implemented well, will enhance service

cohesion.

NextTech’s new governance structure alleviates some of the evaluators’ previous concerns about

conflicts of interest (COI). However, several critical concerns remain in the staffing plan. PMI

requested funding for multiple PMI managers who are tasked with guiding ESP staff and service

operations. This structure establishes avenues for PMI management influence on NextTech staff,

which does not align well with PMI’s stated intent to minimize its operational influence on

NextTech. This structure creates the opportunity and increases the likelihood of COI, such as PMI

priorities taking precedence over ESP priorities. The evaluators believe PMI’s interests are

adequately served through its seat on the Board of Directors, and seek to minimize PMI’s role in

day-to-day operations.

Furthermore, PMI’s plan requires NextTech to rely extensively on PMI staff whose duties will be

split between ESP and non-ESP functions. NextTech is not a separate entity, and these personnel

are employees of PMI. Heavy reliance on staff with split duties exacerbates the potential for COI.

This problem is not limited to PMI; Mercy Health and BGSU both rely on key personnel whose

duties are split among ESP and non-ESP functions.

Through both its managerial and operational structure, the proposed organizational structure

increases the potential for conflicts of interest, where PMI priorities could take precedence over ESP priorities. One of the strongest recommendations of the evaluators is for PMI to restructure its

leadership and staffing to favor dedicated staff and create clear lines between PMI and

NextTech staff and duties.

In order not to reduce the service capacity of the organization, the evaluators have focused on PMI

leadership involved in the plan. PMI’s Chief Innovation Officer (CIO) serves as a liaison between

NextTech and PMI. This role is well articulated and limited (28%). The role for PMI’s Associate Vice

President (AVP) is less clear, and also more substantial (75%). Therefore, the evaluators

recommend that the AVP function, along with corresponding administrative support, is not funded

under the ESP program. Specifics of this recommendation are detailed in Section 3.1.7.

PMI can further manage conflicts of interest by developing formal COI policies and procedures

that cover not only the ESP overall, but specifically address personnel who have split duties.

Regular, independent audits of the relationship between NextTech and PMI need to be conducted to

ensure true separation with disclosed and managed COI, if and when they are identified.

The proposed staffing structure has shortcomings beyond COI. Maintaining a larger staff with split

responsibilities is a greater managerial challenge, and likely will be less efficient than, a smaller

dedicated team. The structure dilutes the focus of key personnel, reinforcing concerns about

operations becoming siloed. Increasing potential for COI, reducing regional cohesion, and reducing

operating efficiency, the proposed structure could delay the region’s achievement of projected

economic impact metrics.

3.1.2 Institutional Technology Commercialization (ITC)

PMI’s ITC approach is focused on quick idea vetting and deciding early whether to provide support

to commercialize a Client’s idea. The written Q&A responses commit to a cohesive, collaborative


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approach, with monthly meetings about deal flow and establishing best practices. The Working

Group is charged with ensuring consistency and synergy across partners. Over 40% of the ESP

budget is dedicated to ITC. This is reflective of the early-stage focus of UT, BGSU, and Mercy.

While collaboration was well-described at the leadership level, the staffing plan and budget

structure may undermine PMI’s collaborative intent. Each collaborator has proposed to build

largely independent, parallel capabilities around technology transfer, EIRs, and other services.

Although collaboration is promised, the proposal lacked clear mechanisms for coordinating and

sharing best practices. Considering the relatively nascent ITC capabilities at some of the region’s

partners, one idea for NextTech to support and promote collaboration is to develop a common set

of template licensing agreements for all collaborators. This would promote cooperation and

alleviate the transactional burden for entities less experienced in technology transfer.

The evaluators inquired about roles of institutional partners, and potential for competition or

duplication of effort between Mercy and ProMedica Innovations. In the application, ProMedica

Innovations proposes to primarily focus on medical device and health IT, while Mercy will focus on

personalized medicine, virtual health, aging, data science, 3d printing, and neurosciences. UT and

BGSU will lead non-health efforts. Because BGSU and Mercy are only recently developing ITC

efforts, each may require time to become proficient. It is essential that the other partners help in

this effort. At the outset, existing opportunities at the research institutions can be easily mined

(‘low hanging fruit’), but as the project progresses, educational programming needs to be developed

to ensure that researchers are aligned with commercialization and that new researchers are brought into the process.

