Ben Franklin Technology Partners

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1 Ben Franklin Technology Partners such a return. 3 John ider, Managing Director of Statewide Initiatives 1010 N. Seventh St., Suite 307 and economic growth. (717) johnsider@benfranklin.org Oftentimes, when one administration succeeds another, they re affected by the not-invented-here sy n d ro m e. I t h i n k b ot h Re pu bl i cans and Democrats in our legislative body and the governor s office have recognized that this [Ben Franklin Technology Partners] has probably been the most significant catalyst to grow the tech community wi t h i n Pen n syl va n i a. former Gov. Tom Ridge, SSTI conference in Pittsburgh, Sept. 15, Annual Report Catalyzing Innovation Throughout Pennsylvania The Ben Franklin Technology Partners is an initiative of the Pennsylvania Department of Community and Economic Development and is funded by the Ben Franklin Technology Development Authority. w w w. b e n f r a n k l i n.o r g great benefit of Pennsylvania s economy. Our success will serve as a model for the nation. Stephen Brawley BFTP of Central and Northern PA Rich Lunak Innovation Works, BFTP of Southwestern PA R. Chadwick Paul, Jr. BFTP of Northeastern PA Roseann B. Rosenthal BFTP of Southeastern PA

1 Central and Northern PA 2 Northeastern PA 115 Technology Center University Park, PA 16802 (814) 863-4558 www.cnp.benfranklin.org 125 Goodman Drive Bethlehem, PA 18015 (610) 758-5200 www.nep.

innovationworks.org 2 4 1 A message from the ceos Entrepreneurship and technological innovation will drive the economic recovery and sustain long-term economic growth on a nationwide level.

2 1 Central and Northern PA 2 Northeastern PA 115 Technology Center University Park, PA (814) Goodman Drive Bethlehem, PA (610) Southeastern PA 4 Southwestern PA Building 100 Innovation Center 4801 S. Broad St., Suite 200 The Navy Yard Philadelphia, PA (215) Innovation Works 2000 Technology Drive Suite 250 Pittsburgh, PA (412) A message from the ceos Entrepreneurship and technological innovation will drive the economic recovery and sustain long-term economic growth on a nationwide level. History has demonstrated that innovation and business growth often hit new strides during times of economic transition. Ben Franklin Technology Partners Ben Franklin Technology Partners has catalyzed innovation throughout Pennsylvania for nearly three decades and has been embraced by every governor and General Assembly since its origin. It began as a liaison between Pennsylvania companies and the resources of the Commonwealth s higher education institutions. The program adapted and evolved to its current role as a driver of multi-dimensional technological transformation. Ben Franklin stimulates entrepreneurship and innovation to accelerate company formation and economic growth. 3 John M. Sider, Managing Director of Statewide Initiatives 1010 N. Seventh St., Suite 307 Harrisburg, PA (717) johnsider@benfranklin.org Oftentimes, when one administration succeeds another, they re affected by the not-invented-here sy n d ro m e. I t h i n k b ot h Re pu bl i cans and Democrats in our legislative body and the governor s office have recognized that this [Ben Franklin Technology Partners] has probably been the most significant catalyst to grow the tech community wi t h i n Pen n syl va n i a. former Gov. Tom Ridge, SSTI conference in Pittsburgh, Sept. 15, 2010 Ben Franklin Technology Partners dramatically increases the success rate of the highestpotential early-stage technology companies. We provide start-ups with access to seed capital, business and technical expertise, and a robust network of resources. We also help develop and implement productivity improvement strategies for established manufacturers so they gain competitive advantage from technological innovation Annual Report Catalyzing Innovation Throughout Pennsylvania The Ben Franklin Technology Partners is an initiative of the Pennsylvania Department of Community and Economic Development and is funded by the Ben Franklin Technology Development Authority. Recognized and modeled internationally as one of the best technologybased economic development organizations in the world, Ben Franklin Technology Partners accomplishment is measured by the success of the companies we assist. A long-range independent study released in 2009 by the Pennsylvania Economy League showed that companies that received Ben Franklin investment and assistance boosted the Gross State Product by $9.3 billion from 2002 through 2006 and provided more than $517 million in additional tax revenues. In 1989 through 2008, Ben Franklin-assisted companies created or retained more than 50,000 highly paid, sustainable Pennsylvania jobs, as well as developed hundreds of new technology-based products and processes. Ben Franklin s client companies deliver $3.50 of incremental tax revenue to Pennsylvania for every dollar of state investment in the program. We know of no other government-funded program that provides such a return. w w w. b e n f r a n k l i n.o r g Over the past several years, Ben Franklin has been tapped by federal, state, and regional policymakers for its expertise on innovation and entrepreneurship issues. Many other states have modeled their programs after the Ben Franklin Technology Partners. In 2008, the U.S. Economic Development Administration, an arm of the U.S. Department of Commerce, named Ben Franklin the most effective regional economic development organization in the nation. Despite an unparalleled history of producing economic benefit for the Commonwealth, Ben Franklin s funding was cut 42% in fiscal year These funding cuts dramatically impact Ben Franklin s ability to deliver the stellar results produced in the past. The combination of state funding cuts, national economic instability, and reduced access to private capital seriously compromises our clients ability to access capital, grow sales revenue, create and retain jobs, and contribute to the future economic growth of Pennsylvania. The Ben Franklin Technology Partners is nimble and versatile and is a proven engine of job creation and retention that generates a tremendous return on investment. The Commonwealth should restore and increase funding to the Ben Franklin Technology Partners to the great benefit of Pennsylvania s economy. Our success will serve as a model for the nation. Stephen Brawley BFTP of Central and Northern PA Rich Lunak Innovation Works, BFTP of Southwestern PA R. Chadwick Paul, Jr. BFTP of Northeastern PA Roseann B. Rosenthal BFTP of Southeastern PA

