I am a co-founder and managing partner of originate Ventures LLC, an early-stage venture capital fund in Bethlehem that has invested more than $42 million over the past 10 years in early-stage technology companies.
I moved to Pennsylvania in December 1987 with my friends to start a new business called SolarCare Technologies at the Ben Franklin Technology Partners incubator facility at the mountaintop campus of Lehigh University.
Back then, we had this crazy idea of putting a sunscreen lotion on a towelette delivery system and selling it to sports and recreation enthusiasts under the brand name SunSense. Our initial funding came from a $50,000 grant from Ben Franklin. Without that investment, we would never have left Ohio to start our business here in Pennsylvania.
The sunscreen product was more or less a bust, but with the guidance and additional financial support of Ben Franklin, we completely reinvented ourselves to become an aspiring medical-device company. That company eventually became OraSure Technologies.
Reflecting back on the past 31 years, because Ben Franklin believed in us, I and my co-founders settled permanently in Bethlehem to raise our families and grow our businesses. I also maintained a conviction to give back my time, talents, and treasures to try and help to “seed and cultivate” future economic development growth and prosperity in our community.
I am quite proud of the return on investment we have delivered in this community since that original $50,000 in seed capital funding from Ben Franklin in 1988. My two favorites that I was intimately involved with are:
For the fiscal year ended December 31, 2018, OraSure had 398 employees (including its subsidiary DNA Genotek), sales of $182 million, and a market cap of more than $700 million. It is still headquartered on a former abandoned Bethlehem Steel site on the southside of Bethlehem. I have been retired from OraSure since 2004, and the company continues to do amazing things. OraSure celebrated more than 31 years in business in 2018.
Originate Ventures has invested more than $42 million in 17 early stage technology start-ups over the past decade in Pennsylvania and the surrounding area. To date, Originate has returned more than $136 million to its investors, including returning more than $27.6 million on a $10.1 million investment from the Commonwealth Financing Authority of Pennsylvania. Companies have trekked as far away as 300 miles to the Victory Firehouse to seek funding for their start-ups. They are always amazed at the vibrant business community that we have here on the southside of Bethlehem!
So why highlight these results? Because without Ben Franklin, none of these accomplishments would have happened here in Pennsylvania.
Since its inception, Ben Franklin has invested in more than 4,500 technology-based companies and boosted the state’s economy by more than $25 billion, helping to generate 148,000 jobs through investments in client firms and their Pennsylvania spinoff companies. Year after year, Ben Franklin has put great numbers up on the board. OraSure is just one of many success stories that have resulted.
But all of this success is fragile and depends on adequate state funding. Eleven years ago, funding for the Ben Franklin statewide network dropped approximately 50 percent, from $28 million to $14.5 million per year. Next year’s state budget draft retains that reduced funding level. This makes no sense to me whatsoever.
While Pennsylvania has been one of the most widely known and progressive states in the nation in delivering effective and efficient technology-based economic development programs, it is now receiving increased competition from other states. These states have also begun investing heavily in innovation and high-tech economic development.
No longer would I need to uproot from Ohio to start a business. Ben Franklin wrote the blueprint for investing in startups and seeding innovation, and now that they have perfected the model, the state has drastically cut its funding. Other states are stealing its blueprint and are aggressively funding to attract and retain the very best.
I believe that Pennsylvania must invest aggressively in innovation to compete and win. What we lose by not properly funding Ben Franklin is lost forever, and future generations of Pennsylvanians will feel the impact of that loss for decades to come.
Ben Franklin works for Pennsylvania. As technology continues to play an increasing role in our economy, the state needs to expand its investment, not curtail it. The economic future of the commonwealth depends on promoting an environment that fosters innovation and the creation of high-paying, sustainable jobs that grow the state’s tax base and economy.
That’s what the Ben Franklin Technology Partners was created to do. And Ben Franklin continues to succeed despite its budget cuts.
We need our legislators to restore funding to the Ben Franklin Technology Partners in the 2019-20 budget. The future is now. This makes great economic sense.
Mike Gausling is co-founder and managing partner of Originate Ventures LLC in Bethlehem.