The Ben Franklin Experiment: Two Decades of Innovation by RoseAnn B. Rosenthal President & CEO : The Ben Franklin Experiment: Two Decades of Innovation by RoseAnn B. Rosenthal President & CEO
“We are, I think in the right Road of Improvement, for we are making experiments.” Ben Franklin : “We are, I think in the right Road of Improvement, for we are making experiments.” Ben Franklin
Quick Overview : Quick Overview Walk Through Three Phases:
Environment
Response
Results & Lessons Learned
Your Portrait of Ben (Team Strategizing Session)
The view from 20,000 feet : The view from 20,000 feet
Legislated in December 1982: most continuous S & T economic development program; survived 2 sunset reviews (1988 and 2000)
Regionally based: 4 “centers”
Statewide overseer board
Funding relatively consistent
Statewide Impact : Statewide Impact
60,190 High Value Jobs Created and Retained
1,556 New Technology-Driven Businesses Created
1,842 Products & Processes Developed and Commercialized
$1.01 Billion in Private Sector Match
$90 Million in Federal Match
$171.3 Million in College/University Contributions
$168.8 Million in Other Resources Leveraged
Statewide Impact (cont.) : Statewide Impact (cont.)
BFTP clients grow faster—adding 5 more jobs/year than non-clients
$2.9 billion increase in gross state products due directly to BFTP
A 14:1 return on the state’s investment
Three Phases of Ben : Three Phases of Ben Start Up: 1982 – 1988 - Ben Franklin Partnership Fund
Advanced Technology Centers
Incorporation: 1988 – 2000 - Ben Franklin/IRC Partnership
1988-1995 Ben Franklin Technology Centers & Industrial Resource Centers
1995-2000 Ben Franklin Technology Partners & PA Technology Investment Authority
Growth: 2001 - Ben Franklin Technology Development Authority
Phase 1: Start Up (1982 – 1988) : Phase 1: Start Up (1982 – 1988) The Environment
An economy in transition: industrialpost-industrial
Recession
Manufacturing decline…
21.5% mfg jobs lost; 14/9% unemployment; 400,000 jobs lost
40 largest corp employment cut by 50%…
1.29 million in ’79 to 600,000 in ’86
Traditional economic development approaches
Smokestack chasing
Gov. Shapp (D): Volkswagen Rabbit; $40 M subsidies; closes in 9 years
Social welfare spending
Role of venture capital emerging
Change in Administration 1978: Gov. R. Thornburgh (R)
Phase 1: Start Up (1982 – 1988) : Phase 1: Start Up (1982 – 1988) The Response
“Choices for Pennsylvanians”…study of State’s economy
Importance of small businesses
Modernize manufacturing base
Diversify economy through innovative, advanced technology companies
New partnerships: public/private; state/local government
Identified strong intellectual infrastructure:
4 universities among top 50 graduate research institutions
5th among states: scientists/engineers; workers in adv tech; $ spent on R & D
Phase 1: Start Up (1982 – 1988) : Phase 1: Start Up (1982 – 1988) The Response (cont’d)
12/6/82 HB 2344 An Act…
…the Ben Franklin Partnership Fund …may establish advanced technology centers which shall serve as university-based consortiums between business, universities and government to provide advanced technology research and development, training, education and related activities which show significant potential in diversification of Pennsylvania’s economy and the State’s economic growth.”
