Cintrifuse has named long-time team member Sarah Anderson as Director of its Syndicate Fund
, the “fund of funds” designed to generate venture capital and resources for the Cincinnati startup ecosystem.
The for-profit fund is one of three major branches of nonprofit Cintrifuse’s work to support the startup and innovation ecosystem in Cincinnati in unique ways. The other two are services provided to entrepreneurs and the Union Hall building that houses Cintrifuse
, The Brandery
, multiple co-working startups and other related organizations like Flywheel Cincinnati
The $57-million Syndicate Fund was founded by the Cincinnati Business Committee in 2012 to invest in other funds instead of investing directly in startup ventures and made its first investment in 2013. Cintrifuse searches out funds around the country that believe in Cincinnati’s innovation ecosystem and are likely to invest in it, with the hope that when those funds do invest in local startups they’ll attract other investors into the mix.
This “syndication effect” is where the fund gets its name, Anderson says.
“We’re really looking for that ‘needle in a haystack’ fund that can provide strong returns in the region,” she says. “We are looking at funds that can really be building companies.”
In addition to the financial performance any investor expects, Cintrifuse uses its Syndicate Fund to build regional engagement of funds and a “return on innovation” for its backing limited partners — large local companies like Kroger and Procter & Gamble — that can also benefit from all the innovation coming from small startups and entrepreneurs.
To foster this kind of innovation and growth here, the Syndicate Fund adds a few twists.
Anderson says the best and most effective funds want “no strings attached” to their investments, so the Syndicate Fund chose not to require funds to re-invest in Cincinnati. Instead, she actively works with funds to develop relationships and make sure investors share Cintrifuse’s commitment to innovation across Greater Cincinnati.
Anderson also takes a hands-on approach to fostering and connecting with funds that fit Cintrifuse’s mission. Although the Syndicate Fund has invested in just 13 funds nationally, it has a network of 250 partners with which it actively engages. Cintrifuse has been able to bring a 7:1 return on its investments back to Cincinnati so far, and Anderson is looking to make sure that ratio gets even better going forward.
The Syndicate Fund will be finishing up Fund I around the end of this year and is already looking toward its next second round, Fund II. Anderson says that there will be tweaks and improvements based on what she and her staff learned in the first round, just as the Cincinnati entrepreneurship ecosystem is always learning and growing.
“There’s really not another model that we’ve been able to find like Cintrifuse,” she says.