Gov. Wolf's proposed budget would give Ben Franklin Technology Partners $8M to fund more startups
By Kennedy Rose – Reporter, Philadelphia Business Journal Feb 9, 2022, 11:12pm EST
Pennsylvania Gov. Tom Wolf’s ambitious $43.7 billion budget proposal includes an $8 million boost for Ben Franklin Technology Partners, a move that the organization’s leadership says could get more Philadelphia-area startups funded.
Wolf’s budget proposal sets aside $2 million for each of the four Ben Franklin Technology Partners offices — located in Philadelphia, Pittsburgh, State College and Bethlehem — as well as an additional $10 million in competitive grants to the Ben Franklin Technology Development Authority. The additional capital would bring total funding to $32.5 million for the program, compared with $14.5 million in the 2021-22 fiscal year.
Ben Franklin Technology Partners of Southeastern Pennsylvania currently funds about 50 startups per year, and the new funding proposed by Wolf could support an additional 10 to 15 companies, CEO Scott Nissenbaum said. BFTP is approached by about 600 to 800 companies per year, he added, and about 200 of those go through a formal review process with Ben Franklin. Only a quarter of the reviewed startups receive funding.
“We've had a pretty sexy sports car, and we really haven't had the fuel to let it do what it can do,” Nissenbaum said.
Early-stage investments from Ben Franklin help startups get growth capital while signaling to other investors that they’re a good bet, Nissenbaum said, and the organization is "ecstatic" about what new funding could allow it to do.
The local Ben Franklin office has invested $6.1 million into startups since the start of fiscal year 2021, most recently participating in an $118 million Series B raised by Philadelphia real estate tech firm Houwzer. Ben Franklin has been involved with Houwzer for years, helping it raise smaller rounds.
For every dollar that Ben Franklin deploys, the organization is required by the state to find an investor who will match its funding one to one, Nissenbaum said. In early-stage rounds, for every dollar Ben Franklin invests, startups receive about three more dollars from other investors. In later-stage rounds, that leverage can be increased up to 10 times, he said.
Startups aren’t the only entities that benefit from the organization's work. Statewide, the Ben Franklin Technology Partners offices deliver $3.90 in wage and tax revenue for every dollar spent, Nissenbaum said.
“When you give out one and get back four, it's a pretty good deal,” he said.
Nissenbaum is optimistic that the Pennsylvania General Assembly will support the proposal to boost funding for Ben Franklin, even as assembly members slam the plan for “astronomical spending increases.”
Ben Franklin helps build businesses and tax revenue, and the fact that Ben Franklin offices are located throughout the state rather than only in major cities like Philadelphia and Pittsburgh could also help to win support from legislators, he said.
“Our message has been clear to our legislators and to our companies, and indirectly to the governor, of more capital is good for us,” he said. “It's good for the region. It's good for jobs, it's good for the state budget and it's good for the lives [in the state].”