Economics / Startups

There’s a rumor that the Lehigh Valley could steal Philly’s startup thunder

There's a friendly competition between the Southeast and Northeast chapters of the state's Ben Franklin Technology Partners.

Inside BFTP/NEP's Lehigh University incubator. (Photo courtesy of Lehigh University)
This story is part of Grow PA, a reported series on economic development across 10 Pennsylvania counties underwritten by the Chamber of Commerce for Greater Philadelphia. Sign up for our weekly curated email here.
Correction: An earlier version of this story misspelled Laura Eppler's last name. (8/14/17, 2:20 p.m.)

Correction: This story was updated with clarifying information from BFTP. (8/15/17 4:05 p.m.)

Jason Bannon has been catching wind of an unthinkable rumor: Fledgling entrepreneurs feel they have a better shot at launching and funding tech startups in the Lehigh Valley than they do in Philadelphia.

“I hear rumors of folks saying you have to go up to [Ben Franklin Technology Partners Northeastern Pennsylvania] because they have a complete offering for entrepreneurs to go from zero to launch,” said the amiable marketing director for Philly’s BFTP.

Is it true? It’s a little early to say (either way, any competition between the sister chapters is “friendly” and productive, say both camps). But like every rumor, this one is founded in some degree of truth.

Both BFTP SEP and NEP accelerate early stage ventures and more mature tech firms. But where SEP deals with ventures headquartered inside the five counties that make up Greater Philadelphia, NEP serves entrepreneurs in 21 counties, from Lehigh and Berks up to the New York borderline. (BFTP is a state-backed capital provider with four regional offices across the state.)

NEP spreads its investments across those 21 counties. It would seem, then, that entrepreneurs in less dense counties such as Susquehanna might have a better shot at BFTP dollars than Lehigh County­-based entrepreneurs, let alone startups in Philadelphia. NEP says, however, that a company’s location is “only one consideration of many” when selecting portfolio companies.

Still, you can see why up-and-coming entrepreneurs in dense urban centers like Philly might be interested in relocating to, say, Bethlehem, home to NEP’s Lehigh University–based headquarters and its TechVentures business incubator (NEP is wholly owned by the university but supported with state funding).

The incubator is in the midst of an expansion, set to complete in mid-October. Demand for space, said NEP marketing director Laura Eppler, necessitated more construction.

The large portion of the state NEP is responsible for brings a lot of diversity. Urban centers churn out young entrepreneurs, whereas rural areas lacking post-secondary institutions are anchored by their largest employers.

“Some of our areas we do more work with established manufacturers rather than entrepreneurs,” said Eppler. “Large employers determine what sectors a particular region focuses on. A lot of our entrepreneurs will find a spin-out product or service that is slightly off-mission within the larger organization, so they’ll leave to pursue it on their own.”

Though job creation and retention are both important, Eppler says keeping jobs in NEP’s region is the most cost-effective approach. According to the company’s 2016 impact report, NEP created 383 new jobs in 2015 while retaining 604 existing jobs.

A look at some of NEP’s recent investments:

  • Allentown-based aquarium machinery company EcoTech Marine, which employs 65
  • Reading-based micronizing company Custom Processing Services, which employs 138
  • Breinigsville optoelectronics company CyOptics/Avago Technologies, which employs 330 in the region and 837 globally
  • Carbon County-based manufacturer KME Kovatch, which employs over 700 (537 can be attributed to NEP’s support)

“Our rationale, very soundly, is it costs a lot less money to keep a job than to create a new one,” said Eppler. “It’s much harder to create new jobs, and not only that, but the human cost of people being dislocated from their jobs [can be devastating].”

As for young companies? Eppler said choosing one company to be excited about is akin to choosing which of your children are most likely to succeed. We’ll be following up on one of the companies in NEP’s incubator, a startup called Grovara, that’s working to help American companies more effectively export goods, in the coming weeks.

Then again, who knows who else will be working alongside Grovara by then.

“We wouldn’t be angry if anybody left to go up to NEP,” Bannon said. “But it’s better here.”


Companies: Ben Franklin Technology Partners
Series: Grow PA

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