- Live from your Public Media Studios WBAA, presents Keystone Edition Business.

A public affairs program that goes beyond the headlines to address issues in Northeastern and Central Pennsylvania.

This is Keystone Edition Business.

And now moderator Chris Jones.

(bright upbeat music) - Welcome to Keystone Edition, I'm your host, Chris Jones.

Anyone could be an entrepreneur, right?

All you need is an idea and some money.

Well, it's not quite that simple.

There are a lot of steps between that idea and success.

One stumbling block can be finding the money to get your startup off the ground.

You may not know what options are out there or how to connect with them.

We have experts here to help.

You can reach out by phone at +1 800-326-9842, email at keystone@wvia.org.

Or on social with the hashtag Keystone business.

But first WVIA's Paul Azar takes a look at where an entrepreneur can turn for funds.

(Air Whooshing) - [Paul] A successful startup begins with a great idea.

After that, every entrepreneur is going to need some capital.

Where you turn when you've exhausted all of the options of fundraising on your own.

The good news is, there are options and there are probably more out there than, you know.

So how can an entrepreneur tap into some of these funds like Angel Investors, venture capital, and grants?

Start your search at home.

Your local small business development center or chamber of commerce may be able to connect you with some loans from grants.

Your startup may be eligible for tax credits, if it's creating jobs, or if it's in a specific sector.

You can also sell those tax credits for some additional capital.

Some private foundations provide grants to specific groups like black-owned businesses or women.

Angel investors and venture capital, are other routes to funds.

Remember investors want to make money, so it's important to outline how your business is going to do that.

You must have a business plan that details what your business is, what you want to accomplish, and how you plan to grow that business.

There's a lot of competition for funding, and investors want to know they're making the right choice.

Make connections, network with other entrepreneurs who have successfully raised capital.

There'll be able to offer valuable advice on how to connect with investors.

For more information, go to wvia.org/keystone business.

For Keystone Edition business, I'm Paul Azar (lively cheerful music) - Now we just need to hear from you, give us a call at +1 800-326-9842, to learn more about the future of workforce development.

First, joining us here in the studio is Ken Okrepkie the Regional Manager of the Pocono Northeast region for Ben Franklin technology partners of Northeastern Pennsylvania.

Jeffrey Box is also here.

He's the president and CEO of the Northeast Pennsylvania Alliance.

And joining us on zoom, We have Matt Rhodes, the managing partner at 1855 Capital.

Welcome guys.

- Good evening - Matt, we're gonna start with you tell us more about 1855 Capital.

- 1855 Capital is what I would call a micro venture fund.

We're a small venture fund.

That's headquartered in State College PA and we are really one of the early-stage investors in central Pennsylvania.

We operate within the Penn State community.

What we say is Penn state community, but it's really here in central Pennsylvania.

we are one of the only active venture funds that is looking at early-stage ventures.

Now, you know, the fact is that we're probably not the first money into some of these ideas, but we are looking and quite frankly, our job is to be aware of ideas and most importantly entrepreneurs, that are looking to make a difference with their ideas and their companies.

So we're an early-stage venture capital fund, operating in central Pennsylvania and looking to create syndicates to help companies succeed.

- Yeah, perfect.

We're gonna get to how you think about vetting deals and that process, but before we get there, you know, one of the things I've learned as an entrepreneur is that there's different phases or different cycles that go on and you have different needs depending on what stage you're in.

You talk about this concept of ladder of funding.

Can you walk us through what that means?

- Sure, so the fact is that at any point in the company's history, they're looking for capital immediately to say, hey, I need to get to the next six months, the next three months.

What I like to think about is the fact that it's not just what you're doing today.

It's where are you going to get to next?

And the fact is that probably what you think you need today, that'll get you to that next step.

But customers take longer to make a decision than you would think because, you know, they don't quite get it at first.

Your product development takes longer than you think, so you gotta be not only thinking about what you need right now but thinking about the next step and the next step and the next step.

