Angelo J. Valletta
Pennsylvania & the Importance of Government-Funded Venture Capital
November 29, 2021 | Published by Real Clear Policy
In 1983, northeastern Pennsylvania confronted serious financial challenges. The regional economy, largely dependent on heavy manufacturing after the anthracite coal industry collapsed in the 1950s, had significantly declined; companies and jobs were offshoring due to cheaper foreign competition. Pennsylvanians faced double-digit unemployment.
Recognizing that economic diversity leads to growth, and that technology-based companies tend to provide jobs with higher wages, then-Governor Dick Thornburgh and the Pennsylvania General Assembly created a novel solution: Ben Franklin Technology Partners (BFTP).
BFTP is a four-center, state-funded economic-development initiative introduced by the Commonwealth of Pennsylvania to build resiliency in the state economy by investing in technology-based firms. The initiative is a public-private hybrid, funded by the state’s Department of Community and Economic Development, which develops and supports companies in various technology sectors that create and retain highly paid, sustainable jobs.
Nearly forty years since its inception, BFTP has proven a resounding success. Since beginning operations, BFTP has earned bipartisan support over multiple administrations. According to the most recent independent five-year study of BFTP’s statewide impact, new state tax revenue generated because of BFTP represented a $3.90 payback to the commonwealth for every dollar invested in the program. Moreover, Ben Franklin’s clients create jobs in industries that pay an average of 52% more than the average non-farm wage in Pennsylvania. That income difference creates generational wealth for families that had previously struggled.
Ben Franklin Technology Partners of Northeastern Pennsylvania (BFTP/NEP) is one of BFTP’s four program partners, serving 21 counties and headquartered at Ben Franklin TechVentures, an award-winning 129,000-square-foot technology incubator located on Lehigh University’s campus in Bethlehem. BFTP/NEP is regularly counted among the top 5% of the most active investors in the U.S.
BFTP’s success clearly shows that government-funded venture capital funds work. For instance, BFTP/NEP leads the business and technology sectors in the Lehigh Valley, Scranton-Wilkes-Barre-Hazleton corridor, Greater Reading, and even parts of rural northern Pennsylvania. Thanks to BFTP/NEP, these regions fared far better than other areas when heavy manufacturing declined decades ago. Indeed, other states can learn from Ben Franklin’s success in Pennsylvania.
In northeastern Pennsylvania, BFTP/NEP challenged the perception that the region is focused on blue-collar jobs and heavy manufacturing. The organization fundamentally improved the regional economy by embracing the region’s identity and creating a favorable climate for tech-based entrepreneurship, innovative manufacturing, and technological advancement.
Today, BFTP/NEP invests in the region’s most promising early-stage technology firms, in addition to supporting established manufacturers aiming to become globally competitive through technology. Our selection process is highly competitive. We partner clients with proven experts as well as Pennsylvania’s world-class higher education institutions and their wealth of knowledge, equipment, facilities, and human resources. BFTP/NEP delivers hands-on support, connections to critical resources, and investment funds when clients most need them.
One of BFTP/NEP’s earliest clients, OraSure Technologies, Inc., launched in BFTP/NEP’s business incubator. Over the years, the company grew and established its headquarters on reclaimed Bethlehem Steel brownfields. Beginning in 1987 with three founders, OraSure now employs 570 and has attracted significant outside investment, provided R&D work for regional universities, and introduced products that detect critical medical conditions.
BFTP/NEP invests far more than money. It surrounds clients with experts and makes introductions to follow-on funders, economic-development leaders, and other potential partners.
If there was ever any question about BFTP/NEP’s important role in supporting Pennsylvania’s economy and quality of life, COVID-19 provided a resounding reaffirmation. BFTP/NEP clients responded quickly to the pandemic, reflecting the agility emblematic of high-performing entrepreneurs and innovative manufacturers. Not only did clients create products and services to address the pandemic; they also pivoted their efforts based on emerging needs, helped keep workers employed, generated essential tax revenue, and played a critical role in sustaining Pennsylvania’s economy.
The innovation displayed by BFTP clients during the pandemic is reflective of the work that established it as the international gold standard for technology-based economic development.
Decades after citizens feared the state’s economy was in peril, northeastern Pennsylvania stands today as a leading innovation hub. But more investment is needed in Ben Franklin Technology Partners. Through ingenuity, technology, and skillful implementation, our work will continue to provide good jobs, support communities, and improve the region’s economy for generations to come.
Angelo J. Valletta is president and chief executive officer of Ben Franklin Technology Partners of Northeastern Pennsylvania.