3 BFTP of Central and Northern PA Linking South Central PA Companies With University Expertise Now in its fourth year, the Innovation Transfer Network (ITN) has created the opportunity for technology transfer among a dozen participating colleges and universities, entrepreneurs, and the business community in south central Pennsylvania. This unique concept was the outgrowth of ongoing interactions among several private/public partnerships including BFTP. Connecting faculty members who have a specific expertise in areas such as IT, marketing, alternative/green energy products, or medical devices to area companies that are developing a new product or process, ITN has become the bridge that links higher education and business with the commercialization process. ITN s Seed Assistance Grant (SAG) program provides research grants of up to $10,000 to faculty members working with a business partner in industries as varied as manufacturing, food, biodiesel, transportation, etc. To date, funds have been awarded to 52 projects, and 44 new prototypes have been developed for commercialization. Creating a Learning Laboratory for Alternative and Clean Energy Start-Ups BFTP has created a dynamic virtual incubator to develop an entrepreneurial community surrounding the concepts of clean, alternative energy. The heart of the Virtual Energy Incubator (VEI) is a set of programs designed to help member companies exploit new energy-related technologies. Incubator members can easily interact with other companies that have the same needs for funding relative to prototype development, testing, and market research. The virtual nature of the incubator creates the opportunity for networking and resource sharing without the need for expensive travel and time-consuming face-to-face meetings. Supporting this virtual community is a team comprised of personnel from the BFTP Transformations Business Services Network, which manages the incubator and provides client services. To date, 15 companies participate in the incubator and take advantage of its offerings. To further augment this effort, Ben Franklin has developed an Executive-in-Residence (EIR) program. The goal is to provide industry-experienced, executive-level manager expertise to emerging energy-related companies in need of support. Salvage Direct Purchased by Nation s Largest Independent Salvage Auction Company In May of 2010, BFTP alum company Salvage Direct was acquired by QCSA Auto Auctions, the nation s largest independent salvage auction company. The combination of Salvage Direct and QCSA creates the third-largest company in the salvage vehicle auction industry. We were excited to combine the best of both enterprises. The number of people employed with the company has nearly doubled, said Bob Joyce, founder of Salvage Direct, based in Titusville, Pa. Joyce pioneered the salvage industry s first online auction and operated exclusively through a unique web-based business model. Founded in 1988, Salvage Direct was originally housed in an old steel mill located in a Keystone Opportunity Zone. The company began its operations with two employees but, by 2004, needed to move into a larger facility. Salvage Direct continued to grow, adding another 140 employees and a network of more than 80 facilities in 28 states before being acquired. BFTP of Southeastern PA Greater Philadelphia Innovation Cluster This year, the Greater Philadelphia region celebrated the award of nearly $130 million from the U.S. DOE and other federal agencies to create the Greater Philadelphia Innovation Cluster (GPIC) for Energy- Efficient Buildings at The Navy Yard. GPIC is a first-of-its-kind, national energy hub devoted to increasing the energy efficiency of new and existing buildings. GPIC will stimulate technology development, company growth, private investment, and quality job creation. GPIC will position the region as a world leader in energy efficiency, said U.S. Department of Energy Secretary Steven Chu, Ph.D. Penn State University is leading GPIC, along with BFTP, the Philadelphia Industrial Development Corporation (PIDC), DVIRC, and the Wharton SBDC. BFTP is proud to lead the intellectual property management and commercialization work for GPIC and will manage the outreach to companies and entrepreneurs. Powering Up the Greater Philadelphia Region Seeded with $10 million from the Commonwealth of Pennsylvania s Alternative Energy Development Program (AEDP), BFTP is fostering the formation of an energy cluster across the Greater Philadelphia region... Power Valley. Entrepreneurs, multinational corporations, investors, academia, and economic development organizations are coalescing to invest in new and growing businesses, form research and development partnerships, launch new education and training centers, and promote the region s energy assets.