Phase 1: Start Up (1982 – 1988) : Phase 1: Start Up (1982 – 1988) The Response (cont’d)
Challenge Grant to establish 4 regional ATCs
$1 M fy ‘82-’83 f/planning,
$28.45M by fy ‘88; $104 total over 5 yrs
Funding no > 50% from State; competitive
Focus on creating new tech clusters & bringing new technologies to traditional industries
Joint R & D (business/academic)
Training & curriculum development
Technical assistance & tech transfer
Business incubators
Market development, feasibility studies
Staff support for advanced tech councils or other consortia
Tech Parks
Phase 1: Start Up (1982 – 1988) : Phase 1: Start Up (1982 – 1988) The Response (cont’d)
University governance
Board of regional leaders
State overseer board
Full project plan submitted annually to state board
Approved all projects and technology sector focus
Phase 1: Start Up (1982 – 1988) : Phase 1: Start Up (1982 – 1988) The Response (cont’d)
ATP of Southeastern PA
Seed funding for start ups
First incubator
Centers of Research Excellence Network
>80% thru universities
Phase 1: Start Up (1982 – 1988) : Phase 1: Start Up (1982 – 1988) Results & Lessons Learned
National Model
1986 Presidential Commission on Industrial Competitiveness Award
Small Business High Tech Institute State Award
David Osborne: INC and Laboratories of Democracy
Economic Impact
523 new start up companies
$400 M non-state support
3,283 jobs created
1,209 companies assisted w/8,649 jobs created & 6,914 jobs retained
Phase 1: Start Up (1982 – 1988) : Phase 1: Start Up (1982 – 1988) Results & Lessons Learned (cont’d)
Programmatic
“From University Lab to the Marketplace”…tougher than expected; 2 different cultures and worldviews
Requirement for university participation in all company engagements posed limitations
Few company spin-outs from university activities
Incubator sustainability an issue
“Silk-stocking” image…few jobs to underprivileged
Phase 1: Start Up (1982 – 1988) : Phase 1: Start Up (1982 – 1988) Results & Lessons Learned (cont’d)
Structural
Competitive funding process for ATPs counterproductive & time consuming
Annual project funding cycle unresponsive to customers
State-directed regional technology focus unresponsive to changing economic/sector conditions
State approval of all projects slows process
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Environment: 1988-1995
PA economy still contracting: job retention vs strategy creation
Manufacturing competitiveness a national issue; mfg losses in PA to offshore and Mexico
Small businesses proliferating nationally; not in PA
David Birch era
Defense downsizing hits PA, particularly SE PA w/ 4 installation closures
Jobs, jobs, jobs…..any job a good job…
Role of technology not central to local strategies; tech job growth too slow; not across all constituencies
Little understanding/policy attention to electronic-based communications and IT sector
Universities pursuing traditional role
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Environment (cont’d)
Shift in role & influence of city vs. suburbs
Growth in suburbs; decline in city
Varying rates of tech adoption, city vs. suburbs
Tech sector taking root in suburban ring
Focus on service sector as economic driver for city
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Environment (cont’d)
New federalism
Focus on market solutions
Search for non-bureaucratic methods; Reinventing Government theme
Fiscal moderation
Investment vs. spending
Redistribution of opportunities vs. outcomes
State Administration changes
Gov. Casey (D)
Labor backlash to perceived neglect of traditional industries
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response
Legislation creating Ben Franklin/IRC Partnership
Industrial Resource Centers added
Legislated in 1988 with reauthorization bill
Focus on manufacturing competitiveness
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
Ben Franklin Technology Centers 501 C-3 incorporation
Boards must be 51% private sector
Equal funding of 4 centers
Regional approval of projects
“Set aside” to enable mid-year project funding
Royalty-based investments in companies without university partnercompanies become focus of innovative activity
Centers that generate financial returns not penalized
Less emphasis on university “technology transfer”
Regional production of strategic technology development plans
Job Link added to BFTPs (link welfare population and tech entrepreneurs)
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP: Criteria for Projects
Balanced portfolio
Support consortium activities
Leverage other funding
Add value through joint ventures with strategic partners
Focus on extending benefits to disadvantaged communities
Coordinate with state and regional development strategies
Seek potential for ROI or sustainable asset
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP: Job Creation Via Entrepreneurial Development
Provides royalty-based investments - $25,000 to $100,000
Initiates effort to form privately-managed seed fund
Invests in regional seed funds
Supports regional venture & entrepreneurial organizations
Founds Business Information Center for small company access to on-line business information
Via SBA/NIST/foundation grants, expands to target minority enterprises and community outreach in collaboration with SBDCs
Launches SBA-funded micro-loan program
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP: Regional economic diversity via educational and research infrastructure
Centers of Research Excellence restructured
START Technology Partnership to commercialize university technologies…(international technology licensing organization, multiple universities & venture firms)
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP: Productivity improvements in existing sectors
Technical assistance to mfg companies: RPDC w/IRC
Creates Technology Investment Fund: product development in established enterprises
Partners with region on defense adjustment strategies
Technology Reinvestment Partnership grant
On-line defense procurement
SBIR technical assistance
