Investing in Ben Franklin Programs Now Pays Off in Future
Morning Call reporter Sam Kennedy’s Monday story on reduced state funding to the Ben Franklin Technology Partners was spot-on in describing the devastating effects of these huge cuts on promising local companies. With more than 40 years’ experience in venture capital, and as a founding board member and current board chairman of Ben Franklin, I am deeply concerned about the effects of these cuts on our region’s economy.
Funding and supporting entrepreneurs and established manufacturers is not a business that is easily mastered. Over the past 28 years, the staff of Ben Franklin has developed its knowledge base and experience, along with its relationships and network, to be one of the world’s best at developing companies that build a regional economy. Reducing the budget of Ben Franklin is squandering one of Pennsylvania’s most valuable assets, crippling a well-oiled economic development machine that is the envy of the world.
On June 30, the Pennsylvania Alternative Energy Development Program grant will expire for the Ben Franklin Technology Partners. This grant, used to develop alternative energy companies and energy improvements in existing companies, cushioned the 51 percent cut that Ben Franklin suffered since 2009 to its traditional Pennsylvania Challenge Grant. The Challenge Grant funds program costs and direct company investments. Ben Franklin’s total budget, assuming no further cuts, would drop from $6.7 million in 2011 to $3.5 million in 2012. This would have disastrous consequences for funding start-up technology companies.
Ben Franklin Technology Partners increases the success rate of the highest-potential, early-stage technology companies. It provides start-ups with access to seed capital, business and technical expertise, and a proven network of resources. Staff members identify and evaluate opportunities, select the most promising ones, and provide clients with crucial resources as they compete in the marketplace.
Recognized and modeled internationally as one of the best technology-based economic development organizations in the world, Ben Franklin Technology Partners is incredibly successful in starting new companies, creating and retaining jobs, and increasing income for Pennsylvania.
A long-term independent study by the Pennsylvania Economy League showed that Ben Franklin statewide boosted the gross state product by $9.3 billion from 2002 through 2006, and provided more than $517 million in additional tax revenues as a direct result of its work. In 1989 through 2008, Ben Franklin created or retained more than 50,000 highly paid, sustainable Pennsylvania jobs, as well as developed hundreds of new companies and new technology-based products and processes. Ben Franklin delivers $3.50 of incremental tax revenue to Pennsylvania for every dollar of state investment in the program. I repeat: Ben Franklin delivers $3.50 of incremental tax revenue to Pennsylvania for every dollar of state investment in the program.
Despite these tremendous results, in the face of overwhelming state budget challenges, Ben Franklin’s funding has been reduced more than 50 percent since 2009. These crushing blows to its resources have curtailed Ben Franklin’s ability to deliver the remarkable results it produced in the past. Deserving companies that might create the highly paid, sustainable jobs that Pennsylvania needs are being turned away, and others are being seriously short-funded.
Projecting historical performance, Pennsylvania’s investment in the Ben Franklin Technology Partners will provide a direct financial return of 350 percent in additional state tax revenue. It will allow technological innovation to be leveraged as a path to economic prosperity. And it will help companies create the jobs that will be the cornerstone of the economic recovery.
Continuing to underfund Ben Franklin is tantamount to rendering it ineffective. The current Challenge Grant budget simply does not provide funding for the critical services and investments that companies need to succeed.
I strongly urge elected officials to restore the Ben Franklin appropriation to its original level, and then increase it in subsequent years. Ben Franklin Technology Partners is not a cost to Pennsylvania; it is an investment that pays richly to the commonwealth in tax revenue, jobs and quality of life.
Frederick J. Beste III of Wind Gap is General Partner of Mid-Atlantic Venture Funds, and chairman of the board of Ben Franklin Technology Partners of Northeastern Pennsylvania.