Q&A: Terrence Hicks, VP of investment at Ben Franklin Technology Partners - Technical.ly Philly

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Jul. 29, 2011 10:41 am

Q&A: Terrence Hicks, VP of investment at Ben Franklin Technology Partners

A linchpin of the local entrepreneurial community for nearly 30 years, Ben Franklin Technology Partners is one of the unique advantages of starting a company in Pennsylvania. And Terry Hicks is leading the investment arm.

Terrence Hicks under the entrance to the Ben Franklin Technology Partners office

A linchpin of the local entrepreneurial community for nearly 30 years, Ben Franklin Technology Partners is one of the unique advantages of starting a company in Pennsylvania.

Partially funded by the state government, BFTP of Southeastern Pennsylvania is one of four Ben Franklin organizations across the Pennsylvania that provides early capital and mentorship. The organization is often the first investment received by those in the local IT, life science and physical science spaces and is an investor in over 100 local companies, including AboutOne, Vuzit, CityRyde, Monetate and many more. The firm also had several exits in NuPathe, Boomi and ClickEquations.

However, the group is fighting to keep its public investment at the current $4 million level, down from $6.9 million in 2009.

Despite the state cuts, BFTP has remained extremely busy partnering with the Philadelphia Media Network for an incubator, creating the DreamIt Plus program and fulfilling its role in the $129 million GPICHub project.

We sat down with Terrence Hicks, Ben Franklin’s vice president of investment to discuss Ben Franklin’s role in the local community, its current funding situation and his increased interest in video games.

From the outside it seems that BFTP resembles that old adage of a duck: calm from the outside, but frantically kicking below the surface. What is the average day like at BFTP?

We fund 25 to 30 companies a year through three application rounds. Each involves a fairly extensive and thorough review process: reviewing the technology, due diligence and then a pitch in front of an investing advisory committee.

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That investment committee is area venture capitalists, angels, accountants and attorneys. All the folks that make up the ecosystem. We tell companies: “You are not only presenting to Ben Franklin, you are presenting to the community.”

If we discover the baby is a little too ugly, we give them feedback to have the company do some plastic surgery.

How many companies don’t make the cut?

We probably fund 35 to 40 percent. The reason that number is so high is that we do a lot of filtering at the outset. If we discover the baby is a little too ugly, we give them feedback to have the company do some plastic surgery.

How has the new administration in Harrisburg and budget affected BFTP?

There are four Ben Franklins across the state. The funding that we receive is equally distributed. Up until two years ago that funding was 6.9 million to each. Two years ago that was cut dramatically to $4 million. This year it was $4 million. [BFTP CEO] Roseann [Rosenthal] is pitching Harrisburg today on the next round.

When we hear that the state is cutting your budget, how worried should the tech community be?

We are usually the first stop for tech companies in the region. If we’re not here the Originate [Ventures] the MentorTech [Ventures]… those guys don’t get as much local deal flow.

What piece of the pie is state funding?

I don’t know if that’s something I want to discuss here. The takeaway here is that we are in the position despite cuts to keep the doors open and keep money going out to companies… We have a number of exits every year. Even if we just get our principal back… we have a big portfolio. The success of the portfolio helps us continue what we do.

Hear councilman Bill Green, University City Science Center President and CEO Steve Tang and BFTP President and CEO Roseanne Rosenthal discuss the role of government in local investment during Philly Tech Week.

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DreamIt Plus seemed much needed. Our only question: Why did this take so long?

We are third-time investors in DreamIt. We realized that the companies in DreamIt I and II tended to not yet be ready for prime time, but they didn’t need that much money to get there.

Pennsylvania loses a company. What we did is say to our angels: “Tell us what companies you’d like to invest in and we’ll match.” Maybe that’s enough to keep them in Pennsylvania.

Terrence Hicks

You see hundreds of companies a year. What patterns or trends are you seeing?

In IT we’re seeing social stuff and applications for iPhone and iPad that we didn’t see five years ago. SaaS is a big percentage of what we see. We’re starting to see some games, which we didn’t see five years ago. We need to learn more about this phenomena of computer games.

You have lots of listed partnerships, and involved community members.  Seeing all of this, what does Philadelphia need?

We always need more early stage money. There’s a gap at the “translational” end, especially in life sciences. There’s a need for more bootstrapped funding for IT companies. The angel community has stepped up but I think there are more deals out there. There’s always a need for a post-Ben Franklin investor.

Like a super angel?

Yes, or an early stage VC. You’ve got Osage [Partners], Emerald [Stage2] Ventures, MentorTech and Originate. That’s pretty much it. Edison [Ventures] wants to do deals at five, six, seven million a pop.

You need a Ben Franklin Plus?

Yep.

What do you think we do well as a city?

We do well at generating ideas out of Philly Startup Leaders, the Hacktory… to see that excitement that we didn’t see five or ten years ago. The community in the IT area is great. We are a life science hot spot and there’s a lot of talent here for that. We are significant players in that arena, but we always need more money to keep them moving and in Pennsylvania.

 

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