PMI proposes measuring success with standard metrics from the Association of University

Technology Managers (AUTM) around pipeline development, number of ideas, new companies

formed, and early-stage funding (e.g., SBIR, NIH, TVSF). However, some intermediate metrics, such

as number of patent applications filed, are not necessarily indicative of a robust, commercializable

pipeline. These early stage and intermediate indicator metrics should be tied with their eventual

outcome to inform the process in an iterative fashion. A common informatics platform can address

this need for data across the ESP.

3.1.3 Venture Development Services (VDS)

PMI proposes VDS services that include EIR support, early stage validation capital for professional

services and prototyping, and physical incubation space. Both PMI and UT house high-quality

incubators and offer services that provide continuity to ITC-stage technologies and early-stage

firms.

One major strength of the region is access to the clinical and health care operations expertise of PMI

and Mercy, and the ability of these partners to serve as ‘first customers’. The clear focus on health

care, devices, diagnostics, and health IT combined with the close ties to the ProMedica and Mercy

organizations present an opportunity for PMI to deliver superior VDS services, even compared with

existing ESPs. Client companies are expected to be sourced primarily from the partner institutions,

enhancing continuity and familiarity.

ProMedica Innovations plans a distributed model with partner-specific EIRs, which may be

administratively expedient, but was viewed as a minor weakness of the proposed approach. Best

practices identified by other ESPs suggest that EIR effort should be coordinated with a single

partner in a ‘hub and spoke’ model. Particularly within the less experienced partners, the approach


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may struggle to produce quality services and outcomes. Effective EIR hiring, supplemented with

close, regular contact and information sharing between EIRs, will be a key to success.

PMI’s planned educational programming includes expansion of two successful regional events,

UT’s Pitch & Pour workshop and PMI’s annual Health Care Summit, among other events. UT

LaunchPad will serve as a hub of activity for both programming and physical space, primarily for

non-healthcare opportunities. Like many other of the services planned, programming is largely

siloed within each collaborator. The evaluators suggest exploring co-hosted events to enhance

cross-pollination of stakeholders within the region.

PMI noted that capital access remains a gap in the region. PMI plans a pipeline of small awards to

validate and de-risk early-stage opportunities and prepare them for pre-seed investment. The

region is home to the OTF-supported Rocket Ventures Fund II, a $6 million pre-seed fund.

Recognizing that many health and biotech opportunities require funding larger than this fund can

provide, PMI intends to leverage the relationships of JumpStart and of individuals within the ESP to

access new or larger sources of capital. Relationships are not an adequate substitute for systematic

program or process to attract capital to the region. The evaluators note that JumpStart has not fully

documented its commitment to serve in this capacity.

3.1.4 Enterprise Development Services (EDS)

PMI has identified key gaps in the region related to EDS, including capital access, attraction of C-

level talent, and a mentor network. They also offered a potential pipeline of EDS-ready client

companies. To address these gaps, PMI and Mercy can offer deep insight into health care delivery

and operations, a core strength of the region’s EDS capabilities. PMI also plans to leverage capable

professional service firms in support of EDS-ready clients.

The proposed EDS lack a clear systematic or programmatic structure. Rather than defining

specific procedures for accessing and deploying expertise, the applicant relies heavily on personal

relationships of EIRs and other staff. With the ESP lacking a clear strategy for EDS, JumpStart

support will be especially critical as these services are implemented. As with VDS, JumpStart has

not committed to serving in this capacity. There is a potential risk that PMI may require support

from JumpStart but is unable to secure that support in either a timely or an affordable fashion. Such

a circumstance could delay progress of client companies or negatively impact the ESP budget. This

concern could be resolved with a more concrete plan for JumpStart involvement and a

corresponding letter of commitment from JumpStart.

Beyond JumpStart, purchased services have been proposed to augment internal expertise with

contracted organizations like NAMSA, an Ohio-based regulatory firm. Because of the underlying

organizational expertise and pipeline presented, the evaluators judged the intent of these services

to meet the requirements of the RFP.

The ESP proposes to launch a mentor program in Q2 to link clients to customers, and expects that

it will have 12-15 mentors in place in 2017. The mentor program will be based on the proven MIT

Venture Mentor Network model. The development of a more formal mentor network may create a

positive effect on talent recruitment, as some mentors will want to become more involved in the

Clients/opportunities they are mentoring.

