Ohio Third Frontier Update from Hicks Partners

Ohio Third Frontier Commission Considers 2012 Budget

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Throw out what you know about The Ohio Third Frontier Project (OTF) and make way for new vernacular and new programs. Gone are the research and development grants, Wright Projects, and clusters. Sustainability, Job Creation and Return on Investment are the new buzz words for the Third Frontier.

This week, the Ohio Third Frontier Commission approved a portion of the investment plan for FY2012. In total, OTF expects to spend approximately $185 million on technology based economic development efforts this year. The Commission tacitly agreed to most of the program provisions; changes to the program details may still occur after the Ohio Third Frontier Advisory Board has more time to study and discuss the plan.

Regardless of the details, the proposed program plan presented fundamentally changes the way OTF will distribute money. Monies will be split between new programs within three service areas:

· Entrepreneurial support

· Open Innovation
· Value Chain Development

The budget details are summarized below.

Entrepreneurial Support
Entrepreneurial Support will receive $68 million spread over five programs. Entrepreneurial Support Program (ESP) - $40 million Funds will be used by six existing ESPs to provide entrepreneurial services throughout Ohio. Some of the funding will be used for other new undefined activities. Pre-Seed funds - $17 million Monies will be made available to leverage private sector investment into existing and new early stage investment funds. Awards will range from $500,000 - $3,000,000 and require a 1:1 cash match. Micro Fund - $1 million This new fund will provide awards of $5,000 - $25,000 for new community based non-profit investment funds. No fund will receive more than $100,000 and each has to match Micro Fund monies dollar for dollar. Growth Fund - $10 million This new fund will make two investments of $5 million each and require a private match of 1:3 and an SBA match of 1:8. Thus, the state's $10 million investment will create $120 million of new capital available to Ohio companies. ONE Fund - TBD The ONE Fund will continue and expand in FY12. This program provides training for entrepreneurs. OTF staff is conducting an analysis and will recommend a specific budget in the coming weeks.

Value Chain Development

Support for value chain development will come in two forms: the new JobsOhio Network and the new Commercial Acceleration Loan Program. Approximately $49 million has been set aside to improve the value chain of Ohio businesses and attract new companies to fill gaps in that chain.

JobsOhio Network - $24 million

Funds will be provided to six regional organizations to support business retention, expansion and attraction efforts. Each regional organization is charged with boosting the economic development of its region and Ohio as a whole. OTF approved grants ranging from $1.6 million to $4.4 million for these Network partners.

Commercial Acceleration Loan Fund - $25 million

This new program is designed to provide loans to help companies move products and services into the market. Three different loan products based on the stage of a company's development and product's commercialization will be offered. Loan amounts will range from $500,000 to $3 million. Forgiveness of principal, deferred and/or balloon payments and low interest rates will be available.

Open Innovation

The OTF Commission will likely aside $65 million for Open Innovation initiatives to continue to encourage collaboration between companies, universities and non-profits. "Seekers" (Ohio for-profit company) and "Solvers" (Ohio for-profit company or non-profit research institute) who come together to pursue commercial opportunities can find funding through four new programs.

Technology Validation & Start-Up Fund - $6 million
These monies will be divided between two separate but connected funds: $3 million for Technology Validation and $3 million for Start-Up. Technology Validation grants of $50,000 can be sought by higher education institutions to fund validation activities. Additionally, new companies launched out of university technologies can compete for $100,000 grants through the Start-Up fund to move their technology along the commercialization pathway.

Open Innovation Incentive - $8 million
Through this program, a "Seeker" can win a $200,000 to $400,000 voucher to spend with a "solver" to address a problem prohibiting the seeker from launching a product. Seekers must contribute $2 for every $1 of OTF money.

Innovation Platform Program - $18 million
Funding will be awarded for operations, equipment and facilities for established technology platforms at higher education and non-profit institutions. These facilities must be used by for-profit industry collaborators. Awards will range from $1 million to $3 million and require a 1:1 cash match.

Industrial R&D Center Incentive - $25 million
This program is a re-vamped initiative designed to attract R&D centers to Ohio. The grants are up to $5 million and cannot exceed 15% of the prime investment amount.

Talent

One program that appears to remain untouched is the Third Frontier Internship Program which will have $3 million this year. Companies can still benefit from a grant of up to $3,000 per internship. These funds are deployed through regional partners.

Your Opportunity?

Ohio has been a leader in technology based economic development for many years and the Third Frontier Project has been called the most successful economic development effort in Ohio history. These changes are significant and can only suggest that Ohio will not rest on its successes but continue to push forward and drive technology development and job creation. Final plans and specific funding mechanisms will be determined in the coming weeks. We will monitor these decisions closely and provide timely updates.

The professionals at Hicks Partners have been involved with the Third Frontier Project since its inception and have helped secure millions of dollars for clients in many industries.

Please feel free to contact Brian Hicks or Emily Turner for more information about our Third Frontier and economic development services.

Hicks Partners, LLC www.hickspartners.com 800-556-0227