NextPittsburgh: Innovation Works reports $372 million invested in Pittsburgh tech startups this year
By Michael Machosky | March 24, 2021
The past year was a disaster for so many industries, from tourism to restaurants. But for Pittsburgh’s tech startups, the progress continued — with some strategic assistance from Innovation Works (IW), Pittsburgh’s main nonprofit, early-stage investor for startups.
“I think we’ve got one of the fastest-growing entrepreneurial communities in the United States,” says Rich Lunak, president and CEO of IW.
It’s a tribute to the strength of the innovation ecosystem that IW has been nurturing since 1999 in areas from robotics and AI to life sciences and software.
Innovation Works’ strategic investments of $6.7 million in 94 companies in 2020 had quite an impact, according to the company’s 2020 Community Impact Update, which was released today.
“Those companies went on to raise money from follow-on investors to the tune of $372 million that, believe it or not, was a record year for follow-on funding in our portfolio,” says Lunak.
That translates to 2,737 well-paying jobs created and/or retained by IW portfolio companies. Twenty-six companies in IW’s portfolio have raised at least $1 million.
“We crossed $3 billion in follow-on funding since Innovation Works’ inception,” says Lunak. “That’s $3 billion of investment to impact southwestern Pennsylvania’s economy and grow it.”
Included in IW’s portfolio are software companies such as Maven Machines, which makes fleet management and dispatch software for trucking and logistics. That company had a breakout year, as did RE2 Robotics, whose robots with human-like robotic arms are used all over the world, doing everything from nuclear disaster cleanup in Fukushima, Japan, to underwater explosive disposal work for the U.S. Navy.
Other startups showing promise this past year include EKTO VR, which makes a wearable robotic boot for roaming virtual environments. There’s also Sparkwear, which makes Bluetooth-equipped, light-emitting interactive bracelets that help people connect and find things in common at special events — and spark conversation.
Many local companies found ways to address the pandemic directly or pivot their skills to meet its challenges.
Medical device company ALung Technologies was given FDA Emergency Use Authorization to provide a technology that could replace ventilators at patients’ bedsides to help them recover from Covid, “without all of the negative side effects of going on a ventilator,” Lunak says.
Lunak also points to CytoAgents, which is bringing a therapeutic for respiratory diseases, influenza, Covid and others to market; the company has received a large grant from the National Institutes of Health to accelerate clinical trials.
Yet another was Health Monitoring Systems, which was “one of the largest of the largest providers of real-time data around the number of Covid patients in hospitals, the number of ICU beds open [and] the amount of ventilators in use,” in more than 600 hospitals across the U.S., says Lunak.
When the pandemic first shut down much of the country, Innovation Works launched a Covid Resiliency Fund to help vulnerable early-stage tech firms. They invested $2 million in 49 companies to help them avoid layoffs and continue research and development.
One example of the life sciences companies to receive investment and assistance in 2020 was Impact Proteomics. The startup is able to take proteins out of cells to make biomarker and drug discovery faster.
A new accelerator, AlphaLab Health, started this past year as a collaboration with Allegheny Health Network (AHN). It supports early-stage startups in the life sciences by providing investment, expertise on how to navigate the healthcare system, mentorship, connections to potential customers, lab space, help from clinicians and the chance to access AHN’s vast clinical databases. This accelerator is located at the Suburban Hospital Campus in Bellevue.
Remarkably, 60% of companies that Innovation Works has invested in during the past decade has a founder or leader that is a woman and/or person of color. Though people of color represent 14% of southwestern Pennsylvania’s population, they represent 43% of the leadership in IW portfolio companies in the past 10 years.
That’s by design. Innovation Works has a number of programs that target the challenges faced by underserved communities, including helping them find mentorship and building a network of investors with a specific interest in diverse entrepreneurs.
“We run a really large internship program that seeks to place women and people of color into startup and tech companies here locally,” says Lunak. “So, in short, what it tries to do is build on-ramps to these opportunities for really everybody in the community.”