Cleveland startups raised $578 million last year

By Douglas J. Guth

Greater Cleveland is a wellspring of vibrant business growth and thinking, if recent fundraising news is any indication. According to fourth-quarter 2022 reporting by Venture Monitor, Cleveland-area startups raised $578 million in venture capital deals last year.

“Nearly double growth from the previous year is exciting. Based on Venture Monitor’s 2021 reporting, our regional startup community blew prior year figures out of the water. Give those founders a high five if you see them on the street,” says Ross Cameron, vice president of innovation and growth at GCP.

Nationally, venture capital investments declined during 2022, compared to 2021. The fact that startups across greater Cleveland captured record level investments in a “down year” nationally is a great feather in our cap, he adds.

“There’s a lot to celebrate. These startups span a variety of industries, and they are great examples of the sort of dynamic businesses that exist all across the region.”

Local companies in a variety of sectors — from healthcare to the fermented foods business — are creating an environment where groundbreaking ideas are bolstered by sustainability and supply chain revitalization.

“We’re going to see climate-tech as a category for continued growth in 2023 — globally, nationally and locally. As a region we’ve got a real competitive advantage in a great manufacturing base and universities in the region who are serious about solving for things like industrial decarbonization or sustainable manufacturing. If I were a startup sitting in Silicon Valley looking for edge, I’d be spending time in Cleveland,” says Cameron.

Medtech company MediView is part of Cleveland’s burgeoning innovation class, via an augmented reality platform giving surgeons a “3D x-ray” into a patient’s internal anatomy. The technology tracks soft tissue without invasive surgery, a boon for individuals requiring tumor biopsies and other potentially painful procedures.

“It’s like giving doctors an iPhone 14 Max from a rotary phone,” says Mina Fahim, named CEO and president of MediView in 2021 by founders Adam Rakestraw and John Black.

In practice, a surgeon dons augmented reality goggles to view a colorized CT scan overlaid on a patient’s body, allowing study of anatomy without having to make an incision. The unique platform has procured $16 million in total funding, with officials closing on an additional $10 million this year.

Located on the Cleveland Clinic campus, MediView partnered with a Findlay investment group for the lion’s share of funding. The coalition of regional business and healthcare executives was joined by the venture arm of Mayo Clinic in boosting the startup’s success.

“Fundraising is all about momentum,” Fahim says. “Our first pitch was showing this technology coming out of the most renowned healthcare institution in the world. The opportunity to invest in that work was very compelling.”

With MediView at the forefront, Fahim believes Northeast Ohio can be a pioneer in the surgical AR space.

“We’re showing people across the country that innovation doesn’t just happen in Silicon Valley — it happens in the Midwest as well,” says Fahim. “That’s something we’ll continue to champion as we enable this journey.”

A city of medical innovation

Lazurite is another Cleveland startup making life easier for surgeons, thanks to a wireless camera system that replaces the clunky wired cameras used during arthroscopic surgeries. Going wireless is safer, faster, requires less sterilization and is less expensive to use than wired systems, notes president Leah Brownlee.

Cleveland entrepreneur Eugene Malinskiy’s creation frees up practitioners to move easily around the operating room, a benefit that helped Lazurite’s ArthroFree Wireless Camera System receive FDA approval last March.

The Warrensville Heights company — a GCP 2022 Best of Tech winner — has also raised $25 million since inception, with another $7 million commitment on tap for 2023. Investment funneled into sales, marketing and product commercialization derives from Cleveland along with California, New York and Texas.

“Our end users represent a group of high-net-worth investors, mostly orthopedic surgeons,” says Brownlee. “Being in Cleveland and having access to hospitals and visibility at the surgeon level has definitely helped.”

Though Cleveland’s world-class medical institutions is another arrow in Lazurite’s fundraising quiver, Brownlee sees room for improvement in how the city markets itself.

“We don’t shout about our achievements as much as other regions,” Brownlee says. “It’s about supporting and bringing together that innovator and venture capital scene in Cleveland. We could even partner with other cities in the Midwest struggling with the same issues. It all comes back to that network effect.”

A future of innovation

Cleveland’s inventive aspirations are not relegated to the high-tech realm. Fermented foods company Cleveland Kitchen has grown into a national brand, landing at 341 on the list of the country’s 5,000 fastest-growing companies.

A portfolio of national accounts has allowed the former Cleveland Kraut to grow from $100,000 in retail sales in year one to $30 million in sales by the close of 2022. In recent years, the culinary brand’s added a flavorful assortment of kimchi products to its selection of signature sauerkrauts and fermented dressings.

A fresh, crunchy sauerkraut has done well to separate Cleveland Kitchen from competitors, with the company’s wares now available in 15,000–17,000 stores in all 50 states. Last year, the fast-moving food manufacturer acquired California-headquartered Sonoma Brinery to deepen its fermentation expertise.

On the fundraising side, the company has procured $25 million, a testament to a good product and a whole lot of legwork by founders including Drew Anderson.

“There were a lot of ‘No’s’ at the start, because sauerkraut is not the sexiest of investments,” Anderson says. “But we solidified our vision and strategy to build a platform around fermented foods.”

Running a manufacturing facility out of Cleveland’s Central Kitchen Food Hub further impressed investors interested in more than the city’s biotech assets.

“They understood that manufacturing — especially food manufacturing — is affordable to do in this region,” says Anderson. “There’s lots of smart people here, and a lot more money than people think. You’ve got to be persistent and continue to knock on doors.”

Locus Fermentation Solutions cultivates its smart investor base through data, specifically how its carbon-neutral manufacturing processes assists industries ranging from farming to oil production.

“We’re able to give people data showing we have technology that works,” says Locus CEO and chairman Andrew Lefkowitz. “It’s not a theory, it’s a business, so the more data points we have, the better.”

While the company has been challenged to attract talent on the C-suite side, Lefkowitz lauds Cleveland as a flourishing epicenter for exciting ideas.

“You’ve got major hospitals and universities here that are in the discovery process,” Lefkowitz says. “We’ve been courted by other regions, but Cleveland is a great place to raise a family and build a business.”

This sentiment can become more common, says GCP’s Cameron.

“Groups like Jumpstart and North Coast Ventures have been doing the yeoman’s work to promote the venture capital ecosystem in the region. The efforts are certainly bearing fruit. We’re seeing the long-term impact of programs like Ohio’s Third Frontier.”


Q4 2022 PitchBook-NVCA Venture Monitor | PitchBook

Greater Cleveland Partnership’s All In vision for a Great Region on a Great Lake has five key priorities: Dynamic Business, Abundant Talent, Inclusive Opportunity, Appealing Community and Business Confidence. All of our work ties back to these values. This story relates to Dynamic Business.


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