The region’s EDS-ready pipeline is modest in 2017, but projects a significant increase in client

firms projected in 2018. It will be critical to develop high-quality services and resources to be ready


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for the expected increase in demand in 2018. Considering the small number of current EDS-ready

firms, a smaller budget than requested for purchased services in 2017 is recommended. This

recommendation is detailed in section 3.1.7.

3.1.5 Cross-Cutting Activities

The applicants acknowledge that marketing and branding the new NextTech ESP will be a major

driver of its success. Branding is a key activity, including relaunching the website, adding content

and utilizing digital marketing, and producing events. PMI has engaged JumpStart to support ESP

operations, client tracking, and other roles.

While PMI repeatedly refers to “inclusive outreach” and “inclusion programs,” its proposal lacks a

clear goal or strategy for inclusion, and contains few concrete examples of activities. One modest

strength of the proposal is that each partner has named positions and inclusion roles defined.

Enabling many heads to think about and address inclusion while the ESP is being established offers

the potential for a strategy to emerge. For outreach, the region’s plan leverages connectivity with

women- and minority-centered community organizations like the Toledo African-American

Chamber of Commerce, the Women’s Entrepreneurial Network (WEN), Northwest Ohio Hispanic

Chamber of Commerce, and the Minority Business Assistance Center (MBAC).

3.1.6 Metrics Projections

The proposed metrics are modest, and are reflective of an ESP at the early stages of formation, and

do show a substantial increase from 2017 to 2018. Moreover, the applicant notes “…it is expected

that 2019 and beyond will have much more significant metrics delivery of some of the most sought-

after metrics for the ESP, including revenues generated, capital raised or attracted to Ohio,

investment from out of the state, and jobs created.” The most substantial metric planned is capital

attraction, which is consistent with PMI’s medical focus. The large portion of the budget reserved

for contracted services also aligns with the conventional trajectory of medical device startups.

Overall, the metrics trajectory proposed is consistent with the OTF Commissions guidance to

support efforts intended to build future capacity to deliver entrepreneurial services.

3.1.7 Budget

The evaluators funding recommendation includes the following changes to the proposed budget:

The PMI AVP, and an Executive Assistant supporting this role, do not have a clearly articulated ESP-

focused role other than general oversight. Staffing for the ESP is already substantial, and additional

PMI-centric oversight is directionally opposed to the independent operational vision for the ESP.

The evaluators urge the applicant to reduce NextTech staff’s dependence on PMI as quickly as is practical. For this reason, funding is not recommended for the AVP, Executive Assistant, and

associated indirect costs. The impact of this recommendation is anticipated to be a reduction of

approximately $500,000 over two years.

PMI’s purchased services budget does not align well with the pipeline presented. The projected

pipeline of client companies nearly triples from 2017 to 2018, yet the purchased services budget

remains nearly flat. The evaluators recommend the purchased services budget in 2017 reflect a

similar per-company average investment as in 2018. The evaluators recommend that JumpStart’s

budget be funded in full. Because PMI has not provided a clear process for approval, use, or amount

of funds, the evaluators advise DSA to monitor the allocation of these funds to ensure


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reasonableness. The impact of this recommendation is to reduce purchased services and associated

indirect costs in the amount of ~$800,000.

Although no change in funding is recommended for other direct costs (ODCs), the evaluators do

recommend DSA verify the allowability of certain cost items proposed, including equipment

purchases for personnel who have shared PMI and ESP responsibilities.

The total program budget impact of the above recommendations is a reduction of ~$1,300,000,

with the associated recommended state funding reduced by ~$650,000.


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3.2 The Entrepreneurs Center (TEC)

The Entrepreneurs Center (TEC) is the Lead Applicant for the West Central Ohio (WCO) ESP. Major

collaborators include Wright State University (WSU), Dayton Area Chamber of Commerce (DACC),

and Nucleus CoShare. TEC has proposed to expand and integrate Institutional Technology

Commercialization (ITC) among its academic partners, and to develop a suite of client services to

support spinout and organically sourced firms. The institutional partners in the ESP have noted

strengths in advanced materials; advanced manufacturing; aerospace; and information technology,

although stated focus areas in health care and health IT lack a similarly strong set of collaborators.

TEC emphasizes a reboot of the region’s ESP, with significant effort invested in building core

services and rebuilding the regional ESP brand. TEC’s proposal leverages the strengths of regional

assets, emphasizing early-stage technologies from AFRL and other local research organizations.

