According to the National Venture Capital Association, Pennsylvania was ranked 7th for overall venture capital investment in 2010 with $559 million in VC investment (California ranked 1st with $11,603 million, Massachusetts 2nd with $2,472 million and New York 3rd with $1,401 million. Our neighbor New Jersey ranked 10th.)
Here are a few statistics provided in the presentation I link to above:
• “From 1970 – 2010 venture capitalists invested $13.3 billion in 1,130 companies in PA.”
• “Public companies headquartered in PA that were once venture-backed account for 783,527 U.S. jobs and $238 billion in U.S. revenue.”
• “One U.S. job was created for every $16,930 of venture capital dollars invested in the state of Pennsylvania.”
• 39% of the VC funding in PA goes to the biotech industry and 16% to medical devices.
• “80% of VC investment in PA comes from out-of-state.”
Such strong results are in no small part due to Pittsburgh’s renaissance as a hotbed for innovation, combining the expertise of national research universities such as Carnegie-Mellon and the University of Pittsburgh with the presence of leading hospitals such as the University of Pittsburgh Medical Center. Pittsburgh often appears in “most livable cities” rankings and was selected as No 1 in the US in the 2011 ranking by the Economist Intelligence Unit. It also has a thriving cultural district covering 14 blocks around Penn Ave downtown.
This January 2009 article in the New York Times provides a few reasons for Pittsburgh’s renewal story: “A development plan begun in the 1980s successfully used the local universities to pour state funds into technology research. Entrepreneurship bloomed in computer software and biotechnology. Two of the biggest sectors are education and health care, among the most resistant to downturns.” The city benefited from the lack of a real estate boom and the conservatism of its main financial services firm, PNC.
A September 2009 story in The Atlantic continues in the same vein, highlighting the local businesses that have been started as a response to the demise of the steel industry and giving a special mention to the Pittsburgh Technology Center, an office park housing high-tech R&D companies.
Ben Franklin Technology Partners – ranked among the Top 10 Venture Capital Firms in the nation by Entrepreneur magazine – has played a critical role in Pennsylvania’s renewal by providing both early-stage and established companies with funding since 1983. BFTP has four regional headquarters in PA and 10 satellite offices.
Its northeastern office oversees the Bethlehem area, among others, and has, since 1983 (according to their website):
• Started 420 new companies
• Developed 1,017 new products and processes
• Created 14,922 new jobs
• Retained 21,358 existing jobs
Because of Pittsburgh’s role in pushing PA numbers up, creating about 15,000 new jobs since 1983 (for public or private companies) doesn’t seem like much compared to the 750,000 created in PA as a whole (for public companies) since 1970, but the Lehigh Valley count about 820,000 residents in the 2010 US census compared to 2.3 million residents in the Pittsburgh area and 12.7 million in Pennsylvania, the 15,000 jobs are a quite respectable outcome in the area (representing 1.8% of the 2010 Lehigh Valley population as opposed to 5.9% in the state, although the lack of data for 1970-1983 makes a precise comparison difficult).
Because the eastern side of Pennsylvania is within commuting distance to New York City, it will be interesting to see how the tech campus recently approved by Mayor Bloomberg for New York City (representing a consortium between Cornell and Technion) will affect the venture capital equilibrium in Pennsylvania, and whether it will hurt the efforts of Ben Franklin Technology Partners to turn the tech park around Lehigh University into a far-ranging innovation hub. But since it will be many years before the new campus in New York is completed, there remains a significant opportunity for Pennsylvania to solidify its position as a regional leader in science and engineering.