Akron is at the center of a new venture-capital fund
Cascade CDC will serve as regional HQ for a national SBA program.
By Teresa Dixon Murray
Akron-area entrepreneurs looking for venture capital have traditionally been forced to turn to funds based in Cleveland or Columbus. Now, Akron will have a hand in its own venture-cap fund.
The endeavor, called Development Capital Corp. Growth Fund, is a new nationwide initiative that arrives in Akron by virtue of a recent overhaul at one of the area's most successful business-development entities: the Cascade Certified Development Co.
"This fund is going to satisfy a big need," says Tim Fitzwater, president and CEO of National City Bank and president of The Cascade CDC, which is helping to organize the local venture-cap effort.
Overseen by Executive Director Deborah Victory, the Cascade CDC has helped hundreds of businesses in the five-county area obtain loans and grants.
Now, the organization has changed its operating name to Cascade Capital Corp. and it is working to raise money to capitalize the new fund.
The DCC Growth Fund, a newly organized limited partnership, is a Small Business Administration leveraged development capital fund that will be managed out of three offices across the nation. Akron will serve as the Midwest office.
Twenty CDCs from across the country will help raise money and originate deals for the fund.
Cascade Capital Corp. is in charge of raising money from investors across a loosely defined region that includes Ohio, Michigan, Pennsylvania and New York. Once capitalized, the fund will invest in companies from the same area.
"Akron has been trying to get a venture-cap effort for years and it's never worked," says Victory, who is helping to spearhead the local fund. "This will work."
Managing partner of DCC Growth Fund is Donald Murfin, founder of Lubrizol Enterprises Inc. For 20 years, Murfin has been involved in venture-capital initiatives, including New Enterprise Associates V & VI, one of the largest venture-capital funds in the nation. His focus has been on early to midstage companies in biomedicine, health care and materials technologies.
Murfin says the new fund will be of interest to businesses with capital needs that are seen as too risky by banks.
"There are a lot of venture funds out there," Fitzwater says. "But the beauty of this one is the leverage with the SBA."
For every $1 raised by Cascade CDC and the other CDCs in its region, the SBA will come up with $2. So the Midwest goal of $15 million (it started at $10 million but Victory is confident she'll surpass it) would provide a total of $45 million for investment throughout the region.
The final steps to launch the fund will occur in July. "Shortly after that," Victory says, "we'll start looking at deals."
She adds that Cascade's role in the new fund came at the suggestion of Gil Goldberg, director of the SBA's Cleveland district. "He said he wanted us to consider becoming a high-volume CDC. They gave us a challenge and we took it. But in order to do that, we had to change our mindset," she says.
One of the biggest changes was an end to the formal relationship between Cascade CDC and the Akron Regional Development Board.
Until this spring, ARDB housed Cascade CDC and paid a portion of the salaries for its four-person staff.
"A chamber is different than a CDC," Victory says. "We had a different geographic area than the ARDB before. Now we're even more of Northeast Ohio and into Pennsylvania, Michigan and New York."
Fitzwater says Cascade Capital will continue working with businesses with other financing tools, such as 504 loans and revenue bonds.