Photo by Sam Allard
FlashStarts, the local startup accelerator and micro venture capital firm which announced last week that it would pivot into corporate consulting, announced at the 2018 conference that it would create a $6 million pot to provide seed funding for blockchain startups.
When reached for comment last week, however, Flashstarts CEO Charles Stack said that while this pot remains "open to investors," they had "not been successful in reaching [their] $6 million goal." Nor, crucially, has the pot invested in a single company.
It turns out that creating a fund for blockchain startups is challenging for many of the same reasons that maintaining an early-stage startup accelerator is challenging.
According to Stack: "Local investors are generally more risk-averse than elsewhere. There is no coordinated local program to attract and retain startups. Our institutions are generally too focused on building entrepreneurship centers and NOT on entrepreneurs. Our local corporations have been disinterested in working with local startups."
That analysis is consistent with a Crain's report today, which announced the formation of a new nonprofit called OhioX which wants to build unity among the state's high-tech entrepreneurs.
"Initiatives like the one surrounding Blockland, which dreams of a Cleveland tech mecca, sometimes feel mismatched with reality when considering the region's struggles to grow and retain new tech companies," reporter Jeremy Nobile wrote. "That can be chalked up to any number of nuanced reasons — a shortage of general support and motivated investors among them."
A shortage of motivated investors certainly didn't prevent the announcement of major investments last year. In addition to FlashStarts, the local accelerator JumpStart announced that it would devote serious resources to blockchain. On the opening night of the conference, JumpStart said it would be partnering with Ohio Third Frontier on a $100 million fund for blockchain companies in the state.
When reached for comment, JumpStart CEO Ray Leach told Scene that when they made that announcement, they were anticipating that Ohio Third Frontier would announce an RFP to support blockchain seed funding in early 2019. But that never happened.
"We are now anticipating that [Ohio Third Frontier] will release an RFP in the first quarter of 2020," Leach wrote in an email. "If this timeline happens, we anticipate $200 million in new seed and Series A capital will form across Ohio in the first half of 2020 with ~$100M+ hopefully being headquartered or invested out of Greater Cleveland by JumpStart and a handful of other seed and Series A funds who are awarded monies from the state."
But this was news to Ohio Third Frontier. When Scene reached a public information officer there, we were told that no blockchain fund was currently in the pipeline.
"There is nothing upcoming that I'm even remotely aware of," said Elizabeth Colbert, with the Ohio Development Services Agency. "I've been working with Ohio Third Frontier for about six years now, so I'm pretty in the loop on what goes on. And there's no RFP regarding blockchain in the works in any way shape or form."
Without the joint fund, JumpStart did still invest in one blockchain startup over the last year: Axuall, a company that's working in the field of digital credentialing.
The Blockland initiative has itself undergone substantial changes since late 2018. From a multi-nodal organizational structure in which an enormous collection of civic and business leaders briefly concerned themselves with things like blockchain thought leadership, government relations and young professional attraction, the initiative now focuses exclusively on its two flagship projects: the annual Solutions Conference (the second iteration of which is happening right now at the Huntington Convention Center) and the City Block real estate project at Tower City.
The Blockland project manager hired in the fall of 2018 is no longer with JumpStart; a joint "digital futures" think tank at Cleveland State and Case still has the same level of funding and physical plans that it did when it was first announced (zero); and no one seems willing to hazard a guess about the current number of blockchain coders working in the region. The goal announced at last year's conference was to have 1,000 by the end of 2019.
Representatives at Tri-C, where a blockchain course was launched last year, did not respond by our print deadline to questions about the number of students who have taken the course and their success in finding work upon graduation.
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