Columbus, Ohio, sits in the center of the state. Increasingly, it also sits at the center of the state's digital healthcare scene.
Gravitating toward Columbus: Health IT scene thrives in Ohio's capital
The majority of the $574.7 million that Ohio startups raised in venture capital funding in 2017 went to healthcare companies, which raised $396.5 million, a 206% increase over 2016, according to venture capital group Hyde Park Angels.
Those healthcare startups have a strong base in and around Columbus. "It's becoming more of a hub," said Tim Raderstorf, chief innovation officer at the Ohio State University College of Nursing. "There's a lot of buzz about the city itself and a lot of great energy."
Perhaps the most well-known healthcare company in the state is CoverMyMeds, which operates in Columbus. The company, acquired by McKesson Corp. in 2017 for $1.1 billion, deals in electronic prior authorization. "The pace of innovation is fast in Columbus," said Scott Gaines, senior vice president and general manager for CoverMyMeds. "There's a lot of collaboration there, and there's a highly educated and talented workforce."
Some of that talent comes from the large health systems in the area, including OhioHealth, Ohio State University Medical Center and Nationwide Children's Hospital. IT workers in general are 31% more concentrated in Columbus than in the rest of the country, and healthcare IT workers specifically are 26% more concentrated, according to Columbus 2020.
Startups and other companies also rely on talent from elsewhere in the state, which is home to 11.6 million. Cleveland Clinic is the second-largest employer in the state, with more than 50,000 employees.
"Because Columbus is geocentric to the state, talent can come from Cleveland and Cincinnati and other rural areas," Raderstorf said.
Reflexion Health, for example, got help from Cleveland Clinic. Researchers from the health system tested Reflexion Health's Virtual Rehabilitation Assistant, finding that the telehealth rehab technology increased therapy adherence.
Some companies, like Veeva Systems, are encouraged by the potential workforce and opened new offices in the state. "Columbus was attractive because of the talent pipeline," said Catherine Allshouse, global chief information officer of Veeva and manager of the company's Columbus office. "We wanted to choose an area where there were already strong businesses, a strong business community, and an education system producing top technology folks."
Though many Ohio companies are thriving, pulling in investments can be tough, some entrepreneurs said. "It's a little bit more competitive because there's less venture capital around," Raderstorf said. But, he pointed out, new venture capital firms have been popping up in the state. "The amount of venture showing up is growing quite a bit, but it's typically never enough."
If startups want to bring in big amounts in later-stage investments, they'll likely have to go elsewhere, said Wayne Embree, executive vice president at Rev1 Ventures, which provides venture capital funding and startup mentoring. But the earlier-stage funding opportunities in Columbus are strong, he said. His firm made 31 investments last year.
"One unique thing in Columbus is the extent to which the major corporations have been active participants in supporting startups," Embree said. "We have direct relationships with most of the local Fortune 1000 companies."
Still, funding has been slight for digital health companies. Four Columbus-based digital health companies received more than $2 million each in funding in 2017: PriorAuthNow, which received $3.6 million; Signet Accel, which received $8 million; Beam Dental, which received $4.5 million; and CrossChx, which received $5 million. That's three more companies than in 2016, when a single company raised more than $2 million, according to Rock Health.
Correction: Four Columbus-based digital health companies received more than $2 million each in funding in 2017, not two. Rock Health initially supplied incorrect information. The story has been updated with the correct numbers.
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