Taking stock of the pluses and minuses of Cleveland's startup community

Startup veteran Mike Belsito, writing in VentureBeat, offers a “personal, honest assessment of Cleveland’s startup community” aimed at helping those in other Midwestern startup communities to “benefit by learning what’s worked here and what challenges still exist.”

The piece is pretty long and detailed, but he breaks it into digestible chunks with headings that include “There is capital here, but it’s not easy,” “The community can often feel disjointed,” “Cleveland isn’t as founder-led as other places” and “We’ve had big exits but need more.”

On the first point (capital availability), Belsito — the co-founder of Product Collective and co-organizer of INDUSTRY: The Product Conference, an annual gathering of technology-oriented product people — writes the following:

A common complaint from founders in Cleveland is that there’s just not enough capital here for them to fund their businesses. I’ve learned first-hand that this isn’t necessarily true. Sure, there is more capital available in places like Silicon Valley or other major tech hubs. But there are funding sources here. There are a few traditional venture capital firms like Zapis Capital, Mutual Capital Partners, and others. FlashStarts and the recently added Cleveland branch of Plug and Play offer capital, mentorship, and office space for pre-seed startups through their accelerator programs. …

So capital is here, but founders’ complaints aren’t completely baseless. Oftentimes, it can be extremely difficult and cumbersome to access. In other locales, companies may be able to find $500,000 in seed funding from a handful of angel investors who are willing to cut quick checks after some reasonable due diligence. It’s usually not that easy in Cleveland.

Later in the piece, he offers praise for institutions including JumpStart, StartInCle (a new initiative formed to make Cleveland a more founder-driven startup community) and Techstars.

He also takes note of “several meaningful exits” in the past few years: Oracle’s acquisition of TOA Technologies, Rakuten’s acquisition of OverDrive, IBM’s acquisition of Explorys, and McKesson’s purchase of CoverMyMeds for over $1 billion.

“The founders of those companies could turn into the next crop of angel investors and mentors,” he writes. “It’s not yet clear whether Cleveland is seeing those potential benefits materialize quite yet. However, in order to continue to thrive as a community, we’ll need more of these success stories.”

Belsito concludes, “Cleveland isn’t the perfect startup community, but it has certainly come a long way in the past 12 years. And with its recent crop of successes and its founders starting to really step up and show leadership, there’s a lot to be hopeful about.”

Another Cleveland business leader — Todd Leebow, president and CEO of Majestic Steel USA, a steel service center and master distributor of steel — uses the national forum provided by Business Insider to argue that it’s time to “defend ourselves from China’s war against American steel.”

He starts this way:

There is a trade war against our domestic steel industry and communities across America are feeling its effects. We aren’t just competing against other companies — we’re competing against other countries. As US Commerce Secretary Wilbur Ross noted, “our steel industry today is under assault from foreign producers that dump and subsidize their exports.” And you don’t need to do much more than glance at recent production data to get the full story.

Bethlehem, Pennsylvania’s 16 million tons/year capacity plant closed. A 3.5 million tons/year steel mill in Sparrows Point, Maryland, collapsed. Right here in Ohio, two facilities responsible for roughly 1 million tons/year in Lorain and Warren came crashing down. Just about an hour outside of Majestic Steel USA’s Cleveland-based headquarters, the one-sided war cost the city of Youngstown alone more than 40,000 manufacturing jobs and $414 million in personal income.

Our reduction in production paved the path for countries like China to claim America’s mantle as the world’s foremost exporter of steel.

The efforts of past administrations “have proven ineffective as steel imports into our country increased 25 percent in the first half of 2017 year alone — accounting for the historically high rate of consumption of 28 percent, according to a Majestic Steel USA analysis,” Leebow writes.

He contends that as China effectively evades tariffs, the United States “can no longer evade its responsibility to our steel industry and the workers it employs. And so, guided by next-generation leadership, we must finally fight back in this trade war. Historic levels of foreign steel consumption must be met with historic efforts to help America reclaim our position in the international steel market.”

The Department of Commerce last month “took an important step forward in doing just that by combatting the foreign circumvention schemes we’ve seen in Vietnam with appropriate duties.”

He calls on the government to exercise “the little-known but tremendously consequential Section 232 authority of the Trade Expansion Act of 1962,” which is “an immediate, short-term fix that must be part of our long-term strategy; it would fundamentally unrig the unfair market for our domestic producers.”

China “is set to dominate global construction and financing of clean energy after record investment in overseas ventures and takeovers last year,” according to this Bloomberg story, which is based on a report from the Cleveland-based Institute for Energy Economics and Financial Analysis.

Bloomberg says the institute reports that China, the world’s biggest energy user, “spent $44 billion on large, international clean energy projects, and mergers and acquisitions in 2017, up almost 38% from a year earlier.” China’s Belt and Road Initiative has driven $8 billion of solar exports and is proving a gateway to emergent sectors like energy storage, Bloomberg reports.

“As the global transition toward renewables gains pace and as battery storage and electric vehicles technologies pick up momentum, China is setting itself up to dominate these sectors globally over the next decades of this century,” according to the report released Wednesday, Jan. 10.

Bloomberg notes that China “was quick to reaffirm emissions reduction pledges after President Donald Trump said last year America would withdraw from the Paris climate agreement.” While China isn’t necessarily intending to fill the “climate leadership void,” it will be comfortable providing technology leadership and financial capacity, said Tim Buckley, the report’s co-author, in a statement.

Cleveland emerges as a bit of a Midwestern outlier in this REJournals.com story that looks at trends in national apartment rents.

The story draws on data from the 2017 Annual Rent Report released Jan. 3 by ABODO.

From the story:

According to the report, the national median rent for a one-bedroom apartment rose 2.4 percent throughout 2017. As of the end of the year, this figure stood at $1,040 a month. The median rent for two-bedroom apartments hit $1,252 in December, a jump of 3 percent from January of 2017.

Overall, apartment rents rose in 28 states last year, fell in 21 and remained unchanged in one, South Dakota. The states with the highest rents were all on the coasts, according to ABODO.

The Midwest saw a number of cities experience declines in rents.

Fort Wayne, Ind., “saw the biggest dip in rents, with its median one-bedroom rent falling 2.8 percent to $526 by the end of the year,” according to the story. Lincoln, Neb., came in second, “with its median one-bedroom rent dipping 2.2 percent to $673.” In St. Paul, Minnesota, the decline was 1.7%, while in Wichita, Kan., it was 1%.

Then REJournals.com adds this: “One Midwest city, though, did see a big increase in monthly rents throughout 2017. ABODO reported that the median one-bedroom rent in Cleveland rose 1.9 percent during 2017, ending the year at $657. The city saw the sixth-highest increase in rents in 2017.”