The Columbus Region has long been a hub for some of America’s oldest and most formative industries, from manufacturing and transportation & to retail – but the last two decades have proven that alongside heritage companies and household names, disruptors can thrive there, too. From its first IPO back in 2016 to the state of Ohio’s largest in 2020, a new generation of tech companies in Ohio’s capital are growing bigger, scaling faster and innovating across industries ranging from healthcare to insurance, all with one thing in common: they’re part of a rising tide.
A Capital with Capital
The Columbus Region’s venture capital (VC) sector is a catalyst for tech companies in Ohio that are transforming and digitizing services across a spectrum of industries – and giving weight to the argument that you don’t need to be on the coasts to secure funding and scale your company.
Drive Capital, for instance, was founded to challenge the idea that tech startups only exist in Silicon Valley. Where did the ex-Sequoia VCs go to make that point? Columbus, Ohio, of course. In 2020, the firm closed two new funds for a total of $650 million. Rev1 Ventures, another Columbus-based VC with $100 million in capital under management, has been launching and growing tech companies around Ohio as the state’s most active seed investor for six years.
2020 was the best year yet for the Columbus Region’s venture capital market, bringing in a record $671 million in funds to startups, surpassing 15 larger metros and ranking it in the top 20 among metros over one million residents. Investor confidence in the region was also rewarded in 2020, with milestones among tech companies in Ohio including the Nasdaq debut of app-based automotive insurance provider Root Insurance, marking the biggest IPO in Ohio history with a valuation of $6.7 billion; healthcare startup Olive.AI’s $1.5 billion valuation, joining CoverMyMeds and Root as a homegrown unicorn insurtech innovator Bold Penguin’s acquisition of RiskGenius and Xagent and prescription delivery startup ScriptDrop’s $15 million funding round after COVID-19 caused its revenue to triple, allowing for expanded integration with pharmacies and courier services like Uber.
There were several factors behind the record-breaking year. The global pandemic accelerated the digital transformation of sectors such as healthcare, insurance and transportation, all of which are heritage industries and also where tech companies in Ohio are most active. This stable foundation – combined with the Region’s strategic location and growing talent pool – placed Central Ohio in a strong position to capture and capitalize on this influx of funding. The future of VC in the Columbus Region looks bright as well, with Drive Capital Co-Founder and Partner Mark Kvamme sharing in a recent Chief Executive interview that “‘the next technological transformation’ will happen in the ‘consumer packaging, manufacturing, insurance, and healthcare services companies of the Midwest.’”
Rich pools of high-quality talent from regional universities and the explosive growth of millennials have drawn Google, Facebook and Amazon to the region, as well as many other established tech companies. Ohio’s low operational costs have only contributed to the business boom. While household names come for the talent, startups also benefit from this same world-class workforce, where 42% of individuals moving to the Region are college graduates and more than 134,000 college students represent one of the highest concentrations of degree-seekers in the U.S.
When it comes time to scale, Columbus Region startups have high-quality talent at their fingertips: in 2020, CBRE ranked the Region the no. 1 small market for tech talent in the country. Healthcare software firm CoverMyMeds, for instance, is one of the Region’s fastest-growing employers and made more than 300 hires in 2020. In 2021, the company will open the first of two buildings on their new 418,000-square-foot, $240 million headquarters campus to accommodate an expected 1,500 employees.
Big Brands Buy In
In the Columbus Region, sources of support for emerging entrepreneurs are not limited to VCs alone: the Region’s major companies and institutions are backing the startup community, too, keen to invest in and help shape the future of their fields.
Support for tech companies in Ohio comes from bedrock industries. In the insurance sector, insurtech company Beam Dental raised $80 million in 2021 – doubling its outside investment raised over nine years – with the help of Nationwide, one of the largest insurance and financial services companies in the world that got its start in Ohio nearly a century ago. In the healthcare space, The Ohio State University’s Wexner Medical Center has adopted Olive’s AI-powered software which helps hospitals automate routine tasks, ultimately redirecting billions in healthcare spending from administration to actual care. Even in retail, current and former executives from brands like DSW, Limited and Bath & Body Works have joined forces on the advisory board of MIVE, a new slow fashion startup that puts size inclusivity first with their augmented reality-powered e-commerce platform that measures every shopper virtually.
VC investors, major industry players and a strong talent pipeline come together to form a stable foundation on which tech companies in Ohio can grow – so for entrepreneurs thinking about where to set up shop: think less about the coasts, and more about Columbus.
Interested in the Columbus Region’s startup scene? Contact us today to learn how we can guide your company through the location decision process.