Client services proposed by TEC are directionally appropriate, although they are still early in

development. Many of the proposed services are still conceptual and lack experienced personnel.

The region lacks a pipeline of companies ready for EDS in the funding time frame. TEC noted,

“within the West Central region, very few companies fall within the definition of EDS.”

TEC has met the requirements established in the new RFP. For this reason, funding is

recommended. The large number of new hires represents a risk, especially to early stage

administration and quality service delivery for more mature, high-growth firms. With noted lack of

Clients ready for EDS, funding for EDS is not recommended.

The proposed inclusion efforts are siloed

within DACC and focus primarily on

attraction; even if TEC’s inclusion goals

are met, there will be little impact on

inclusion in the region. Funding is

recommended for a new staff member at

DACC that focuses on ESP-specific

inclusion, but not for existing DACC staff

whose roles are not ESP-specific. TEC is

strongly encouraged to rethink its

inclusion efforts, and how inclusion

services can be more effectively

integrated into the ESP network to span

beyond company attraction.

The economic impact metrics committed

by TEC are extremely modest. Even

acknowledging that the ESP is in an early stage of establishment and the uncertainty associated

with becoming fully staffed, the metrics committed signal a much longer time span to achieve a

positive return on the State’s investment. The evaluators recommend that DSA work with TEC to

define appropriate metrics for the project period.

The merit evaluations results are presented in Table 5.

Table 4: TEC Funding Recommendation Summary

Recommended Total Budget $6,100,000 Requested Total Budget $7,461,854

Difference ($1,361,854)

State Funds $2,900,000

Requested State Funds $3,352,888

Difference ($452,888)

Total Cost Share $3,200,000

Cash Cost Share $2,689,000

Donated Services $511,000

2017 Total Budget $2,900,000

2017 State Funds $1,378,688

2018 Total Budget $3,200,000

2018 State Funds $1,521,312


15

Table 5: TEC Evaluation Findings O

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Exceeds Requirements Meets Requirements Does Not Meet Requirements

3.2.1 Organization, Governance, and Administration

Overall, TEC has presented a reasonable management and governance structure that integrates

existing Federally funded efforts with new ESP-funded efforts. TEC is an independent 501(c)3

organization with ESP operations existing as a ‘business unit’ within TEC. The Director of the ESP

will report to the President of TEC. The ESP team will leverage the administrative support of TEC.

TEC will take the primary role in managing partner deal flow, building necessary relationships,

delivering services, and other core ESP functions. The continuity provided by TEC is an important

strength of the proposal.

The TEC board will oversee overall TEC performance and operations and guide the 7-member

Executive Committee in both ESP and non-ESP functions. The evaluators recommend TEC establish

a dedicated board, or at least a subcommittee of the board, to oversee and guide its ESP operations.

An independent board would ensure that ESP and Ohio priorities are emphasized, and reduce

potential conflicts of interest related to competing priorities set by Federal and other TEC

stakeholders. If such a board cannot be formed prior to award, the evaluators suggest that TEC

form such a board during the project period.

TEC has not hired its planned ESP Director or any of the EIRs. This staffing uncertainty is a major

weakness and a risk, particularly given the short time frame of the program. The risk is mitigated to

an extent by the TEC President serving as interim ESP Director. The President has a long history of

leadership at TEC and within the region, and strong knowledge of the community. In the written

Q&A response, it is noted that TEC has formed a search committee and has identified candidates for

this committee, as well as two potential ESP Directors. They expect to complete the process within

30 days of award and to have a selection completed within 60 days of award.

Personnel from Ohio University, including some active with the SEO ESP, TECHGrowth, plan to be

engaged in the WCO region. OU has offered time from these personnel as cost share. Specific staff

have been assigned ESP-specific roles, but the majority of the cost share is dedicated to senior

personnel that have no clearly articulated responsibility to the ESP or individual component(s).

Because of the unclear nature and focus of these activities, they are not recommended for inclusion

in the TEC budget. However, because TEC has overmatched its 1:1 cost share requirement, this

recommendation does not impact the overall state funding request.


