Growing Greater Cleveland Companies Generate $424M In Economic Benefits
An economic impact study from The Center for Economic Development at Cleveland State University’s Levin College of Urban Affairs shows that young, high-potential companies receiving capital and/or technical assistance from Greater Cleveland entrepreneurial support organizations are generating impact in Ohio. Last year, 245 startups supported by Northeast Ohio seed funds, accelerators, incubators, or mentoring, recruitment and education programs collectively generated $424 million in economic benefits for the state. The growth and activity of these entrepreneurial companies and their suppliers resulted in $16 million in state and local taxes, a $142 million increase in household earnings and a total employment impact of 2,383 jobs.
The annual study looks at the economic contributions of tech-based businesses that have accessed the resources of the Northeast Ohio Entrepreneurial Signature Program (ESP), a coordinated regional network of entrepreneurial service providers funded in part by the state’s Third Frontier initiative. The report analyzes the impact of startup clients that received support and responded to a survey; reported some Ohio employment, payroll and/or expenditures in 2013; and certified their responses.
“ESP intervention comes very early in a company’s development, so when support organizations begin working with these startups, they may have only one unpaid employee—the founder,” explains Jerry Frantz of JumpStart Inc., the nonprofit designated by the state to lead the Northeast Ohio ESP. “Fast forward a few years, and those who’ve been able to continue their momentum have grown to have as many as 50 to 70 staffers.”
Further analysis of 44 entrepreneurial firms who participated in the study yearly between 2010 and 2013 reveals that, as this consistent subset of companies matured, so did their economic contributions; collectively, they increased their payroll by $21.6 million and overall output impact by 70% over those four years.
“Studies like this indicate that if new companies are able to access and leverage the resources they need, they can make contributions almost immediately and then can grow to create even more significant impact,” says Frantz.
All told, startups that received support from Ohio Third Frontier-sponsored organizations in Greater Cleveland have generated an impact of at least $1.1 billion since 2010, a number Frantz only sees growing if the continuum of available resources can meet demand.
“In the last two years, 167 Northeast Ohio companies got some of their first—or seed–funding, which means in the very near future there are quite a few entrepreneurs that will be in search of their first customers, tasked with finding skilled workers and seeking significant funding,” says Frantz. “Ensuring the full potential of businesses like these is realized is critical to enhancing the economic vitality of our region and our state.”
To read the entire 2013 Economic Impact of JumpStart Inc. Portfolio and Client Companies report, click here to download the PDF.