If you follow venture capital, you’ve no doubt heard the term “unicorn” referring to the rare (almost mythical) startup that reaches a value of $1 billion or more.
For all the tens of thousands of tech startups that have launched, only a handful reach a billion dollar valuation. On a global level, there are an estimated 168 venture-backed companies awaiting exit valued at $1 billion, but recent trends show that on average, only 25 unicorns will exit per year from around the world.
Now you can add one more company to that global list — CoverMyMeds, which is being acquired by McKesson Corp. for $1.1 billion. Founded in 2008, CoverMyMeds has grown to unicorn status by electronically automating the prescription medication prior authorization process.
The solution saves health care professionals valuable time and ensures that patients receive the medication they need to be well.
What makes CoverMyMeds unique is that it is the first unicorn launched in Ohio. While JumpStart is very proud to have invested in CoverMyMeds, the impact of having a unicorn in Ohio goes far beyond the specifics of one investment. In fact, it could change the startup landscape in Ohio forever.
So why are unicorns so important? First, they are typically associated with Silicon Valley, where venture capital investing thrives. Some investors might have thought a unicorn was not very probable in Ohio, until now.
The high-profile nature of a unicorn exit brings new attention to Ohio, and once people start looking deeper into our state, they’ll soon find there have been quite a few additional tech exits here of late. This includes startups such as CardioInsight, Knotice, Catacel, Explorys, Assurex Health and TOA Technologies.
Increased national attention from the investing community is important because the fuel our startups need to keep their momentum is venture capital — the vast majority of which still lies outside our region. It’s now proven that Ohio can produce a world-class success, which should help attract more investor interest to our state.
Having an Ohio unicorn changes the landscape for entrepreneurs as well. The CoverMyMeds team probably could have played it safer and still would have had a very successful exit.
But the team’s willingness to think the way world-class startups do is a big part of what led to a world-class outcome. It doesn’t mean that every entrepreneur should expect unicorn success, but it does means that every entrepreneur should aspire to deliver beyond expectations.
The model is working
Finally, it is important to acknowledge what an Ohio unicorn means to all of the stakeholders and supporters of entrepreneurship in Ohio, including Ohio Third Frontier.
For the past decade throughout the state, these funders, development organizations, investors and regional leaders have collaborated in hopes of driving economic impact through tech startups. The recent run of exits — capped off by the CoverMyMeds story — helps validate that this shared vision was accurate and that the model is working. ●
Jerry Frantz is managing partner, entrepreneurial services and investing, at JumpStart Inc.