16

3.2.2 Institutional Technology Commercialization (ITC)

TEC clearly articulated the regional strength in research and development, and dedicated

focused effort on engaging partners such as AFRL, UDRI, WSU, and WBI. The challenge in the region

is converting quality research to commercial opportunities and high growth companies. TEC notes

that without the development of this ‘top of funnel’ approach, it would be difficult to develop

opportunities and an ecosystem in the region. TEC’s overall opportunity and goal is to better

leverage regional R&D assets, and to establish robust processes to both vet technologies and

transition these to high growth businesses.

TEC’s approach leverages federally funded ITC infrastructure and process with Air Force

Research Lab, a prominent regional research entity. TEC plans to extend this expertise into

academic and other collaborators. TEC uses a proprietary system (ArchiTech), and “Commercial Readiness Assessments” using a proprietary methodology licensed to TEC. The exact process for

scaling and transferring ITC capabilities to partners is unclear, especially given the wide disparity

in budgets between WSU, UDRI, and WBI.

Given the region’s focus on aerospace, manufacturing, and materials, it is unclear how the same

processes, evaluation criteria, market assessments, and people will function for health and

biotechnology opportunities. The applicant notes that, “…experienced staff is required to oversee

and provide services and to generate satisfactory program results…”, an aim that is undermined by

the need to hire a new ESP Director and EIRs, as well as to expand into health and biotechnology.

Relationships with key health institutions in the region, such as Ascend Innovations, are nascent.

TEC does participate in the Ohio Federal Research Network (OFRN), consisting of 11 Ohio research

Universities and 52 Ohio industry partners engaged across six Centers of Excellence (COEs). One

COE, Human Performance and Health Sciences (HPHS) Center of Excellence led by WSU and WSRI,

may help with the identification of new Client opportunities in the biomed/biohealth space. TEC

also is connected with the 711th Human Performance Wing located on Wright-Patterson Air Force

Base in Dayton. However, the need for domain expertise in the commercialization of these types of

technologies remains.

While plans for technology assessment received significant attention in the proposal, other

necessary aspects (such as streamlining licensing and talent attraction for initial company creation)

received less attention, despite being identified as risks by the applicant. For example, it remains

unclear how TEC will build on technology assessment activity, to attract talented entrepreneurs

to form companies around promising technologies. This transition to VDS should remain a focus as

TEC builds out its ITC infrastructure.

3.2.3 Venture Development Services (VDS)

TEC articulates a broad and compelling need in the region for high-value services for early-

stage businesses, noting, “…the region does not currently have robust general business support

capabilities or formal business acceleration services available to most companies within the eight-

county proposed ESP service area.” TEC has identified and provided a pipeline of 31 companies that

could benefit from formalized Venture Development Services (VDS).

TEC and its partners plan to offer a diverse array of services such as expanded incubation space,

general business support, EIR support, customer access (“First Customer”), and an Application

Discovery Program. Service delivery will occur primarily through to-be-hired EIRs. This is a key

risk to success, but perhaps unavoidable given the lack of a fully functioning ESP in the region.


17

The vision for TEC’s First Customer program is an appropriate component of VDS services,

although it may not be adequately resourced, particularly for health/biotech clients. TEC has built

relationships with leading regional businesses like General Electric, and has an MOU in place with

Ascend Innovations for access to health care innovation assistance. Reaching outside the region,

including engaging other regional ESPs, may help fill any holes identified in TEC’s customer

networks.

The VDS component includes support for SBIR companies and a highly flexible set of purchased

services. The WCO Ohio economy has an unusually large segment of SBIR companies. These firms

often struggle to grow and raise capital. TEC plans specialized support for SBIR companies.

Purchased services include substantial ($900,000) support for professional services, technical and

business validation, and customer connectivity.

The major long-term risks TEC faces in its VDS efforts are the fundamental challenges the ESP

seeks to address. Initially, uncertainty around staffing, including a new Director, EIRs, and analyst

roles is a primary concern. In the long term, the most significant risk is investment-quality deal

flow. While a current pipeline of VDS-ready companies exists, the long-term success of TEC’s VDS

approach depends on its ability to: (1) move new potential Clients through the early stage

commercialization process; and (2) to focus considerable effort on rebranding and attracting VDS-

ready firms from the community – the two primary goals of the overall ESP effort.