4 BFTP of Northeastern Pennsylvania TechVentures 2 Expansion Increases Space for Tech Companies Vice President Joe Biden joined business and community leaders to celebrate the groundbreaking of Ben Franklin TechVentures 2 in April Ben Franklin TechVentures 2 will be a 47,000-square-foot expansion to the original incubator/post-incubator facility. Located on Lehigh University s campus in Bethlehem, it will include wet labs, office/meeting space, and parking and will be a certified LEED building. Ben Franklin TechVentures is addressing the growing need for incubator and wet lab space in northeastern PA. Wet lab facilities are scarce in the region and necessary for technology sectors including biotechnology and electronics. TechVentures 2 will accommodate start-up companies that create as many as 200 sustainable, highly paid technology jobs and retain 100 more jobs in the first three years. Since 1983, Ben Franklin TechVentures has graduated 46 successful companies, which together have grossed more than $408 million in revenue and created 4,500 jobs. Saladax Expands Commercialization and Receives Certification Individuals metabolic rates of chemotherapy drugs vary widely, and the optimum level of medication is critical to effectively treat the cancer while minimizing debilitating and potentially life-threatening side effects. Saladax Biomedical, Inc. produces MyCare, a line of sophisticated blood tests that quickly, accurately, and inexpensively determine levels of chemotherapy drugs in the blood of cancer patients. Since joining the BFTP portfolio and moving into Ben Franklin TechVentures in 2004, Saladax has received 10 patents with an additional 15 pending, raised $20.5 million in follow-on funding, and increased employment from two to 26 people. The company recently entered into an agreement with Bristol-Myers Squibb (NYSE: BMY) for the development and commercialization of clinical diagnostic tests. In addition, Saladax achieved ISO 13485:2003 certification to design, manufacture, and distribute in vitro diagnostic medical devices. Discovery Machine Continues Rapid, Profitable Growth Discovery Machine (DMI), Williamsport, developed a suite of novel, patented software tools that enable companies to capture, manage, automate, optimize, embed, and network the knowledge found in the experience and intellect of their key employees. Companies needs to retain the expertise of staff will grow as the baby boomer generation continues to move into retirement, taking their knowledge and experience with them. In addition, DMI s technology helps protect a company s institutional knowledge in the event it experiences a merger or acquisition and/or staff recruiting by competition. Since joining the BFTP portfolio in 2007, Discovery Machine has, on average, doubled its staff each year and is now profitable. The company s customer roster includes well-known and influential technology leaders including Lockheed Martin, Northrop Grumman, Boeing, Textron, Bechtel, DARPA, NASA, NAVAIR, and the Office of Naval Research. Over the past year, BFTP and regional Power Valley partners supported the development and submission of more than $650 million in federal proposals, which have resulted in securing more than $400M thus far. Responding to a healthy regional deal flow, BFTP committed more than $2.4 million to nine energysector companies this year. Investments included $150,000 in OxiCool, Inc., a Philadelphia-based company developing environmentally friendly air-conditioning technologies. BFTP also awarded OxiCool $250,000 through its Competitive Energy Consortia (CEC) program to conduct research and product development with the U.S. Navy. Today, OxiCool has a product development agreement with a major U.S. trucking corporation. Entrepreneurial needs reaching Washington In May, Federal Reserve Chairman Ben Bernanke and a national delegation visited BFTP at its headquarters in the Building 100 Innovation Center at The Navy Yard. RoseAnn B. Rosenthal, President and CEO of BFTP/SEP, spoke with Bernanke regarding the importance of entrepreneurial investment and technology commercialization to the nation and the role they play in creating the jobs that will fuel our economic recovery. In July, Rosenthal was appointed to the inaugural National Advisory Council on Innovation and Entrepreneurship. The Council was created to help the Obama administration develop a broader strategy to spur innovation, enable entrepreneurs to develop breakthrough technologies and dynamic companies, and create jobs across America.

