Ben Franklin Technology Partners of Southeastern Pennsylvania is investing $2 million in Philadelphia-area tech and health care startups before setting its sights on a new late-stage fund with a goal of raising at least $25 million — a welcome commitment for local startups as venture capital funding dries up.
The investments were made in two groups, with $1.3 million going to five tech startups and $700,000 doled out to two health care startups.
The seven companies to receive investments from Ben Franklin Technology Partners are:
- Accencio, a Philadelphia intellectual property startup;
- GoWell, a Narberth firm that aims to make the process of enrolling in health care benefits more efficient;
- Luxtech, a Philadelphia designer and manufacturer of LED light engines;
- PolicyMap, a Philadelphia startup that translates datasets into maps;
- Red Vector, a Chesterbrook intelligence platform that allows institutions to identify and manage insider risks and threats;
- AnaOno, a Philadelphia clothing startup that makes apparel for breast cancer survivors;
- ChromaTan, a Philadelphia startup creating infrastructure to support cell and gene therapy and looking to lower the cost of operation for companies in the space.
The seven companies are in widely varied spaces but are looking to disrupt their respective industries. Ben Franklin Technology Partners of Southeastern Pennsylvania CEO Scott Nissenbaum highlighted ChromaTan as a startup that has the potential to have a great impact on cell and gene therapies, an industry that will only continue its growth trajectory in Philadelphia.
By investing in such companies, Ben Franklin Technology Partners is looking to get in on the ground floor. "We want to invest in the picks and shovels," Nissenbaum said. "The infrastructure in the market isn't fully built out yet. We have the solutions but a lot of times the infrastructure to support it is the most expensive part. These are the picks and shovels that allow them to do the work."
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Ben Franklin Technology Partners is now setting its sights on a larger fundraising initiative with the creation of a new late-stage investment fund.
The fund will be the second of its kind, following the GO Philly Fund. A joint venture between Ben Franklin Technology Partners and Newtown-headquartered EPAM, GO Philly raised $25 million to invest in early stage, tech-focused startups. Nissenbaum hopes to begin closing on the new fund in the second quarter.
"My hope is this one will be a multiple of that. Success is anything above $25 million, but it depends on how the capital markets can support it," Nissenbaum said, adding that the goal of the fund is to be an investment resource for startups so they don't have to leave the region to find capital.
Both funding moves are especially noteworthy given the nationwide downturn in venture capital funding. Ben Franklin Technology Partners, which acts as both an investment entity and a nonprofit, is different than traditional VC firms because it receives state funding along with money from outside investors.
Nissenbaum said the government funding that allows continued investment can be both a positive and a negative. It allows for lower valuations and less competition, but that also means there are less entities to share the risk with, he said, so Ben Franklin Technology Partners can be left more exposed "if things go sideways."
"We're in the market when other people aren't," Nissenbaum said. "Our purpose is to help you survive and thrive, whether it's good economic conditions or bad economic conditions."
In fiscal 2021, the most recently available data, Ben Franklin Technology Partners invested $8.4 million. It has invested in 201 active startups in the region.
