off and running: six startups to watch in 2015

Cleveland's entrepreneurial scene is increasingly vibrant, with new small businesses and technology startups being launched at a fast clip. While it takes a good idea, a lot of hard work and, ideally, some strong financial support and mentorship to get off the ground, some businesses take off faster than others.

Here are six companies started in the last year that are poised for rapid growth in 2015.

Vestor allows the average person to invest in real estate development projects. Founded in May 2014 by Matthew Moss and Jeff Chen, Vestor takes a crowdfunding approach to investing in real estate.

Moss, who previously worked as a Project Assistant for the City of Cleveland’s Department of Economic Development, noticed that developers often had trouble finding investors for their projects. “More projects were coming for assistance than we had time or resources available,” explains Moss. “I thought, why can’t we invest in these projects, even with a couple thousand dollars.”

With that, Moss and Chen, who previously worked for the successful Cleveland startups Tackk and FormFire, launched Vestor. The concept allows people to invest in real estate projects by purchasing shares in an investment vehicle. “Our goal was to see what the demand is for these types of assets,” says Moss.

Moss and Chen are targeting young professionals and other investors who want to support downtown’s redevelopment efforts. “The young professionals are most connected to the downtown revitalization,” says Moss. “Seasoned investors don’t know who to talk to. They said ‘I want to put my money in downtown Cleveland.’”

The model also works well for first time investors who want to learn the process without taking big risks. “You can invest a couple hundred thousand or a couple thousand or even a couple hundred,” Moss says. "Then you can follow it and see where it goes.”

Looking ahead: Crowdfunding for real estate development is taking off on the coasts, says Moss, and Vestor has had significant interest from local developers and potential investors.

Vestor currently has three major projects in the works. The company is running a $250,000 debt equity raise for Forest City Brewery in Duck Island. The brewery got its name from an establishment of the same name that operated from 1839 to 1880. The new venue aims to recreate the look and feel of the original in a modern context -- with solid oak, turn-of-the-century ice boxes and a bar and beer hall tables made from salvaged wood. Forest City Brewery is being built on the site of the Silberg Brothers Beer Garden, one of the oldest breweries on the near west side. Investments start at $5,000 with an eight percent projected return.

Vestor is also involved in a $7 million campaign for the Le Meridien Hotel planned in the Gateway District. The third project has not yet been disclosed. 

“People should watch us because real estate crowdfunding is a budding industry, and Cleveland has the potential to be a great city for new industries,” says Moss. “We are a tech business that wants to change how people connect to the physical world around them, and we want to use that to help other businesses, particularly non-tech/manufacturing businesses, start and grow in Cleveland.”

Lufthouse provides a customizable application based on proximity, allowing users to get personalized information sent directly to their smart phones. The technology is being touted as perfect for museums and trade shows. Lufthouse allows companies or institutions to communicate directly with potential customers through iBeacon and proximity-based Bluetooth Low Energy (BLE) technologies.

“Consumers can get the scoop on your company, product and promotions without ever having to spend valuable time speaking with a representative,” explains co-founder Joan Soskin.

Soskin caught the attention of FlashStarts co-founders Charles Stack and Jennifer Neundorfer, and in May 2014 Soskin and co-founder Lauren Wyeth started Lufthouse. The company has worked with Western Reserve Historical Society on projects like the Euclid Beach Carousel – each horse broadcasts a story – and the 1964 Browns Town exhibit; and CityProwl on its walking tour of the Arcades and other projects.

Looking ahead: Lufthouse has plans to go national in 2015. “This year will be an important year to expand, as we're seeing major players [such as retailers and sports venues] use this location-based technology for advertising,” says Soskin. “Our platform is uniquely scalable and easy to use, but achieving a broad user base in Cleveland will be a major milestone for us to hit in the coming year.”

When Kritika and Josh Cerreta got engaged a year ago, they quickly decided they wanted guests to make a donation to a cause rather than spend money on traditional wedding gifts. The average wedding costs $55,000, says Kritika, yet there is no easy way for guests to donate money. “I just wanted to support a charity with all this money I’m spending, but I don’t want it to be hard,” she says.

KnotProfit is their solution: an online wedding planning site that allows users to create donation-based registries, buy donation-based wedding favors, and even select vendors who will donate a portion of their profits to the charity.

“We allow couples to plan their wedding, but everything goes to charity,” explains Cerreta, elaborating that guests can make donations in lieu of wedding gifts and vendors contribute a percentage of their profits towards a nonprofit or social cause. “We’ve never had a vendor say no to the donation.” The company has a national client and vendor list, especially in the Cleveland and Boston areas.

The Cerretas’ wedding guests donated money to rebuild the kitchen at Kritika’s grandfather’s school in India. Their story will be told in a number of wedding magazines this year, including the January issue of “Style Me Pretty.”

Looking ahead: KnotProfit plans to raise awareness about alternative weddings in Cleveland in 2015. “We decided to add a new spin to the local area’s bridal events in 2015 by focusing on hosting eco-friendly and socially conscious bridal markets, wedding DIY workshops and wedding expos with local wedding vendors,” says Cerreta. “Most importantly, every event will support a Northeast Ohio charity.”

