When Ray Leach took the reins at JumpStart Inc. just more than a year ago, he knew the challenges the job posed. As a serial entrepreneur, he understood the barriers to entry any new start-up faces and the hurdles a CEO must clear.
“I’ve been an entrepreneur who started a company at a very young age with very little capital and I grew a small business and ultimately, it got much larger,” says Leach. “We’re looking for people who have ideas or talent in technology or intellectual property that can end up creating $30 (million) to $50 million companies.”
Leach began his career at IBM and later co-founded Publishing Solutions Inc., a systems integrator that was recognized by Case Western Reserve University’s Weatherhead School of Management as the sixth fastest-growing company in Ohio from 1990 to 1995. He sold that business in 1997.
He also founded Capella Investments Inc., a firm that provided angel and management consulting to start-up technology organizations. And he was the Entrepreneur-in-Residence for CommonAngels, the largest angel investing organization in Boston.
Today, Leach manages JumpStart, a nonprofit organization owned by founding entities NorTech (the Northeast Ohio Technology Coalition) and Case Western Reserve University. JumpStart invests in early stage, high-growth-potential companies. Early stage companies are defined as those with less than $10 million in revenue, while high-growth means the owner has a solid plan for reaching $30 million to $50 million in annual revenue within five to seven years.
JumpStart’s fund has $9 million in the bank and Leach hopes to raise an additional $9 million soon. The organization invests an average of $250,000 in a client company, with a potential investment range of $50,000 to $800,000.
To date, Leach and his team have put their financial backing behind five regional companies — Ayalogic, Day-Day Ltd., Embrace Pet Insurance, PreEmptive Solutions Inc. and Stanton Advance Ceramics.
Smart Business caught up with Leach to discuss his thoughts on entrepreneurship, managing a start-up venture fund and identifying the best of the best.
What lessons from your own business experiences do you apply to your job?
Many. It always takes longer than you would expect for you to accomplish your goals. That’s a fundamental truism across any entrepreneurial business. Most entrepreneurial organizations are run by optimists, and optimists have shorter time windows in their own minds than reality.
So the first lesson is that it’s always a little harder. There will be things that occur that you cannot anticipate ahead of time, and it’s going to take you longer than what you might initially have envisioned to accomplish your goals.
The second lesson is, you never do yourself justice if you dream small. One of the biggest lessons I learned early in my business was when I contemplated who I wanted for my board or what kind of company would be interested in my product or offering, that you have a tendency as an entrepreneur to sell yourself and your idea short.
So while it’s difficult, and while it may take you longer to get to where you want to go, that should not prevent you from going after the absolute most capable board member or investor that could bring the most significant benefits to your business.
Also, don’t be bashful. Go after a marquee player. You hurt yourself if you don’t dream big and try to find resources and relationships around your business that help you do that.
What are the key traits you find in entrepreneurs?
There’s no textbook entrepreneur. (They) come in all shapes and sizes and backgrounds and perspectives and disciplines. You look for people who can communicate, who have a vision, that are ethical and who have energy.
But they can be from any kind of discipline. They can be a housewife, a researcher at Case or a programmer working for a large company that wants to start a new one. Fundamentally, there is no textbook example of the kind of entrepreneur we’re looking for.
We’re more interested in individuals that have the ideas that can be significant wealth-creating entities. And we meet lots of individuals that have restaurants or have service businesses that are great entrepreneurs, but we don’t necessarily engage with those kinds of scenarios because we’re looking for things that could be $30 million to $50 million businesses.
I think there’s a big [misperception] about entrepreneurship, that entrepreneurs are born with everything they need to grow a fast-growing high-potential businesses. One of the reasons Jumpstart exists is that we fundamentally believe and know it’s true that you can meet a great Type A entrepreneurial person who may have the vision and the sales skills, and may have part of what that entity needs, but if that opportunity is actually going to grow and be a sustainable organization that can grow into a business of the size we’re going to focus on, they’ll need a lot more than just that.
We’re trying to bring the most critical resources that entrepreneurs we meet will need in order for them to actually be successful in the earliest stages of their development.
What are those resources?
There are three fundamental sets. First, we intend to act as a convener for all interested stakeholders in high-growth entrepreneurship in 15 counties across Northeast Ohio. So hopefully a year from now, people who approach or get engaged with JumpStart recognize that Jumpstart has the ability to connect people to great ideas and connect ideas to resources that are required for them to take the next step of their development.
The second piece is we have a team of individuals that have been involved in business development activities for start-up, venture-backed companies, as well as a handful of founders of former venture-backed companies, who are on a full-time basis advising and assisting, and ultimately mentoring and working with what our business plan calls for — 225 companies over the next three years.
Finally, we’ll actually be making investment decisions for the best of the best companies that we engage with and provide intellectual capital to. Our plan calls for us to invest $9 million in 40 companies over the next three years, and we’re going to invest in the businesses that we think have the greatest likelihood of attracting additional capital after ours as the company develops, as well as create economic wealth for the region.
So how do you identify which companies to fund?
It’s a huge challenge. Every 120 days we have an application deadline. We evaluate and score every plan and go through a process to try to identify the plans that have the greatest potential to generate long-term economic wealth.
We select those companies, do significant due diligence and ultimately make a decision on which of the companies we’d like to invest in by the end of that round. We’re the farm system for potential venture-capital backed companies in Northeast Ohio.
How to reach: JumpStart, (216) 363-3406 or www.jumpstartinc.org