So as I always say to the people I talked to, yes, I understand what you need right now, but let's talk about that next rung on the ladder, or do we have what you need in case it doesn't work out perfectly.

Because we can talk about being perfect, but that's not typically the experience there's, you know, it's you know, reality strikes, and so you might need that next level of that next level.

And so talking about the ladder of funding, we start with the friends, family, you start with some grants, you start with some local opportunities, there's economic development funds, SBI has been Franklin.

We try and be at that next rung that tries to actually be a rung that can get you to a broader set of investors and the like.

So it's always about if you think you need hundred, $500,000, let's think about what is it, what would it take to mean if you needed a million or five-nine if you got that five one to five million if you got that five,1 to 5 million, what would it take to get to that 10, 20, 30 million?

And again, maybe you don't need it, but you have to plan for it.

Quite frankly, the whole, you gotta be able to climb the whole ladder.

- Matt how do you go about vetting deals?

Another way of thinking about that is what is 1855 Capital looking for in an investment?

- Well, so I like to say we don't invest in ideas.

We invest in teams and people.

ideas are a dime a dozen quite frankly.

And no matter what you think, you're not the only one with that idea.

So it's not about it's the right idea, it's ideas whose time has come with the right people in the right place at the right time.

So we tend to sort of watch from the grandstands for a while.

I would say that we have not yet invested in anything that we haven't watched for at least 12 months.

We're really looking at the people how they behave.

I like to say that in an entrepreneur's lifetime, there are only two types of days, good days and bad days, and the bad days outnumber the good days.

So are you ready to go through those bad days and get to the good days?

So we watch for a long time it's the people their ability to persist, to be proactive, and get there quite frankly.

- We appreciate that we'll be back... - And the fact is they have to have really good ideas and we look for transformational ideas quite frankly.

- Absolutely, and we'll come back to you and get a little bit more information on that.

Ken Okrepkie here in the studio, tell us more about Ben Franklin technology partners.

- Yeah.

So Chris Ben Franklin was founded in 1982 and interesting enough that Genesis of Ben Franklin has a closer connection in North-Eastern Pennsylvania than most people realize.

Right, we were founded under the Governor Dick Thornburgh administration, along with Lieutenant governor, Bill Scranton.

So we all recognized Bill Scranton and the impact he's had on our community here.

They had a vision to invest in technology and innovation to create jobs.

So 38 years ago, that vision and that mission is still true today, right?

So they, we, our funding comes from the Pennsylvania department of community and economic development supported by today's legislature and the governor.

And we do it, we provide value and we create those jobs in two ways.

Number one, we're an early-stage seed fund, and we invest money in early-stage technology companies that have a high growth opportunity.

So I can invest up to $100,000 in a given funding round in over a period of years and up to $450,000 in a technology company that has a high growth opportunity.

And the second thing we do is we invest in the entrepreneurial ecosystem here in Northeastern Pennsylvania.

And when I talk about that, I really mean the business incubators, there are 14 incubators in Ben Franklin's incubator network, and one of the largest incubator networks in the country.

And we support the entrepreneurs that are there and the economic development organizations that have built those incubators and created a fertile place for entrepreneurs to grow their businesses.

- So you mentioned a 100 to 450, or did you say 450 over the life cycle.

- 450 Probably over the life cycle.

- What is a typical Ben Franklin technology partners portfolio company look like?

So what are you looking for and how do you vet deals?

- So we're being introduced to entrepreneurs at the idea stage as well as the revenue.

So it will be pre-revenue and we'll have companies that will already have customers or like you heard previously, you know, Matt said, we want to see an entrepreneur who we believe can execute on the opportunity.

It's about the team, there are a significant number of ideas out there.

But we want to see an entrepreneur that's talked to their customers and in a perfect world, they'll show us that there's some level of market traction, right?

They've talked to their customers, the customers have indicated not only that it's a good idea, but they would be interested in purchasing the product.

And then they can show us that this is a scalable business opportunity because we're about job creation.

