Cleveland’s strong institutional investing ecosystem

A thriving city typically is one that attracts significant global capital investment. Cleveland has a rich history of innovation and investor capital attraction. Born during the Industrial Revolution, world-class entrepreneurs created companies that became global leaders and endured for more than a century.

Along with the growth of these companies, best-in-class service providers — banks, law firms, accounting firms and wealth managers — were founded in Cleveland, creating a highly sophisticated ecosystem that supported explosive capital formation, investment and generational wealth creation. Many of these Cleveland-based companies remain global leaders, and their rich legacy provides the foundation of Cleveland’s past and future success.

As the world economy transitioned from the Industrial Revolution, other cities emerged to attract capital to support new global companies in Silicon Valley, Boston, Austin and others. In the 1980s and 1990s, Cleveland’s highly sophisticated and accomplished corporations, investors and service providers evolved and maintained their global leadership by investing and participating in emerging markets. As the global economy expanded, new private equity investment vehicles were created to aggregate capital to fuel global growth.

Institutional investors who relied on a traditional mix of publicly traded equities and fixed income have steadily increased their portfolio allocations to private equity as the regulatory environment matured and transparency and outperformance have increased. As a result, many Cleveland-based private equity managers have emerged as global leaders.

The growth of these firms, which invest in both Cleveland-based companies and companies around the globe, has resulted in market-leading returns for investors and the creation of hundreds of new jobs for Clevelanders. They have also created a base of capital attraction to invest in new companies that are critical to Cleveland’s future growth.

As Cleveland endeavors to achieve the market leadership it enjoyed during the Industrial Revolution, its corporate and economic development organizations have devoted time and resources to attract capital investment for 21st century companies. Our existing legacy of sophisticated capital investment and management has created a fertile environment for future capital attraction and formation for start-ups and emerging companies.

I am chair of the Investment Committee of the Cleveland Foundation, whose $3.2 billion endowment is invested to ensure long-term income to help fund more than $120 million in grants annually.

Many Cleveland-based institutional investors have invested with local fund managers, driving a double-bottom line of investment growth and local company growth. Investing in local fund managers helps this double bottom line and helps create an equity investment ecosystem to support venture capital and early stage investments. Investing in Cleveland-based private equity firms allows fund managers to expose investors to opportunities outside of Cleveland, giving fund managers a chance to grow their firms, creating a pipeline of new jobs in the Cleveland market.

Assuming repeatedly strong investment performances by these fund managers, Cleveland’s private equity firms can continue to attract the support of institutional investors, both locally and worldwide, fueling liquidity into the market and strong job growth, metrics that lead Cleveland to become an institutional market, ripe for investment. ●

Daniel Walsh is Founder & CEO of Citymark Capital

Daniel Walsh

Founder & CEO