Issue: September 2006 Issue
A new fund for budding entreprenuers grows in Lorain County.
Lorain County Community College (LCCC) has long had a commitment to fostering entrepreneurship in Lorain County and Northeast Ohio. Last month, that commitment swelled by a half-million dollars.
The Lorain County Community College Foundation has established the Innovation Fund, which will provide pre-seed capital to entrepreneurs and emerging businesses to create enhanced educational opportunities for students and faculty at LCCC, says Don Knechtges, senior adviser for LCCC and the Entrepreneurship Innovation Institute, which includes the GLIDE (Great Lakes Innovation and Development Enterprise) incubator, among other training and development services for entrepreneurs, headquartered in the new Entrepreneurship Innovation Center to be completed in October.
In 2002, the LCCC Foundation submitted a request to the IRS to establish a charitable fund to help support entrepreneurs in the early stages of their businesses. After a lengthy four-year process, LCCC got approval for the fund – the only one of its kind in the country due to the fact that all contributions are tax deductible.
â€œThereâ€™s a tremendous need for this fund,â€ Knechtges says.
The LCCC Foundation, which has assets of more than $17 million, set aside $500,000 to start the fund and is now accepting contributions from the community. The Foundation hopes to raise $2 million in the next year, Knechtges says.
Typical grants will be between $5,000 and $20,000, but can go as high as $100,000. To be considered for a grant, entrepreneurs must: present a business idea that revolves around innovative, cutting-edge technology; match the grant dollar for dollar; and create an educational opportunity within the business to engage students and/or faculty. This educational opportunity could be an internship for an LCCC student, a research opportunity for a faculty member or any other hands-on educational approach.
The fund will make between 10 and 20 investments a year, depending on the demand, Knechtges says.
All businesses that receive a grant will become a GLIDE client company, meaning they will meet regularly with GLIDE representatives and those from the foundation and the college for assistance in getting the business off the ground. Additionally, businesses can colocate at GLIDE if in need of office space.
The LCCC Foundation will not have any ownership in the companies it invests in, however, it can receive a four percent Stock Appreciation Right. If, within five years of the investment, the value of the company should increase through other outside investments, the foundation has the right to receive money equivalent to four percent of that increase in value and put it back into the fund for future investments.
The Innovation Fund will start accepting applications in November.
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