Philadelphia scores II...

At the Robin Hood meeting I noticed a couple of times mentionings of Ben Franklin... First, I thought it was another angel investor, but then it clicked me - it is the organization I was supposed to go to today... Ben Franklin Technology PArtners...

I had a meeting with Terry Hicks, VP Investment Group and later on also with RoseAnn Rosenthal, President & CEO... And I got very impressed with the achievements of Ben Franklin as well as the basic model...

Ben Franklin was created in 1983 with the goal of helping economic development of Pennsylvania - and because PA at that time was very much agricultural economy, it was rather a turn around plan than just development... Ben Franklin is a network of 4 economic development agencies strategically distributed throughout PA, run on commercial principles, with significant funding from the state of Pennsylvania - I visited the Southeastern Ben Franklin (BFTP/SEP)... The focus of the agencies is to diversify and strengthen PA economy by focusing on entrepreneurial development and innovation (how similarly we should be looking at the Czech Republic), and it is doing so by direct investments in emerging tech companies, providing technical and business expertise and facilitating contacts and cooperations between private and public, including universities and research institutions; Capital, Knowledge and Networks...

The Board of Directors is the executive body of the agency, and consists of respected representatives of both private and public sector - with majority from the private sector...

BFTP/SEP usually invests in 25 ventures per year, typical size of the initial investment is $ 250 - 750k (total of $ 6 - 7m), currently having 92 portfolio companies which are then monitored with the help from external consultants who are hired by BFTP/SEP... In 2008 alone they had 12 exits, including a super-successful sale of a biotech company Protez to Novartis for more than $ 400m...

What is very important is the fact that BFTP/SEP usually provides matching funds, so it only invests alongside angels or VCs, so it really has a multiplicating effect, but it makes angels' and VCs' lives a lot easier... Their investments usually take a form of sub-ordinated convertible loan with warrants, only in limited cases they go immediately into equity...

But the overall outcome is that an agency like Ben Franklin, initiated and co-funded by the state / government, but kept independent (quasi-public) can really make a significant difference - it is interesting to take a look at the Impact Study that they published recently (showing that the investment grew PA economy by $9.3 billion, created thousands of jobs and actually returned 3.5 for each 1 dollar invested)... And that all just with a 28-million-dollar contribution from public money on annual basis (for all 4 agencies)...!

Oh, and I almost forgot: BFTP/SEP also created an angel network and have a minority stake in a GP of a VC fund where they are the largest LP... Like it was not enough already...