Contributed by: Laura S. Eppler
April 16, 2019
This article was originally published by Network Magazine.
Launched more than 35 years ago, Ben Franklin Technology Partners was ahead of its time. In 1983, with steel and other industries in decline, unemployment was high, and Pennsylvania’s economy was reeling. The state needed a bridge between its struggling heavy manufacturing economy and the technology-based economy that would carry it forward. Enter Ben Franklin.
By every measure, the plan worked. The statewide initiative accelerated the development of technology-based industries by investing in start-ups and funding innovation in established manufacturers. Serving all 67 Pennsylvania counties through four regionally-based centers, including the northeastern center located in Ben Franklin TechVentures in Bethlehem, Ben Franklin became one of the most widely known and emulated technology-based economic development programs in the nation.
Since its inception, Ben Franklin has invested in more than 4,500 technology-based companies and boosted the state’s economy by more than $25 billion, helping to generate 148,000 jobs through investments in client firms and spinoff companies in Pennsylvania.
However, all of this success is at risk. This recognized international gold standard in tech-based economic development is starved for financial support.
Since 2007-08, state funding for Ben Franklin has dropped approximately 50 percent, from $28 million to $14.5 million per year. Pennsylvania’s current budget draft for the 2019-20 fiscal year, which begins July 1, would keep funding at the reduced level, which is about half of the amount that it has received over most of its history. Because of diminished funding, Ben Franklin has already been unable to invest in some deserving companies and has seriously short-funded others.
Ben Franklin significantly increases the success rate of the highest-potential early-stage technology firms. It also supports established manufacturers by leveraging technological innovation in Pennsylvania’s colleges and universities to implement product and process improvements that allow clients to be more globally competitive. Ben Franklin identifies and evaluates investment opportunities, selects the most promising ones, and provides companies with crucial resources as they strive to succeed in today’s highly competitive marketplace.
Ben Franklin invests more than money alone. It surrounds clients with internal and external experts in accounting and finance, marketing, intellectual property protection, supply chain management, and other disciplines. Ben Franklin’s “secret sauce” is providing high-value, enterprise-wide support, often working with clients for many years. The process is labor intensive, customized, and has been developed over three and a half decades of experience.
The formula works. According to an in-depth analysis by two nonpartisan research organizations, The Pennsylvania Economy League and KLIOS Consulting, Ben Franklin helped to create 11,407 high-paying jobs, generated $386 million in tax receipts for the state, and boosted the commonwealth’s economy by $4.1 billion between 2012 and 2016.
Among the reasons for the large impact on the state’s GSP is that these jobs are in industries that pay annual salaries of $79,364 per year, or 52 percent higher than the average private nonfarm salary in Pennsylvania.
Every dollar invested by the state into Ben Franklin generates $3.90 in additional state taxes, the analysis found. Pennsylvania received a total of $386 million in additional state tax receipts as a result of Ben Franklin investments in clients.
Other states recognize Ben Franklin as a smart investment, which is why so many have launched their own high-tech economic development programs. In fact, a recent analysis of state funding support for technology-led economic development programs in 13 comparable and competitive states found that Pennsylvania’s per capita spending of $1.37 was second to lowest. The average state spending per capita in that study was $5.67, more than four times Pennsylvania’s level. Neighboring states like Delaware, Maryland, and Ohio all surpass Pennsylvania in funding.
Innovation is the key to long-term economic prosperity. States that harness innovation, and the companies associated with it, are capturing a disproportionate share of economic growth.
Less funding for Ben Franklin Technology Partners means lost opportunities, and fewer highly paid, sustainable jobs — now and in the future. It’s time to restore state funding to Pennsylvania’s technology-based job-creation engine. What’s lost by underfunding Ben Franklin is lost forever.