Federal Technology Assistance Program w/federal labs
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
Upgrade and retrain workers; attention to role of organized labor; Gress Graphics; Greater Phila. Productivity Consortium
Supports regional consortia addressing competitiveness and export development issues
Sponsors and seeds LibertyNet, region’s first internet community
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) Results & Lessons Learned
Largest regional source of institutional seed capital: core to mission
University spin-outs remain a challenge
Regional advisors from all sectors a strong asset
Regional base of legislative & constituent support critical for stability
Diversification of revenue key to growth
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) Results & Lessons Learned (cont’d)
Pressure to keep administrative costs low limits programmatic options
Traditional economic development metrics…short term jobs…a poor measure of success for technology development programs
seed-stage tech investments = high-risk & long-term reward affects competition for state funding
Difficulties of small non-profit in large regional economy…impact and visibility
Functioned as a facilitator, reacting creatively to variety of situations…necessary to shift to catalyst, creating reactions
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Environment: 1996-2000
Unparalleled national economic growth
Recognition of technology as economic engine of the future
Competition for gazelles replaces focus on corporate recruitment; rise of the tech entrepreneur
The competitive advantage of regions frames discussions
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Environment: 1996-2000 (cont’d)
Recognition that competition is global
Pace of economic transformation accelerating
Positive press attention to technology & entrepreneurs…finally
Networks and technology clusters in vogue
Shortage of skilled labor replaces concerns about job creation
Welfare reform adopted; economic empowerment hits
Blurring of lines: traditional/S&T/community economic development
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Environment: 1996-2000 (cont’d)
Private sector incubators/accelerators emerge
Universities defining new role in Knowledge Economy
Venture philanthropy emerges
Federal attention to technology development (NIST, MEPs, SBIR, ATP, EDA, etc)
New Administration in PA: Gov. Ridge (R)
Ben Franklin Partnership sunset in 2000
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response
PA Technology 21 Process
Recognition PA not in the technological vanguard despite strengths
Comprehensive approach to technology required
Cluster and network based
Global approach
Industry-led
Creation of PA Technology Investment Authority
Technology financing, e-commerce, and research & development
Grounded in regional strategies
BFTPs “gatekeeper” of regional process
Closer alignment of regional/state strategies
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTCs engage Battelle: 10 year strategy
Constituent & self assessment
Best practices survey, nat’l & int’l
Integrates Tech 21 objectives
BFTCs form stronger network
Single identity: Ben Franklin Technology Partners
State-wide coordinator
Produce Tech 21 Cluster reports
Common web site; marketing materials
Commission Nexus Associates to produce independent economic impact report
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP Adopts Expanded Vision:
“Ben Franklin will be the primary economic development catalyst helping the region transition to a knowledge-based economy.”
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP Approves Strategy Based on 4 Objectives:
BFTP as integral, pivotal link in the region’s economic development delivery system, providing risk capital and services to technology enterprises;
BFTP as broker for knowledge-based solutions, drawing on regional, national and international resources to help companies and communities with technology issues;
BFTP as a source of information on the technology sector, advocating and contributing to the region’s understanding of technology as an economic driver;
BFTP as an enabler, intervening strategically to be a change agent in areas basic to creating the infrastructure for a new economy.
Transform organization growing, sustainable regional institution, with an innovative, entrepreneurial, performance-based culture.
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP’s Entrepreneurial Development:
Shift from transaction orientation to relationship development
Emphasis on incubation vs. incubators
MOUs with physical incubators
Increased funding levels to $500,000
New investment vehicle: subordinated debt w/detachable warrants
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP’s Entrepreneurial Development: (cont’d)
Larger resource commitment for support to portfolio companies
New models of entrepreneurial support: Success Teams; mentors
Streamlined and improved investment assessment, documentation and management processes
Lead partner in 3 specialty capital funds
Restructured and refunded micro-loan program; focus on “The Competitive Edge” through technology & services
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP’s Technology Solutions:
Creation of EDA-supported Technology Extension Services
Professional field staff co-located with county economic development staff
Call agents to existing technology companies
Technology engagements with University Centers of Excellence
Federal research labs and private research companies, institutions
Product Development Consortium in inner city Philadelphia
Technology expertise to portfolio companies
Refers 25% of successful investment candidates
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP’s Information and Advocacy:
Sponsor/produce economic reports
Regional benchmarks, the technology workforce, regional entrepreneurial climate, women entrepreneurs and technology, minorities and technology, venture capital in the region, and state report on bio/life sciences sector.