3.2.4 Enterprise Development Services (EDS)

The West Central Ohio region appears to lack a clear, current need for EDS. TEC notes, “Within

the West Central Region, very few startups fall within the parameters of the Enterprise

Development Services (EDS) service component: early-stage companies that are ready for Series A

investments ($2-$5M), with significant revenues, and proven organizational leadership.” The

evaluators requested additional information on any EDS-ready firms that TEC could identify. TEC

provided a list of firms that may require EDS during the project period, but did not adequately

substantiate the firms’ EDS-readiness. The evaluators judged that several firms listed by TEC were

not EDS-ready. If TEC can successfully deliver VDS services, some clients may become candidates

for later EDS, and the connectivity to SBIR companies may provide some additional eventual deal

flow. It is unlikely that an EDS pipeline will emerge during the project period to justify separate EDS

funding.

Without a current pipeline, EDS must be judged in terms of future benefits of having a ready

structure and staging of resources. However, much of TEC’s EDS client acquisition process is ad hoc,

depending on “interaction and outreach.” TEC notes that they expect to identify clients through “the

organic ecosystem via marketing in outreach,” or through location in the TEC facility, or

participation in the ESP Acceleration program or VDS.

Moreover, the EDS articulated by TEC appear likely to occur even if EDS funding is not provided.

EDS will be deployed through similar channels as VDS services, including EIRs, mentor networks,

and customer access, which already appear to be funded through the VDS component. TEC is

currently working on the formation of a new angel network in the region; however, this is also

likely to occur independent of EDS funding. Personnel and purchased services funded in the VDS

component are likely to be sufficient to support any EDS-ready firms that emerge. These activities

will also provide a platform for future EDS delivery.


18

Other elements appear misaligned with EDS-ready company needs. TEC notes that “[t]he West

Central Region faces a shortage of entrepreneurial talent […] to lead a high-potential company…”,

but the proposed mitigations focus almost exclusively on student talent at university partners. Such

programs may be more relevant in transitioning ITC technology into new ventures, or adding

staffing to existing firms, but not for sourcing key leadership to EDS-ready firms.

Other areas of effort, including plans to prime the region for later investment through angel

networks, developing relationships, and events, are equally relevant for VDS firms, and are likely to

occur without OTF support for EDS. Examples include, in addition to the above-mentioned angel

network, executing MOUs with regional sources of capital, cataloging opportunities in ArchiTech,

and developing a Capital Sources Advisory Group, all of which are cross-cutting and supported by

individuals funded in other components.

TEC’s EDS plans not only must succeed themselves, but also rely on the concurrent success of

Cross-Cutting and VDS efforts. The VDS component, and TEC’s ability to establish a stable pipeline,

are already risk elements that depend on their ability to re-brand and translate technology scouting

services into early-stage companies. When considering these risks combined with extremely

modest success metrics, the evaluators do not recommend funding for TEC’s EDS component.

3.2.5 Cross-Cutting Activities

Perhaps the most important activity planned by TEC is its marketing and branding initiative. TEC

seeks to connect and integrate regional stakeholders and convince potential Clients that the TEC-

led ESP offers a true value proposition. Awareness efforts and networking events will help. The

planned single-point-of-entry “Aggregation Platform” website that describes the value proposition

of the ESP and links to the appropriate partners will also be critical. The planned mentor network

should champion TEC in the community.

TEC seems to have a good grasp of the regional ecosystem. TEC has executed MOUs with several

area stakeholders who may provide domain expertise, source talent, and assist with marketing. TEC

has developed relationships with most regional sources of R&D activity. Donated service provider

commitment appears strong. A nascent, but improving relationship with Ascent Innovations may

improve capabilities for healthcare-relevant clients.

TEC plans a unified onboarding process, also a key need for any ESP. A general onboarding and

client management process is described. TEC describes this as a three-phase process, based first on

an intake form linking to a central SalesForce database. Second is an assessment and qualification

review where clients meeting ESP criteria are referred to TEC’s 18-hour commercialization

readiness program. Third is assignment to an EIR and utilization of common technology platforms

like ArchiTech to assess and link resources.

Inclusion is critical to a successful ESP. TEC has proposed inadequate inclusion efforts. Inclusion

programs are focused exclusively within the Minority Business Partnership organization within the

Dayton Area Chamber of Commerce (DACC). The only clear difference from their current offerings

is a new staff member focused on attracting ESP-relevant companies.

The shortcomings of the region’s inclusion strategy are unlikely to be addressed by funding

the activities planned.

