Shaker LaunchHouse Accelerates Startup Firms
Business accelerator offers support, office space for early entrepreneurs with the help of a public-private partnership
The six founding partners of Shaker LaunchHouse designed their entrepreneurial hub and support system to look and feel like it's a world away from Northeast Ohio.
Three years in, the group continues to offer seed investments and office space to budding businesses just like it planned. In the process, the partners created an atmosphere where software developers, architects, nutrition bar makers and aspiring rappers coexist and think little of it.
"(The LaunchHouse concept) is not something you see in the Midwest a lot," software developer James Gifford said at a LaunchHouse potluck lunch. "You see it in California and you see it in New York City.
"They're trying to bring the Silicon Valley model here to Cleveland."
You won't see any shirt-and-tie combinations at the LaunchHouse, but you will find plenty colorful furniture, glass windows, marked-up whiteboards and a dog or two. Though 30 startups call the structure at 3558 Lee Road home, founding partner Dar Caldwell said LaunchHouse has in some way invested in nearly 100 small Northeast Ohio companies. Its 30 portfolio firms have raised $4 million in follow-on funding and now employ about 50 people altogether.
In February, the Ohio Third Frontier ONEFund Accelerator program named Shaker LaunchHouse one of four premier accelerators in the state.
"We are the only place in Northeast Ohio where entrepreneurs can come to get a collaborative environment, resources and early stage investment," partner Todd Goldstein said. "The reason why Dar and I initially started the LaunchHouse is that nobody else is filling this gap in the region. We thought the idea of bringing resources, capital, working space, networking and educational events would really be a way to revitalize the region."
Good Greens is the anchor tenant. Founded by Shaker Heights resident Keith Pabley, the company makes nutrition bars that contain fruits, vegetables, protein and antioxidants. The bars are sold at Heinens, Marc's, Whole Foods and about 700 other retailers across the country.
Caldwell and Goldstein created the LaunchHouse concept a few years ago in a small office above a pizza restaurant in University Heights. They outgrew it and moved to a previously abandoned University Circle location, but that was soon demolished. At that point, Shaker Heights officials approached the group with an interest in their concept.
That initial discussion eventually led to a public-private relationship between the city and the LaunchHouse. In July 2010, Shaker Heights City Council planned to spend $100,000 on the environmental remediation of the Lee Road property. Demolition of the former Zalud Oldsmobile Dealership was a possibility, but the city bought into the LaunchHouse concept by September. Council appropriated about $400,000 in renovation funds in a five-month span to gut and rewire a structure Caldwell admits was "disgusting."
The LaunchHouse opened in June 2011, but the city reiterated its belief in the project at its most recent council meeting by approving a lease amendment and a second-floor build-out of the property to not exceed $150,000.
"We're keeping a great business in Shaker that we want to keep here," City Councilman James Brady said in May after the approval. "It was very well-received in (the city's finance committee)."
The LaunchHouse lease amendment gives Caldwell and partners the right to occupy the building without rent payments for a five-year term. The LaunchHouse will maintain the property as its primary place of business and will be responsible for utilities. Partners are not allowed to be employed by or invest in another "early stage incubator or business accelerator," according to the resolution.
The second-floor project will require a new roof and feature a separate entrance and electrical systems. Construction will begin in the coming weeks.
Caldwell said the the city's investment helps LaunchHouse's mission to keep startups from bolting for Silicon Valley or other areas they perceive to have more opportunities. He helped foster a laid-back, inclusive and collaborative environment as another incentive to keep businesses in Shaker.
"We don't care what you look like or dress like," Caldwell said. "You just need to be passionate and obsessed with what you're trying to create.
"We'll help you out on that path."
Check Shaker Heights Patch this week for information on a few LaunchHouse tenants.