When Vice President Joe Biden was in Bethlehem in April, he called Ben Franklin TechVentures, the technology business incubator of Ben Franklin Technology Partners of Northeastern Pennsylvania (BFTP/NEP), a “hub for innovation research and cutting-edge ideas,” and “part of the firm foundation upon which America can build.”
Indeed, having grossed more than $408 million in annual revenue and 4,500 jobs since 1983, TechVentures is a job creation machine. It has also proven to be a smart way to spend state dollars, returning $3.50 for every $1 of investment, and has also done the near impossible–maintain bipartisan support in Harrisburg through multiple administrations.
Still, it’s only now, with construction of a massive, state-of-the-art facility underway, that TechVentures will have a home to meet ever-growing demand, and one truly befitting its incredible impact on the regional and state economies. TechVentures2, will be a 47,000 square foot technology jobs factory with space for up to 40 promising companies working on medical devices, energy efficiency, biotech and software ventures, among others. What’s more, the facility is truly poised be a national model upon its completion late next year.
“I don’t claim to be omniscient with respect to incubators, but I know a lot about them, and (TechVentures2) will be maybe the definitive high tech incubator in the country after the expansion” says Fred Beste, the CEO of the general partners of the Mid-Atlantic Venture Fund and a Ben Franklin board member for the Northeast region for all but three of its 27 years. “It says a lot for the state of entrepreneurship in the greater Lehigh Valley.”
Beste, named last week as BFTP/NEP’s chairman of its board of directors, recalled a much different region when he came to the Lehigh Valley more than 25 years ago, one dominated by the presence of Bethlehem Steel and other Fortune 500 companies and one with a weak entrepreneurial pulse.
Then came Ben.
“It was one of the first incubators in the country, and Ben Franklin has polished that apple every year,” Beste says.
Success has not occurred overnight, but rather incrementally and consistently for more than a generation. BFTP/NEP is responsible for activity in 21 counties from the Lehigh Valley to north of Scranton, and 10 incubators. Prior to 2007, the hub was Jordan Hall, a modest building on the campus of Lehigh University. TechVentures made the most of that leased space by providing a comprehensive set of business supports for technology based startups. At its peak, TechVentures packed 13 companies into 10,000 square feet. Companies like Computer Aid, founded here in 1981 and now a $250 million company in Allentown employing thousands, and global semiconductor manufacturer IQE, founded here in 1988, blossomed at TechVentures thanks to a large and always growing network of expert contacts and direct, one-on-one consulting. In 2001, it garnered National Business Incubator of the Year honors from the National Business Incubator Association.
When Bethlehem Steel was winding down the last of its operations some five years ago, it gave one of the buildings on its Mountaintop campus to BFTP/NEP, more than tripling TechVentures’ operating space. With 35,000 square feet, TechVentures manager Wayne Barz, among others, figured the expansion would carry the program through five or six years of continued growth.
After only 18 months at the new facility, TechVentures was 90 percent full by 2008. Cash-strapped entrepreneurs, including many with highly experienced management teams, were seeking out TechVentures in droves as much for small funding boosts as the incubator’s business service capabilities. It was one of the few options between Philadelphia and New York, and unlike many incubators and economic development organizations, marketing is not a problem because its reputation usually precedes it.
“There was an explosion of life science and biotech startup companies, all of which needed wet lab space,” says R. Chadwick Paul, president of BFTP/NEP. “(With the added space) we were able to say yes more often and we found that demand was deeper than we thought.”
Last September, U.S. Commerce Secretary Gary Locke gave BFTP/NEP a $6 million check via an American Recovery and Reinvestment Act grant to expand TechVentures to meet market demand. Combined with other federal and state funds and private donations, BFTP/NEP began preparations to grow again, this time into TechVentures2.The expanded incubator will be able to accommodate start-ups that create as many 200 high-paying and sustainable jobs and retain 100 more jobs in the first three years.
There are several key features brought about by the expansion that all but guarantee the continued growth of TechVentures2. Most importantly, the new facility will increase its dedicated post-incubator space for those companies that “graduate” after five years of growth in TechVentures. In this space, tenants pay standard commercial rates as they’re fully developed and better able to handle larger overhead costs, while still reaping the benefits of being a part of TechVentures. Ciclon Semiconductor Device Corporation started out as three workers with a couple of desks when it earned $150,000 of BFTP/NEP investment in the spring of 2005 and turned it into $24 million from investors by early 2009, when it was sold to Texas Instruments. TI liked TechVentures so much it wanted to stay there as a post-incubator tenant (it also retained all local jobs and has continued to expand).
That’s important for BFTP/NEP, as these post-incubator companies act as anchor tenants that help fill in funding gaps and sustain the incubator’s strength, while providing their experience and support to newer tenants.
“That’s best practice, to build your budget with the assumption that you’ll have 20 to 25 percent of your space occupied by an anchor tenant paying commercial space,” says Paul.
Barz says a roomier TechVentures2 will enable BFTP/NEP to focus on alternative energy companies, for which they have specific funding to attract; but the incubator will try to maintain a diverse mix–currently it’s about one-third life sciences companies, one-third software/web service and the rest is made up of assorted technology, chemical and electronics firms.
Wet lab space has increased from 5,000 to 12,000 square feet. TechVentures2 will also allow for individual suites with combined office and lab space, as well as shared lab space and equipment for multiple companies to use, providing more common areas for ideas to cross-pollinate. With multiple exits and entrances, a digital signage program that will features 14 digital screens scrolling news headlines and updates on TechVentures2 companies, and an entire top floor of meeting and conference space, Paul says the new facility will continue to promote exposure to and among its tenants. Even the location of the free coffee–near Barz’s office and all the conference facilities–was intended to promote that theme.
“One of the reasons we’re so successful is the cross-mentoring between our companies,” says Paul. “Hallway conversations are as valuable as anything else that happens.”
Then there are less obvious, aesthetic benefits, like windows in the labs. The labs in the existing building were old photography dark rooms for Bethlehem Steel and sans windows. Now natural light will shine on the many ideas taking root there.
“It’s an extraordinary place to turn dreams into miracles,” says Beste. “You have to realize, this is the facility that every community in the country wants.
“This expansion is going to enable the Lehigh Valley to incubate a substantially larger number of high-tech dreams of entrepreneurs. Some are going to fail. Many will only be modest successes. But a handful are going to become titans.”
Joe Petrucci is managing editor of Keystone Edge. Send feedback here.
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Photos:
Vice President Joe Biden tours the existing TechVentures facility in Bethlehem.
Biden speaks to an audience at the future site of TechVentures2.
The digital screen on the right is even more prominent at TechVentures, with 14 monitors around the building broadcasting incubator company news.
R. Chadwick Paul speaks at a BFTP/NEP event.