• TEC and DACC mention outreach programs, but do not provide a differentiating premise or

ESP-specific expected outcome.


19

• Rural engagement is substantially overlooked.

• Strikingly absent is attraction of diverse innovators into the ecosystem. Considering the

region’s focus on Institutional Technology Commercialization, a lack of a diverse pool of

innovators will negatively impact downstream efforts such as VDS.

• No plans are presented to tailor Venture or Enterprise Development Services for inclusion.

Even if fully successful, TEC projects a very small (9) total number of companies under its inclusion

metrics in the project period. The amount of funding and the return on that investment, as defined

by the metrics, do not align.

The clearly new function, ESP-specific outreach, is recommended for funding. The other items

(including existing staff and DACC programs) requested to be state-funded are not recommended.

The evaluators recommend that TEC refocus its efforts on inclusion in future funding proposals,

such as by implementing better coordination between TEC resources and tailored services for

woman-owned, minority-owned, and rural businesses. Inclusion should be a prominent feature

throughout the network, not localized within a partner that has no other role in the ESP.

3.2.6 Metrics Projections

TEC’s proposed economic impact metrics represent a very low bar, and if taken as a true goal,

would represent a poor return on State investment. While some metrics are impressive, such as

238 jobs created, others severely lag, such as third-party investment in Ohio of under $4 million.

The diversity and inclusion metrics fall short of expectations.

The evaluators interpret these metrics not as targets, but rather as another indication of the early

stage of development of the ESP. TEC notes that mathematical functions were used to determine

many of the metrics (e.g. “…based on ESP data for 2009-2014 period from Development Projects,

Inc. and TechGrowth Ohio…”). No narrative or rationale describing clearly how the numbers are

related specific to the region and would follow the proposed services and plans. For this reason, the

evaluators encourage DSA to engage TEC and explore developing new metrics that more accurately

represent the realistic potential of the region for generating economic impacts.

3.2.7 Budget

TEC was unable to demonstrate a valid pipeline of firms ready for EDS, nor were they able to

articulate how EDS would programmatically differ from VDS. Mentor networks, EIRs, and other

activities have funding under VDS. TEC noted: “within the west central region, very few companies

fall within the definition of EDS services”. For this reason, EDS funding is not recommended. The

impact on the total TEC budget of this is $617,187.

In addition, changes to the inclusion program budget are recommended. DACC plans a team of

individuals who will focus on attracting ESP client firms, including three existing staff and one new

hire. Funding is recommended to support the new position dedicated to inclusive attraction of new ESP client firms. Future resources should be focused on integration of inclusion services across

partners and across the client life cycle, not siloed in an otherwise separately operating partner.

Tailoring of client services for woman-owned, minority-owned, and rural firms should be increased.

The evaluators recommend only the new ESP-focused hire be funded. The total budget impact of

this change is a ~$300,000 reduction to DACC.


20

Ohio University has committed as cost share several personnel and additional budget items.

However, OU’s senior leadership and management roles are not specific to the ESP. These positions

lack a clear, direct role in the ESP (if any). For this reason, these resources are not recommended to

be allowed as cost share. It is important to note that OU is not receiving state funds, and TEC’s

budget is over-matched. Therefore, this cut does not impact the state funds request. The total

budget impact is a ~$400,000 reduction, but there is no impact on the state funding amount.

The evaluators requested during Q&A a more detailed accounting of software costs, but the total

software expenditure remains unclear. A significant amount of resources is dedicated to software

development. DSA should include provisions in the grant agreement that will ensure that these

costs are necessary, reasonable, and appropriate for the program. In addition, the evaluators advise

DSA to confirm that Wright State University’s personnel budgets comply with cost sharing rules.

The total budget impact compared with TEC’s requested budget is a reduction of ~$1,350,000. The

corresponding State funding impact is much less than half that amount, totaling ~$450,000. This

includes ~$300,000 cut from TEC’s budget and ~$150,000 from DACC.


21

3.3 Quality Today, LLC

Quality Today, LLC proposed a program to recruit underserved individuals, particularly individuals

from rural areas, into Quality Assurance (QA) careers. The proposal seeks funding to implement

curricula and testing to identify and support qualified individuals. Quality Today’s goal is for these

individuals to be qualified for hire into Ohio-based companies in QA positions. The applicant makes

an impassioned argument for the dual benefits of helping underserved individuals and reducing the

cost, time, and burden of hiring on Ohio employers.

