IRS Ruling Allows Lorain County CC Foundation to Assist Entrepreneurs Through Unique Innovation Fund
Thursday, September 25, 2008
ELYRIA, OH - The Lorain County Community College Foundation is leading the way in assisting technology entrepreneurs in Northeast Ohio through the establishment of its Innovation Fund, which provides pre-seed awards to businesses at the earliest stage of their development.
The Innovation Fund, which promotes economic development by creating mutually beneficial partnerships and enhanced educational opportunities for residents of Lorain County and the Northeast Ohio region, is a result of a landmark decision by the IRS that allow contributions to the Innovation Fund to be fully tax-deductible.
Realizing the potential risks to a foundation’s tax-exempt status for supporting incubator activities, the LCCC Foundation submitted a special request to the IRS seeking permission to accept charitable contributions that would be used for the purposes of the Innovation Fund. In January of 2006, the LCCC Foundation received the positive ruling, a groundbreaking decision applicable only to the LCCC Foundation and is the only one of its kind in the nation.
The LCCC Foundation’s request to the IRS proposed a unique approach for leveraging philanthropic investments as a way to unite education and economic growth strategies. This model requires every financial award distributed to include an educational component for students and faculty, allowing them to experience entrepreneurship in action. The inclusion of this educational component directly supports the mission of both the college and its foundation, and therefore was deemed by the IRS as an acceptable philanthropic investment.
“The idea is to create a fund where individuals, organizations and corporations can make tax deductible contributions to help early stage entrepreneurs be successful, while providing an educational experience for students in entrepreneurship. The Innovation Fund supports a ‘grow our own’ strategy for business and job creation,” said LCCC President Dr. Roy A. Church.
The Innovation Fund uses funds from Ohio's Third Frontier Program combined with matching local support to make the awards. To date the Innovation Fund has received generous support from organizations like the Community Foundation of Lorain County, the Nord Family Foundation and First Place Bank. There are two types of support: the first is an award up to $25,000 to help validate the technology; and the second is a pre-seed investment of up to $100,000 to help validate the business concept.
“This is about investing in our strengths, it’s about seizing our opportunities, and it’s about unleashing the creativity and potential that’s right here,” Ohio Lt. Governor Lee Fisher said of the Innovation Fund. Fisher is also director of the Ohio Department of Development.
The Lorain County Community College Foundation Innovation Fund has awarded $700,000 to 10 technology start-up companies in its first three rounds of awards. These awards help fill the funding need for businesses that are at the earliest stage of development–the difficult point in a business’s growth before they are mature enough to attract angel investors and venture capitalists.
The 10 companies that received awards to date are:
• NanoMimetics, Inc. – $25,000 award. NanoMimetics’s technology is a patented
polymer coating that significantly improves the performance and lifespan of materials used in aqueous environments without the use of any toxicants.
• Vasolux Microsystems, LLC – $100,000 award. VasoLux MicroSystems is a medical device company developing next-generation diagnostic medical imaging devices.
• Wireless Environment, LLC – $100,000 award. Wireless Environment is a leading innovator and industry pioneer in the invention, design, and manufacture of efficient, long-lasting light bulbs using Light-Emitting Diodes (LED’s) as their light source.
• Axiom – $25,000 award. Axiom is a medical education software company that uses cutting edge 3D animation to teach difficult yet vital concepts.
• Collabotive, Inc. – $100,000 award. Collabotive has a patent pending system, www.ReviewView.com, that incorporates a number of innovative collaboration technologies for managing consumer reviews and ratings from multiple independent websites that do not have the expertise or web traffic to offer this revenue generating, traffic-increasing feature.
• CutterCroix, LLC – $100,000 award. CutterCroix engineers software for small to mid-size contractors that is simple, economical, mobile, scalable, and delivered as a subscription-based web application
• Segmint, Inc. – $100,000 award. Segment developed software, which will enable analysis of every aspect of a consumer’s spending habits, from a wide variety of data sources. Segmint will be capable of accessing consumer data down to line item detail with the ability to target groups of consumers ahead of their purchase decisions.
• Radiocarb Genetics – $25,000 award. Radicarb Genetics will manufacture safer, less radioactive infant formula and nutritional products for children that prevent genetic damage using soybean and algae protein grown with low radiocarbon CO2.
• Endotronix – $25,000 award. Endotronix will manufacture and sell implantable wireless sensors to medical device manufacturers for integration into their existing medical devices across multiple medical fields.
• Sensor Development Corporation – $100,000 award. Sensor Development Corporation will produce and market a new, versatile gas detection system for mold and mold-based toxins in the agricultural industry utilizing nano-crystalline technology.
“The Innovation Fund Award has had a significant impact on our ability to more quickly bring to market CutterCroix’s innovative software and services for helping contractors improve profitability. This award provides the runway to further refine key product features and complete the necessary marketing materials of our initial web-based software solution,” said Mark Slavik of CutterCroix.
The application process for the Innovation Fund is completely Web-based. Applicants are able to submit an application through the fund’s Web site. Upon submission, GLIDE and its regional partners representing a network of industry experts, entrepreneurs and investors employ a thorough due diligence process to assess both the technology and the business potential. In tandem, the LCCC Entrepreneurship Innovation Institute works with applicants to form a potential educational opportunity.
For more information about the LCCC Foundation Innovation Fund, please visit www.lorainccc.edu/if.