You know, how do we invest in a company that can grow to 20, 30, 40, 50?

And in some cases, we have companies that have created thousands of jobs in Northeastern Pennsylvania.

And just to reiterate there for Ben Franklin, right?

We're a statewide organization Ben Franklin and Pittsburgh, Philadelphia, one that runs from Erie to Harrisburg.

And then we cover the 21 counties here in the footprint, and I represent the six counties here in the Northeastern corner.

- And so what stage, you said all varying stages, but what's the typical stage.

So how does someone get in contact with you at Ben Franklin, right?

And what should they have prepared in order to go through the process?

- I would say we see entrepreneurs and reinforced this on a varying level, right?

An entrepreneur, maybe somebody that had that aha moment and said, I'm interested in starting a company and they'll give me a call and we'll talk to them.

Whether they come to our website at nap.benfranklin.org, or they give me a call on my cell phone.

Most folks are referred to me that through economic development organizations or other entrepreneurs.

And so then entrepreneur who comes with an idea we really need to dig in to how will they turn that idea into a company?

And in other cases, we'll have an entrepreneur that maybe comes out of the industry that they have in level of expertise in, and they know who the customers are.

And they've built a product that has some sort of, you know, intellectual property, a competitive position in that marketplace, and they're ready to go.

And so our dollars can be used initially, you know, at a level of say $35,000 or so to help them validate that market opportunity and engage initial customers, or we can make an investment up to $100,000 where you start to hire maybe your vice president of sales or that key engineer that allows you to take that product from the beta stage and convert it over into real customers and generating revenue.

So we'll see entrepreneurs on both levels of the scale.

- Can you give us a sense of how many investments Ben Franklin is making, on an annual basis?

- Yeah, on an annual basis, our Ben Franklin, the 21 counties here in the Northeastern corner, we'll be investing in probably between 20 and 25 companies each year.

- Excellent, Jeff let's go to you.

Can you tell us more about the Northeastern Pennsylvania Alliance?

- Yes, thank you, Chris.

NEPA Alliance is a seven County regional community and economic development agency.

we've been doing economic and community development here in Northeast PA for many, many years.

We are created by both Federal and State law.

We are part of the Appalachian Regional Commission which serves 52 of the 67 Pennsylvania counties.

We are also partnered with the economic development administration and we're also identified and established by state law through the department of community and economic development.

So in, some respects, like, can we are funded with state dollars through, through DCED, we are also funded through federal, agencies as well.

We bring probably about $2 million in federal grants to the region on an annual basis.

We have several business development programs, 12 financing programs, we do international business development and we also help local companies get government contracts.

So we're involved in a lot of different things throughout the region.

- You know, there's a reason I put you third, right?

When we chatted with Matt, he was talking about venture capital and the ladders of funding, right?

And really the bar to get capital from Matt is going to be a higher bar.

We talked to Ken at Ben Franklin who also makes available capital on an equity basis, and again, on a high bar.

One of the things I want to chat with you about actually a few things, the first one is your loan program, right?

So business is looking for loans, according to your website you guys offer loans as small as $10,000 all the way up to 5.5 million.

Can you tell us about some of those programs at a high level and also the eligibility.

- Yes, I like to say Chris, that we can pretty much fund anything.

We have done dairy farms, we have done tree farms, we have done different types of manufacturing, standard businesses of brick and mortar type, we have done over the years, we've done retail.

So there's pretty much a wide spectrum of types of businesses that we can fund.

And yes, as you said, we can fund anywhere from the $5-$10,000 microloan up to say 50,000 for start-up-type businesses.

And then when you get up into the bigger dollar items with our larger-scale programs, then the loans are 100, 200, and up to five and a half million or 45% of the project cost.

That is with our SBA 504 lending program.

That program is tailored to Land and building type projects, larger-scale type projects.

We've done hotels, we've done car dealerships, there are other types of businesses in a bigger scale that we can help fund with that.

- You know, the other area that I wanted to discuss with you is, are grants right?