The evaluators found the goals and vision of Quality Today to be admirable. The benefits to

underserved individuals can be profound. Easier hiring of QA staff could be a benefit to many Ohio

firms. All regions’ ESP networks could benefit from improved inclusion. However, the services

described by Quality Today do not align with the programmatic intent of the ESP Program RFP. The

vision of this applicant is profoundly different than the capital access, entrepreneurial coaching,

customer access, and other services envisioned by the ESP program. It is unclear how Quality

Today’s program could benefit more than a narrow subset of ESP client firms, nor how they would

preferentially impact OTF-focused industries. For these reasons, funding for Quality Today, LLC

is not recommended.

In order to fully realize the potential value in the programs offered by Quality Now, the evaluators

recommend that the applicant engage with other agencies or programs within Ohio in order to find

a closer programmatic fit.


22

APPENDIX 1: EVALUATION PROCESS AND CRITERIA

UVG’s primary mission in reviewing ESP proposals is to deliver clear and substantiated funding

recommendations to the Ohio Third Frontier Commission. The purpose of this review is three-fold:

(1) to justify funding recommendations for applicants; (2) to identify gaps in proposals and offer

opportunities for improvement; and (3) to provide programmatic insight and recommendations

about the ESP Program as a whole to the Ohio Third Frontier Commission.

To support this mission, UVG has sought to perform a thoughtful, objective, and consistent

assessment of each proposal. The proposals have been evaluated according to the ESP Program RFP

merit criteria, Ohio Development Services Agency (DSA) requirements, specific guidance from the

OTF Commission, and overall OTF mission and objectives. UVG has placed special emphasis on

confirming the alignment and integration of the applicant’s vision, organizational structure,

collaborators, and key stakeholders.

UVG performed an in-depth review of the written proposal, followed by a round of detailed written

and oral questions to the applicants. The review included a thorough validation of the budget and

cost share for the proposal including an in-person session with each applicant to review budget and

cost share questions. Based on this review process, UVG developed and presented

recommendations to the OTF commission.

Evaluation Criteria

1. Organization, Governance, and Administration

• Qualifications of Lead Applicant

• Strategy

• Organizational Structure

• Governance

• Conflicts of Interest

2. Institutional Technology Commercialization

• Opportunity/Gap/Need

• Goal/Outcome

• Approach/Process

• Leadership/Key Personnel

• Client Acquisition and Service Delivery

• Key Success Criteria

• Core Resources

• Key Risks and Mitigations

• Leadership Team and Stakeholders

• Alignment with Client Type

• Budget Reasonableness

3. Venture Development Services


• Goal/Outcome




23



• Core Resources





4. Enterprise Development Services


• Goal/Outcome





• Core Resources





5. Cross-Cutting Activities

• Marketing, Branding, and Outreach

• Pipeline Development and Client Management

• Diversity and Inclusion

• Stakeholder Engagement


• Other Proposed Initiatives

6. Metrics Projections

7. Overall Budget Reasonableness


24

APPENDIX 2: ABOUT URBAN VENTURE GROUP (UVG)

UVG Company Background

Urban Venture Group, Inc. (UVG) is a consultancy based in Columbus, Ohio. UVG principals are

experienced technology entrepreneurs with over fifty years combined experience founding,

funding, growing, and selling technology-based businesses in Ohio.

Nature of UVG Business Activities

UVG provides consulting services focused on commercialization of early stage technologies. Our

clients span energy, materials, transportation, medical, defense, and information industries. Our

business focuses on market engagement and attraction and effective allocation of resources to

advance commercialization. UVG’s principal business activities include:

• Commercialization Strategy – Identifying paths to market, validating customer needs,

planning and funding operations, and identifying exit strategies.

• Entrepreneurial Coaching – Helping technology entrepreneurs overcome the barriers to their

success, including operations, strategy, and managing internal and external relationships.

• Grant Writing – Non-dilutive (grant) funding strategy, grant writing support, funding agency

access, spanning Federal and State agencies.

• Venture Services – Preparing a firm for capital investment, including business planning and

strategy, pitch deck preparation, and strategic engagements.

• Technical Market Research and Analysis – Primary and secondary market research, trend

and growth analysis, opportunity analysis.

• Sales Pipeline – Coaching, training, and infrastructure to manage and accelerate sales.

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