The first event KnotProfit will host is Oak & Honey EventsRecycled Wedding Boutique, which takes place on January 25th at Red Space at Hotcards.

Animal Oralectrics
Animal Oralectrics keeps dogs’ teeth clean and prevents periodontal disease under the guise of a chew toy. Founder Paul Ruflin developed the Zumby based on technology used in a human mouth guard-like device that uses a low-frequency electrical current to kill oral bacteria and prevent gum disease. Ruflin licenses the technology from Biolectrics, another Cleveland company that makes the human version.

“It works like a dog toy, but really is a device that helps with gum disease and bad breath,” explains Ruflin. “This kind of complements brushing and dental cleanings, but most people don’t do that for their dogs.” The toy is made from a non-toxic rubber-like material that can stand up to a dog’s chewing.

Ruflin has been working on the Zumby for almost two years out of the MAGNET offices. Now the product is ready to hit the market.

Looking ahead: Ruflin says the Zumby will be out by July. He’s been raising capital and received $125,000 from the North Coast Opportunities Technology Fund in November. Ruflin has chosen an injection molding company, Molding Dynamics in Burton, and is close to selecting an electronics fabricator.

Zumby will first be available for sale on the Animal Oralectrics website and in pet stores later this year.

Nikola Innovation
An avid cyclist and roller blader, Nick Stevovich wanted to find a way to increase his performance and alleviate leg fatigue while bike racing. After trying different things, Stevovich developed an improved bike pedal that uses some of the concepts of rollerblading.

Nikola Innovation’s (formerly Motion Resolution) Zivola bike pedal changes the stroke cycle, has greater efficiencies and uses different muscles for greater speed. It distributes the work of the legs more evenly, and the pedals stride in and out in a skating motion.

Stevovich makes two versions of the pedals: one in stainless steel and one in lighter weight titanium for competitive racing. The pedals fit on any bike and look similar to traditional bike pedals.

Stevovich launched the Zivola pedal in September at the Interbike conference in Las Vegas and had a positive response. “More than 200 people came through the booth,” he says. “When you think about something for five years and then it’s actually happening, it’s really exciting.” Stevovich has received orders from all over the world since he opened online ordering the day after Thanksgiving.

Looking ahead: Stevovich is currently developing a bike pedal for the casual rider. “I was going for performance, but people always said how comfortable it is,” he explains. “It helps with knee pain, hip pain, and overall joint pain. And you don’t need bike shoes because it’s a flat pedal.”

Nikola Innovation plans to send its pedals to pro bike teams this year in order to secure sponsorships. The pedals are sold in bike shops in Ohio, New York, Oregon and Florida. “Our goal is to be in all 50 states by the end of 2015,” says Stevovich. “And we want to continue most of our assembly here in Northeast Ohio.”

As a youth hockey coach for 20 years, Don Harkins is all too familiar with the headaches associated with booking a hotel for team travel. There are issues like getting the entire team booked in the same hotel at a reasonable rate and finding a hotel during a larger tournament, just to name a couple.

After organizing and booking hotels for a showcase in Detroit two years ago, Harkins and his wife, Kim Kubiak, figured they could make a business out of organizing team travel details. So they formed TeamInn in 2013. The company streamlines the group booking process – negotiating rates, booking everyone in the same hotel and making sure the team manager’s room is booked and paid for.

“If you travel as a team, the coach wants to have the team members at the same hotel,” explains Harkins. “We take it out of the parents’ hands and put the power of reservations in the manager’s hands.” The company has partnered with more than a dozen hotels. Harkins and Kubiak make their money through commissions, a portion of which TeamInn shares with the tournament directors.

TeamInn is the only group booking company with a mobile app, which helps users manage their reservations. “Our rates are always below the others,” boasts Harkins. “And we get free perks for the teams, such as free rooms for the coaches or food coupons on the back of the team cards. We provide all that and pass it on to the director to show the economic impact.”

TeamInn went through Bizdom’s mentoring program, and received the maximum investment for its business model.

Looking ahead: TeamInn is on a trajectory to serve not only youth sports teams, but any group needing a block of hotel rooms “For just two people, we’ve grown pretty big in a year-and-a-half,” says Harkins. “We made $354,000 last year and we’re on track for $1.5 million in contracts this year and growing every day. There’s $8 to $9 million in the pipeline.”

Harkins plans to work on additional perks for TeamInn members, such as gas station rebate programs.

Karin Connelly Rice
Karin Connelly Rice

About the Author: Karin Connelly Rice

Karin Connelly Rice enjoys telling people's stories, whether it's a promising startup or a life's passion. Over the past 20 years she has reported on the local business community for publications such as Inside Business and Cleveland Magazine. She was editor of the Rocky River/Lakewood edition of In the Neighborhood and was a reporter and photographer for the Amherst News-Times. At Fresh Water she enjoys telling the stories of Clevelanders who are shaping and embracing the business and research climate in Cleveland.