5 Ben Franklin State impact Jobs Created...8,523 Jobs Retained... 6,157 Funds Leveraged... $3.2 Billion 2010 numbers not yet available > BFTP s work with client companies generated $517 million in new state tax revenue from , which is a 3½-to-1 payback on the state s investment during the same time period. > during the period , it was found that BFTP clients operate in industries that pay 33% more than the Pennsylvania non-farm annual wage. > during the period , BFTP boosted the Gross State Product by $9.3 billion. Based on 2009 Pennsylvania Economy League (PEL) study BFTP of Southwestern PA / Innovation Works Innovative Energy Companies Receive Seed Funding and Expertise The Energy Alliance of Greater Pittsburgh is a joint effort of BFTP and the Allegheny Conference on Community Development to create a strategic partnership of traditional and alternative energy companies, global leaders in material science and intelligent building technologies, academia, corporate and government research, and supply-chain providers. The collaborative efforts aim to create and retain jobs and attract investment across a portfolio of energy technologies. To bolster activity among energy-related start-ups, BFTP made seven early-stage investments last year totaling more than $1.2 million. BFTP also awarded more than $250,000 in grants to five regional companies. These investments have supported business ventures ranging from water purification using solar thermal energy and novel home insulation to stateof-the-art LED lighting. Talent, Mentoring, Investment Worth a Billion A combination of investment, business mentoring, and human capital hit the jackpot for BFTP portfolio companies. Since our seed fund began a decade ago, portfolio companies leveraged BFTP resources to attract more than $1 billion in follow-on financing, a milestone reached in 2010 that demonstrates private sector validation for our rigorous investment decisions and coaching. Seed funding is essential, but just as critical is the hands-on business assistance to help companies commercialize technology and launch successfully. For example, having the right people with leadership skills and the ability to execute business strategy are the goals of our Strategic Human Resources Initiative. Our HR services help companies prepare for explosive growth by identifying the right positions needed at each stage of a company s life cycle, developing compensation strategies to attract and retain top talent, and sourcing appropriate candidates to fill these key roles. Nearly one-third of BFTP s talent placements in the past three years were women or minorities, and almost one-fifth of them were boomerangs, highly skilled individuals attracted back to the region with the right opportunity. To streamline the hiring process, and thanks to a grant from the Benedum Foundation, BFTP is launching Hub Hire, an automated system for our portfolio companies to easily post jobs, sort through applicant resumes, and track hiring activities. Hub Hire is being developed with BFTP portfolio company The Resumator, which specializes in software to manage the flow and evaluation of resumes. Agile Innovation System Spurs Technology Commercialization from Research Universities BFTP and Carnegie Mellon University were recently awarded one of the nation s most competitive federal grants, the $1 million i6 Challenge. Only six grants were made among the proposals by hundreds of universities and economic development groups. The i6 Challenge was created to identify and support the nation s best ideas for technology commercialization and entrepreneurship, seeking specifically programs that can be replicated. The BFTP/CMU proposal for an Agile Innovation System is expected to accelerate our regions technology commercialization; form, fund, and grow new spin-out companies; and create knowledge-based jobs in SWPA. In addition to the $1 million award, another $1 million is available for Small Business Innovation Research (SBIR) grantees associated with the BFTP/CMU proposal.

6 1 Central and Northern PA 2 Northeastern PA 115 Technology Center University Park, PA (814) Goodman Drive Bethlehem, PA (610) Southeastern PA 4 Southwestern PA Building 100 Innovation Center 4801 S. Broad St., Suite 200 The Navy Yard Philadelphia, PA (215) Innovation Works 2000 Technology Drive Suite 250 Pittsburgh, PA (412) A messa s Entrepreneurship and technological innovation will drive the economic Ben Franklin Technology Partners 3 John M. Sider, Managing Director of Statewide Initiatives 1010 N. Seventh St., Suite 307 Harrisburg, PA (717) johnsider@benfranklin.org Oftentimes, when one administration succeeds another, they re affected by the not-invented-here sy n d ro m e. I t h i n k b ot h Re pu bl i cans and Democrats in our legislative body and the governor s office have recognized that this [Ben Franklin Technology Partners] has probably been the most significant catalyst to grow the tech community wi t h i n Pen n syl va n i a. former Gov. Tom Ridge, SSTI conference in Pittsburgh, Sept. 15, Annual Report Catalyzing Innovation Throughout Pennsylvania The Ben Franklin Technology Partners is an initiative of the Pennsylvania Department of Community and Economic Development and is funded by the Ben Franklin Technology Development Authority. - w w w. b e n f r a n k l i n.o r g ment. The Commonwealth should restore and increase funding to the Ben Franklin Technology Partners to the great benefit of Pennsylvania s economy. Our success will serve as a model for the nation. Stephen Brawley BFTP of Central and Northern PA Rich Lunak Innovation Works, BFTP of Southwestern PA R. Chadwick Paul, Jr. BFTP of Northeastern PA Roseann B. Rosenthal BFTP of Southeastern PA

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