Ben Franklin Technology Partners has raised its largest ever amount of capital, securing $28 million towards its $100 million statewide fund in a bid to retain and grow startups in Pennsylvania.
The Global Opportunity Pennsylvania Fund, or GO PA Fund II, follows the $24.3 million GO Philly Fund Ben Franklin Technology Partners closed in 2019. The GO Philly Fund was the organization's largest ever fund, which it is now looking to more than quadruple with its latest initiative.
Ben Franklin and Fulton Bank are anchor investors in the GO PA Fund II, which also has investments from WSFS Bank, Robin Hood Ventures, Investors Circle and Ben Franklin Technology Development Authority. The latter is a state-run development program that funds Ben Franklin Technology Partners.
The fund is being raised by and will be deployed across the four regional Ben Franklin partners, which include Ben Franklin Technology Partners of Southeastern Pennsylvania, Northeastern Pennsylvania, Central and Northern Pennsylvania, and Innovation Works, which covers the southwestern part of the state. It is the first time they are collaborating on a fund like this.
Ben Franklin Technology Partners has committed $10 million to the fund over the course of five to 10 years, mainly through returned capital from past investments.
The goal is to raise the remainder of the $100 million in the next year.
Funding will allow the organizations to provide follow-on investments to companies already in the statewide Ben Franklin Technology Partners portfolio, which equates to some 600 startups. Ben Franklin Technology Partners of Southeastern Pennsylvania CEO Scott Nissenbaum said the fund will be instrumental in retaining startups in the Keystone State, helping them bridge the gap from early-stage to later-stage investments. It will also continue to establish Pennsylvania as a hub for innovation.
Nissenbaum said the fund will mainly be used to participate in growth rounds. The benchmark it might consider for a life sciences startup could mean the company has a product in clinical trials. For a tech startup, it would look at investing in companies with revenue between $5 million and $20 million and with triple-digit growth.
Ben Franklin Technology Partners will look to invest anywhere from $1 million to $5 million per company, depending on the final fund size.
As an organization, Ben Franklin Technology Partners has a unique perspective and model that Nissenbaum thinks will attract other investors. For example, the organization's due diligence happens over years rather than months, a process it often applies to prospective investors. That long-term relationship building gives Ben Franklin Technology Partners what Nissenbaum described as the "pole position seat to be able to say, out of these 600 companies, these are the five this year that have done incredible things."
"It also then makes it easier for an outside investor — a New York investor or California investor — to say, 'We've got smart money at the table pouring on more money, and they're going to be the local, close-to-home entity that is helping roll up their sleeves to get this company from where they are today to the big success we're all hoping for," Nissenbaum said.
The approach worked with the initial GO Philly Fund, which launched in 2019. Through the fund, the organization made 18 investments in 11 startups and has not incurred any losses yet, Nissenbaum said. Two companies in that tranche — Tridiuum and Sidecar — have sold for over $100 million.
That's one major calling card Nissenbaum and his fellow Ben Franklin regional CEOs can point to when trying to attract new investors to complete the $100 million fund. He said to raise the remaining $72 million, Ben Franklin Technology Partners will be in talks with banks, family offices, angel investors, small endowments and other accredited investors.
Nissenbaum said that the GO PA Fund, coupled with recent federal designations for the region and state as both a hydrogen hub and a technology hub, are evidence of national attention for the innovation happening in Pennsylvania.
"Now with all this money flowing into Philadelphia startups, companies here have an advantage," Nissenbaum said. "There's a lot of capital, which is great. Still not enough capital, but at least we're really starting to chip away at that 'we need to import all of our capital' problem."
