Many of the people in charge of the Ohio Third Frontier program aren’t happy.

Several members of the Third Frontier Commission and Advisory Board expressed deep frustration over the relatively meager number of awards that the technology-focused economic development program has made during fiscal year 2012, which ends on June 30.

Even so, they aren’t yet ready to crank up the number of awards they make. First off, the Ohio Department of Development still is making adjustments in response to several changes that the commission made to the Third Frontier program a year ago.

Plus, the commission and its advisory board, which makes recommendations on which the commission votes, are raising new questions about how some of Third Frontier’s 14 programs are structured.

On Friday, June 22, during a joint meeting, advisory board chairman Mark Collar said he knew the meeting would be a difficult one.

“There seems to be as many points of view as there are people in this room on some aspects of (the Third Frontier program),” said Mr. Collar, a partner at Triathlon Medical Ventures of Cincinnati.

When he asked group members if they thought the Third Frontier program has lost some momentum, several said it has.

The commission has awarded about $40 million of the $190 million it set aside for fiscal year 2012, which ends June 30. They also voted to set aside an undetermined amount of money that will be used to fund for another six months several nonprofits that provide services to entrepreneurs through the Third Frontier’s Entrepreneurial Signature Program. That funding is intended to give the commission and advisory board time to discuss possible changes to that program. (Read more about that vote here.)

Disappointment abounds

Advisory board member John Huston said he was “saddened” by the “paltry amount of money” the commission has awarded. Technology companies, he said, that want to apply for money are confused as to what’s causing the hold up. “The joke on the street” is that the delays were caused by “saboteurs from Michigan and Pennsylvania,” said Mr. Huston, who founded the Ohio TechAngels, a Columbus-based group of individual investors that has in the past received money from the Third Frontier.

“Surely it isn’t Ohioans causing this to happen,” he said.

Likewise, advisory board member and Procter & Gamble executive Mark Peterson — who described the Third Frontier program as “wildly successful” — said the pace of awards has been “incredibly disappointing,” especially given that many companies still need help because of the recession.

Some of the delays are the result of several changes made to the Third Frontier program over the past two years, said Norm Chagnon, deputy chief of the Office of Technology Investments at the Ohio Department of Development. With the commission’s approval, the state added several new initiatives and changed others For instance, in some cases the commission will award loans to applicants instead of grants. Dr. Chagnon noted that the department is in the process of hiring people who could review loan applications.

Some of the changes were made to fit recommendations made by Mark Kvamme, who was appointed by Gov. John Kasich to lead some of the state’s new economic development efforts.

Though the fiscal year is about to end, the department just recently put out a request for proposals for its Pre-Seed Fund Capitalization Program, which provides funding to venture capital groups in the state. Several other RFPs have yet to be released.

Commission member William McCreary was among those unhappy about the delays created by the new structure of the Third Frontier program.

“Had we known the process would take this kind of time, I don’t think we would’ve supported it,” Mr. McCreary said.

However, a few members of the advisory board, including Barbara Snyder, president of Case Western Reserve University, said there is something worse than spending the money slowly.

“That would be using it in a way that doesn’t produce results for the people of Ohio,” she said.

Questions about data accuracy

Aside from the pace of spending, members of the two boards raised a number of other concerns related to issues such as the industries that the Third Frontier focuses on and whether it communicates well enough with JobsOhio, a nonprofit that Gov. Kasich formed to take over some of the Ohio Department of Development’s duties.

Several questions were related to the Entrepreneurial Signature Program, which provides funding to nonprofits that assist entrepreneurs, including Cleveland-based JumpStart Inc. and several Northeast Ohio organizations with which JumpStart works. That afternoon, the commission voted not to award the full $40 million set aside to fund the program in fiscal years 2013 and 2014. Instead, it voted to continue funding the nonprofits at previous levels through the end of the calendar year.

A few members of the advisory board and commission said there are lingering questions about the accuracy of the data provided by the nonprofits.

“Is there really inaccuracy in the data?” said commission member and Eaton Corp. executive Rick Fearon. “There have been questions raised by the public and others about that.”

Some vocal critics of JumpStart also have suggested that the information be analyzed by an independent auditor, an idea that advisory board member Thomas Brady brought up during the meeting.

“That’s what we do in business, right?” said Mr. Brady, president and CEO of Plastic Technologies Inc. of Holland, Ohio, near Toledo.

The boards aim to hammer out the issues at hand during an offsite meeting that will take place in either August or September.

“It’s time to do a meaningful, no-holds-barred offsite retreat to wrestle those issues down,” Mr. Collar said.

Source: Crain’s Cleveland Business: http://www.crainscleveland.com/article/20120625/FREE/120629894