Grants are those elusive opportunities that any business owner would love to learn more about?

And I understand Nepal Alliance actually is a foremost expert.

So can you tell us a little bit more at a high level, I know you work with three primary organizations with regard to the grants, but can you chat with them and some of the opportunities that the viewers might be eligible for?

- Yes, most of our, arc Appalachian regional commission grants, go to local either non-profits some or some go to higher ed different types of projects like that for economic development, job creation, job retention, or in the workforce side to train kids for the jobs that are here and in Northeast PA. We do have funding through our international business development program.

We will actually this is a Commonwealth funded program and supported by ARC also.

That program allows funding to help businesses travel to overseas markets, to go to overseas trade shows, to build a business relationship in overseas markets.

Pennsylvania has 15 overseas trade offices.

We are the local contact point to get local businesses connected with those overseas markets.

We vet them to determine what products and what services might have a demand in overseas markets, and we make those connections.

So again, Pennsylvania could subsidize a trip to... Several years ago we took five companies locally to the Paris air show.

Aerospace companies that are located here in Northeast PA that was a good opportunity for everyone.

So there's no one size fits all in that.

Chris, there's a lot of different program dollars available through our different programs.

And the best thing to do is go to our website or give us a call and we'll certainly talk to the businesses and see if we can help.

- Perfect, and before we go to Matt just a question came in from social media does NEPA Alliance help the entrepreneurs actually write the grants?

- We will help up to a point, we're never going to say we're going to do all of it for you because that's not who we are.

We, do help and guide and educate the folks to get the right language into the grant writing or to the grant readers.

So we do help with them and we do work with them.

- Perfect, thank you.

Matt.

We're gonna come back to you.

So you have three primary funds.

You have your Core $10 million funds.

You have an Angel syndicate fund and then you have Opportunity zone fund.

So we didn't chat about the angel or the opportunity zone.

Can you give us a quick summary of both of those funds?

- Well, so the opportunity zone fund is really the fact is that in the Appalachian regional commission, in Pennsylvania, and in Penn State.

If you look at the Penn State campuses, almost every one of those is, and there's 23, I think around the State.

I'll certainly one of those is the one-to-one correspondence with an opportunity zone.

So the fact is that there's this law that's been out there or these regulations that have been out there that provide a tax advantage to invest in companies that are operating in the opportunity zone funds.

And our job is to try and facilitate those.

The angel, what we say with 1855 Capital, really the fund that is active and is looking to invest is the venture fund.

The venture funds perspective says very clearly that we do not want to be the only investor in anything that we invest in.

The biggest thing that most startup companies need is more capital than they think they need.

And we want to be able to provide a syndicate.

And what a syndicate means that we cooperate and partner with other investors to essentially assure that the company has the capital, they need to succeed in the full journey.

So for that reason, we want to attract angel investors, we want to attract and cooperate with and be a lightning rod, quite frankly, for identifying opportunities that people want to rally around.

And so it's the networking effect that I think makes us successful and creating a and I talk about creating a team between the operating team and the investment team to make big things fully successful.

- Perfect.

- Can I interject it?

- Yeah, go ahead.

Ken.

- I think What Matt just indicated is it's important that we work together within this community when we talk about raising capital.

So if an entrepreneur comes to Ben Franklin and say, we invest $100,000, traditionally they'll leverage that investment to raise another $500,000.

And they do that because of the experience that they've come through, you know, putting together a business plan and a venture profile in a, in a pitch deck.

But then we can make introductions to people like Matt Rhodes and other venture capital firms and angel investors.

And so they leverage our investment, you know, for every dollar they'll raise another five.

And I think over the period of time, since 1983, our entrepreneurs have leveraged that funding for $1.6 billion.

And it's because of the community that's out there are people who are looking for deals, they're looking for great opportunities, and the better we can prepare our clients to interact and meet with people like Matt and the other angel funds.

