February 26, 2010

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• Burton Dorion 1 year 6 months and 27 days ago

  

  Before looking to Ray Leach for advice on government funded investments in startups, you should look at his results. Since 2004 his organazation has spent over $60m but only $16m found its way into startup companies. The rest went to pay their high salaries, high employee count and overhead. Out of the 50 companies they have invested into since 2004, very few are on promising paths.
  
  Jumpstart's $11m budget is mostly funded by the state and only $3m of that was invested. Their overhead is irresponsible and insulting. Despite having almost no startup success himself, Ray Leach just gave himself a $30k raise to bring his total comp to $428k and the top $10 people bring home over $2.3m.
  
  If this was a private fund, the fact of not having one positive exit in 50 investments in six years would have caused a riot, the fact that 75% of the fund goes to pay salaries and overhead would cause criminal inquiries. however, since it is state money, no one seems to understand or care.
  
  There is nothing wrong with gov funds like this as long as the are operated like funds in the private sector by keeping only 2% of the total raise and 20% of the profits to fund overhead.
  
  There are groups like Jumpstart in almost every major region of the country. Most of them have produced stronger results and very few operate with more than 10% of Jumpstart's budget. The reason you don't hear about them is they spend their money wisely instead of employing a 5 person marketing staff like Jumpstart.
  
  I hope the people of Ohio will wake up.