Innovation Works Inc., one of the most active investors for Pittsburgh-area startup companies, is doubling down on the region and offering more capital to cash-strapped startups than ever before.
In fiscal year 2021-2022, IW made 62 deals with local tech firms, which placed it among one of the most-active startup investors in the country, not to mention all of Pennsylvania.
But for its most recent fiscal year, IW CEO and President Ven Raju said that number climbed by 20%.
It's funding that comes at a critical time for many budding tech firms as investment dollars from traditional startup investors have calmed amid broader market uncertainties over the past year.
To help address some of those uncertainties during their onset, IW announced in November 2022 that it doubled its investment check size for startups enrolled in its accelerator programs, which now all come with a $100,000 investment via a convertible note so long as the startup completes certain milestones while enrolled in the program.
"We are really stepping up and trying to come in where there may be private sector [voids]," Raju said. "We've increased our investment capacity, we've increased the number of deals, we've increased the check size."
During the time of its 2022-2023 fiscal year, Raju said IW deployed roughly $7 million in capital to startups in its seed stage program. That's double the investment capacity of its prior fiscal year period, Raju said.
He cited additional funding at the state and federal levels as being part of the reason for the expanded capacity, funding that an October 2022 report from the Brookings Institute found as being necessary to help foster the growth of Pittsburgh's tech scene.
But the North Side-based investor also used cash from its reserves to invest and support companies and their founders in the region over the past year, Raju said.
"I think it's particularly important now in light of the macroeconomic headwinds and tightening of the private sector funding environment, it's all the more needed for IW to step in and really support entrepreneurship," Raju said. "[The response] has been very well received. We're able to support more entrepreneurs, support more companies, increase the check size. Our check size in fiscal year 2022-2023 increased by 40% from fiscal year 2021-2022, which is a material increase."
And it's a trend, at least for a bit into the foreseeable future, that Raju expects IW will be able to sustain going forward.
"Over the mid-term here, I think we are going to continue to deploy capital at this rate," Raju said. "I don't want to speak to a 10-year horizon, but certainly over the course of the next three to five years, our intention is to continue with increased support."