Aggressively market portfolio successes
Support & sponsor regional marketing & agenda-setting events
Developed regional Technology Action Agenda with local public broadcast station
Created web-based communities of interest: TechPhilly.org and winwomen.org
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP’s Infrastructure:
Management of Regional PTIA process yielding > $25M for region
Nanotechnology Institute: $10.8 M; new model
Ben Franklin Gateway Partners: $4.5M to create $30M guarantee program w/area banks
IT Metrics report
R2C Alliances: multi-institutional/industry consortia for technology diffusion and application
Two private venture funds
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP’s Infrastructure: (cont’d)
Ben Franklin Innovation Center: COE + incubator
Research & commercialization
Company formation
Magnet for company attraction
Educational symposia
Fostered biotech consortium
New anchor for technology development
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) The Response (cont’d)
BFTP/SEP’s Infrastructure: (cont’d)
Restructured export consortiumWorld Trade Center announced
Modeled biomedical technician training: Wistar Institute and Community College of Philadelphia
Incubated regional consortia:
Women’s Investment Network
Greater Philadelphia Collegetown Project
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) Results & Lessons Learned
Customer/constituent/staff feedback & input key to improvement
Regional structure & support remains basis of strength
Changing conditions require flexibility in approach/strategies/partners
Ability to tap into networks seeded & supported over time an important advantage
Importance of educating funding sources on implications of changing environment and expectations; e.g. more supporthigher staff costs
Phase 2: Incorporation (1988-1995; 1996-2000) : Phase 2: Incorporation (1988-1995; 1996-2000) Results & Lessons Learned (cont’d)
Tension between resources for new investments vs. portfolio management & services
Improved returns from increased services
Investments greatest revenue generator
Operational strength and systems to support new strategies provide the foundation for change
Incentive-based approach focuses efforts & drives performance
Active, engaged board an asset; refocus as needed
Phase 3: Growth 2001 Future : Phase 3: Growth 2001 Future The Environment
Senate Bill 876 creating the…
Ben Franklin Technology Development Authority* to:
“Serve as the Commonwealth’s key regional partners in identifying, developing, adapting and implementing advanced technologies.”
“Act as regional facilitators and managers for interactions, programs and initiatives.”
“Establish partnerships.”
* BFTP/PTIA merge; BFTPs on governing board; IRCs independent network; regional system in tact
Phase 3: Growth 2001 Future : Phase 3: Growth 2001 Future The Environment (cont’d)
Altered, slowing economic environment; BFTP resources in greater demand
Many regional orgs. & seeking role in creating the New Economy
Lead universities launching tech. & enterprise development initiatives
Growing attention to value of federal/state alliances
Technology strategies in vogue nationally; tobacco settlements provide added resources
Legacy phase of state administration; new governor in 2003
Public school funding & performance, stadiums, land use, city blight and inner-suburban ring deterioration, population loss, state/local political power plays the key topics
Phase 3: Growth 2001 Future : Phase 3: Growth 2001 Future The Response
BFTP/SEP Adopts New 5 Year Strategy
Regional Vision
BFTP/SEP Vision
Mission
Key Strategic Goals
Phase 3: Growth 2001 Future : Phase 3: Growth 2001 Future Team Challenge:
Given the overview of “The Ben Franklin Experiment” outlined here, name three key goals that BFTP/SEP should consider as it embarks upon its 3rd phase of evolution.
Phase 3: Growth 2001 Future : Phase 3: Growth 2001 Future
Regional Vision
To see the region achieve international stature and recognition as a model for technology, innovation and entrepreneurship.
Phase 3: Growth 2001 Future : Phase 3: Growth 2001 Future
BFTP/SEP Vision
A force for the creation & growth of technology enterprises through integration of scientific discovery, development, commercialization and innovation.
Phase 3: Growth 2001 Future : Phase 3: Growth 2001 Future
BFTP/SEP Mission
BFTP/SEP stimulates economic growth and competitiveness in the region through initiatives and partnerships that nurture innovation, accelerate the development and adoption of technology by companies and communities, and promote the growth of technology-based entrepreneurship.
Phase 3: Growth 2001 Future : Phase 3: Growth 2001 Future
BFTP/SEP: Our Plan
Phase 3: Growth 2001 Future : Phase 3: Growth 2001 Future
Key Strategic Goals
A leader & partner in the development and implementation of large-scale regional initiatives;
The undisputed leader in the provision of capital and development services to pre-seed & seed stage technology enterprises;
A nationally renowned organization for product development & commercialization;
A contributor to regional understanding of the technology sector, through focused economic research that informs policy and program decisions;
A bridge linking minority and underserved populations to the tech-sector;
An acknowledged international leader in technology-based economic development.
Phase 3: Growth 2001 Future : Phase 3: Growth 2001 Future Achievements/Lessons
News & film 2006!