Liberal advocacy group says Ohio State University investment could mean millions for Kasich's friend

by MARC KOVAC CAPITAL BUREAU CHIEF Published:

Columbus -- A liberal advocacy group says a friend of Gov. John Kasich who came to Ohio to help privatize the state's economic development efforts could be making millions of dollars from an Ohio State University investment in a new venture capital firm.

Progress Ohio is questioning whether OSU agreed to comparable terms in its $50 million investment in Mark Kvamme's Drive Capital as were offered to at least one other public agency approached by the firm for funds.

A "summary terms" document obtained by Progress Ohio as part of a public records request included management fees and organizational expenses that would have totaled more than $9 million over a 10-year period if applied to the OSU investment. That's not including potential profit from Drive Capital's investments.

The exact terms of the OSU investment have not been made public. Documents released by the university are redacted, blocking full disclosure of management and other fees.

"I want to be very clear that Drive Capital left this [summary terms document] behind with [the Public Employees Retirement System of Ohio]," said Brian Rothenberg, executive director of Progress Ohio. "It did not leave this behind necessarily with OSU. We can't tell for sure, although many of the items in this document … appear to be some of the items that are in the OSU redacted piece."

Kvamme could not be reached for comment, via an email address posted on Drive Capital's website Dec. 9.

A spokeswoman for OSU declined comment on the specifics of the university's investment terms with Drive Capital.

"It is not appropriate for us to comment on OPERS decisions," Gayle Saunders, assistant vice president of media and public relations, said in a released statement. "We do affirm our decision that Ohio State has a legal obligation under the Ohio Uniform Trade Secrets Act not to disclose trade secrets."

Kvamme is a Silicon Valley venture capitalist who came to Ohio several years ago to join Kasich's administration, where he served as a jobs adviser and director of the state department of development.

He also was the initial head of JobsOhio, the private nonprofit created by lawmakers and Kasich to head the state's economic development efforts, shielding details about incentive negotiations from public view.

Kvamme left the JobsOhio post a little more than a year ago and is now a partner and co-founder of Drive Capital.

Rothenberg said OSU's investment in the latter should prompt an examination of state ethics laws to block officials leaving JobsOhio or other appointed positions from benefitting financially from their former positions.

"We have somebody who'd never been to Ohio or hadn't spent much time in Ohio, did not have a whole lot of contacts, came in for a dollar a year, made many contacts through JobsOhio with the business community and other wealthy folks in Ohio and turned around and resigned and three years later was able to get a contract which we know was a sweetheart contract …," he said. "That's a pretty big return for anybody anywhere in the country. I think he definitely cashed in on the relationships that he was able to develop in Ohio, better than most Ohioans could."

Rothenberg added that responses from OSU and other public agencies for records related to Drive Capital illustrated a misunderstanding or purposeful circumvention of the state's sunshine laws.

"... Different state agencies are interpreting public records law differently," he said. "… Some state agencies believe that they can for confidential reasons waive away public records access or find creative ways not to allow it. And it is something that the attorney general needs to look into and the legislature should look into."

Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.

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