By RoseAnn B. Rosenthal, President and CEO
States across the U.S. and countries around the world all want a thriving economy that supports not only existing business, but also promotes the creation and growth of new business. The hope for local communities is clear, more business means more jobs for residents, more revenue to support local infrastructure and the potential for new ideas, innovations and opportunities for future generations.
Here in Pennsylvania, our goals at Ben Franklin Technology Partners are quite similar. For more than 30 years, we’ve worked to promote technological innovation and stimulate job growth and economic well-being across the commonwealth. During that period of time, our strategy has worked and Pennsylvania has seen increased employment. We’ve become a guiding example for other states to follow and our efforts are recognized on a global scale.
And yet not every young tech company with potential survives. Why is that? How can we ensure the better survival rates for innovative companies? What’s the environment here in Pennsylvania? Here are four reasons why Ben Franklin is Pennsylvania’s best option to help tech startups survive:
1. Young Companies Need Help Planning: To be clear, all businesses, new or established, need clear short- and long-term planning. But young companies face the added risk of inexperience and not always having the benefit of being able to pull from existing plans that have produced results.
At Ben Franklin, we surround our clients with the planning resources and tools that help them map out a path that is unique to their business, market-driven and focused, and draws from decades of best practices and success. This type of assistance is a valuable community in the business world, with many consultants requiring fees that are well beyond the capabilities of most young businesses. Not only do we provide these services as part of investment in local businesses, we focus on ensuring that our clients can maintain their success after they’ve established themselves and “graduated” from our programs.
2. Young Entrepreneurs Need Mentors and Guides: Good leaders make sound decisions on behalf of their companies and its employees. From finances, to personnel matters, these decisions impact every aspect of their business. But emerging leaders require development and guidance as they navigate the new business paths and opportunities.
Ben Franklin clients benefit from experienced leaders who have proven track records in strategic planning, management, marketing, finance and a host of other disciplines. These established leaders work with young entrepreneurs to impart their knowledge and experiences, creating a sort-of “masters” programs for clients. Imagine being able to regularly meet with many of the most respected business minds in your community and having access to an established network of visionaries and influencers. That’s what Ben Franklin provides to innovative young companies throughout Pennsylvania.
3. Startups Need Capital (and more): With few exceptions, most startups do not enjoy an abundance of capital and face challenges that include a lack the revenue or cash flow. Just like young children need an abundance of resources and patience to build their strength, grow and thrive, startup companies also require a lot of support during their formative years.
Overhead and equipment costs can quickly deplete cash reserves, cutting into a company’s ability to make the necessary investments in product and service improvements. While providing funding for clients is part of what we do, it’s equally important that we foster environments where companies can offset expenses by sharing work space, resources, access to equipment and a network of experts whenever they need. Unlike other institutions that seek substantial profit in a short time frame, Ben Franklin's investments are phased and milestone driven. The entrepreneurs with whom we partner must check in with us quarterly, prior to the next check being issued. This approach helps our clients be successful, and helps make Pennsylvania successful.
4. We’re the Right Partner for Pennsylvania: As mentioned, our goals are different than banks or other investors who are typically looking for a return on their investment as quickly as possible. Our objective is sustainability and creating fertile ecosystems where businesses can grow and thrive. While we pride ourselves on our return on investment for the state, generating $3.90 in additional PA tax revenue for every state dollar invested, our goal is to create jobs. This makes Pennsylvania more attractive to entrepreneurs, to existing companies, and ultimately to job seekers.
Our investments have generated 4,182 jobs in client firms, an additional 7,225 spinoff jobs across Pennsylvania --- jobs that would probably not have existed except for Ben Franklin intervention and investment. These jobs pay 52 percent higher than the average private nonfarm salary in the state, and are exactly the type of jobs we need to more of to help keep young families happily living in Pennsylvania.
While we’ve seen evidence time and again that Ben Franklin works for Pennsylvania and is viewed as the gold standard by which tech-based economic development is judged, all that we’ve accomplished over the past three decades is now at risk.
Competition for cutting-edge business is fierce, and states are working to attract our homegrown talent like never before. Innovation is happening all around us and neighboring states are increasingly capturing a disproportionate share of economic growth. Despite the increased competition, funding for Ben Franklin has decreased by more than 50 percent since 2008. Our funding increasingly trails our neighbors in states like Delaware, Maryland and Ohio, and among the 12 most competitive states focused on this type of funding, some state’s investments are nearly triple Pennsylvania’s.
So what’s at risk of being lost? Everything.
The planning, mentoring, guidance and capital startups need is at risk. The ability to invest in new companies, or better invest in existing clients is at risk. The local businesses we depend on and the jobs they bring are directly in the crosshairs of this funding approach. As for the young workforce we’ve educated in our school districts and universities and worked hard to cultivate for our communities? We risk losing them forever as they pursue opportunities elsewhere and never return.
Ben Franklin is underfunded. Additional funding is essential to remain competitive, attract investments, and drive innovation by funding and supporting entrepreneurs to enable them to grow rapidly. There is reason why Ben Franklin’s work is in high demand; because it works. It’s time to bring more Pennsylvanians into innovative economies, both to stem population loss and to address the demand for talent. An investment in Ben Franklin is an investment in Pennsylvania’s economic success.