The Pennsylvania Angel Network is an entity that aggregates a whole host of angel funds in the Commonwealth of Pennsylvania.

We can present those deals on a monthly basis to that group so that you get the power of collaboration and investment in deals that have a great opportunity.

In Northeastern Pennsylvania, you know, our companies are raising capital in the Silicon Valley and in New York City.

And last year, last two years, my portfolio loan, you know, they've leveraged our funding in the hundreds of dollars to raise $19 million one year and another $22 million the following year.

- That's incredible, and I was actually gonna ask you, and if you could just give us a little bit of sort of narrative of American paper bag and TMG health.

Two companies that came into the Ben Franklin system, and our extraordinary success story.

- Yeah, So, and I think they're, great two great companies to highlight American paper bag, right?

The entrepreneur was touring North America, came from Canada, his lead came into the governor's action team in the small business development center.

He visited North Carolina, Arizona, California, all across the country, and chose Northeastern Pennsylvania because of the opportunity to grow his business here.

He now has 50 employees and as the name indicates he creates bags, but he's the most green, most energy-efficient, and fastest bag manufacturer in North America.

The brakes inside his machines actually were made by the company that makes the brakes for Ferrari.

So I like to say, you know, he's the Ferrari.

And he would probably say the Tesla of bag manufacturing.

And, and we expect his company to double or triple in size in the next three to five years.

I'll bet he'll be 100 to 150 employees.

TMG is on the other side of the spectrum, right?

My colleague, Jerry E Fall who ran Ben Franklin technology partners is up in the Pocono Northeast for 22 years, this company Ben Franklin invested in when it was 16 employees.

Jack tags company and the company grew aggressively.

And today they sit in 150,000 square foot building.

And last I checked more than 1500 employees here in Northeastern Pennsylvania.

And there are a whole host of other companies that are percolating, right?

That most people don't know exist from Intelligreen at candus incubator and Hazelton to downtown Wilkes-barre , we have studio B and playing guru to downtown Scranton you have signal Amp and channel Ape.

Signal Amp Health has more than 100 employees now, And both of those two companies have raised venture capital across the country.

- It's incredible, and I'm going to come back to you to close the show in just a minute.

Jeff, I got a question on LinkedIn from bill Koch.

He posted a question about startup funding for nonprofits.

Can you share more about how NEPA Alliance helps nonprofits with funding?

We have about a minute.

- We have a 501c3 subsidiary agency we call a nonprofit community assistance center.

We're a partner with the foundation center out of New York.

We run something called the Northeast Pennsylvania Grantmakers which is a collaboration of all of the higher profile foundations in Northeast PA. Our staff Kurt Bauman and Athena Ardwig can help him look through the myriad of options for starting up and funding a nonprofit.

We could, we could help look for money for that.

- Perfect - Yeah.

- Ken, in closing the show tell us a little bit more about I exchange and if I'm not mistaken, I believe a one is coming up soon.

You have Five seconds.

- Yeah, so I exchange is our awards program May 18th from three 30 to five, we will be providing a group of six awards to companies in Ben Franklin's portfolio.

We'll be doing this on virtually this year and we can't wait next year to get back in person where we can interact with all of the types of providers and consultants that help to support our companies.

I think what I would wrap it up and finally close out to say, listen, what we do works, you know, in Ben Franklin's history, we've helped to create 531 companies they've generated almost 20,000 jobs and launched 2200 products here in Northeastern Pennsylvania.

Providing a return on investment to the Commonwealth of Pennsylvania for $3 and 9 cents for every dollar that's invested on our organization.

The reality we've been in business for 38 years because what we do when we invest in technology and innovation it creates jobs.

- That's awesome and for folks that are watching, you could go to the website and get more information about the upcoming I exchange.

I would like to thank our panelists for participating and thank you for joining us.

For more information on this topic, please visit wvia.org.

And remember you can re watch this episode or any previous episode, on-demand anytime online or on the WVIA app.

For Keystone Edition.

I'm Chris Jones.

Thank you for watching.

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