Venture fund may attract tech firms
The recently announced Venture Chesco will use money from the county’s pension fund and from Ben Franklin to attract young companies
“It’s going to make a difference, I really believe that. We would love to find more Centocors and Cephalons, homegrown companies that stay here and grow here. That’s really what it’s all about.”
– Mike Grigalonis, chief operating officer at the Chester County Economic Development Council
Chester County officials don’t expect the $4 million venture capital fund they recently established to make them the country’s next big tech hub, but they do hope it will put the county on the map for young technology-based companies.
The Chester County Retirement Board voted Dec. 21 to enter into a partnership with Ben Franklin Technology Partners of Southeastern Pennsylvania, or BFTP, to invest $4 million in emerging companies already located in or willing to locate to Chester County. The partnership, dubbed Venture Chesco, will see $2 million in county pension funds matched by $2 million in BFTP funds.
“Available capital is what drives places like Silicon Valley,” said Chester County Commissioners’ Chairwoman Michelle Kichline. “While we don’t have those kinds of aspirations, we do want to be viewed as a place where innovation is happening. Venture Chesco should help us achieve that goal.”
The fund is similar to one established in Bucks County in 2014. There, the Capital for Bucks County, or VC4BC, was established with the county and Ben Franklin each committing $2 million. As in Chester County, Bucks County’s portion came from its pension fund.
Kichline said such investments from pension funds are not unusual.
“Many pension funds invest a portion of their available funds in what are called ‘alternative investments,’” she said. “These can be real estate, commodities, venture capital, and others. In our case we are using less than one half of 1 percent of the county pension fund (valued at around $420 million) to invest in Chester County companies. This is intended to be an investment that generates a positive return for the pension fund while at the same time it helps grow a new generation of Chester County companies.
“No pension funds are or will be used for any county
operations,” Kichline said. “Venture Chesco investments will be investments intended to generate a return for the pension fund.”
Mike Grigalonis of the Chester County Economic Development Council said he’s confident there will be plenty of demand for Venture Chesco. The council operates a program called i2n, or Ideas x Innovation Network, which assists emerging growth businesses in the life sciences, energy, and information technology fields in Chester and Delaware counties.
“Each year we do an assessment of our operation and every year a need for funding comes up as a top concern,” said Grigalonis, chief operating officer and executive vice president of the economic development council.
Early stage funding
helped establish the drug companies that now employ thousands along Route 202 in eastern Chester County, he added.
“Is $4 million enough? Of course not, but it’s not intended to fill every need,” Grigalonis said. “It’s going to make a difference, I really believe that. We would love to find more Centocors and Cephalons, home-grown companies that stay here and grow here. That’s really what it’s all about.”
Kichline said the fund will work with companies that are developing new technologies in a number of areas, including information technology, life sciences, financial services, physical sciences and agricultural sciences.
“Each company will be evaluated on a number of categories to determine whether an investment in that company should be made,” the commissioners’ chairwoman explained. “That analysis
is the primary role of our partner in this initiative (Ben Franklin). BFTP has been engaged in this process for over 30 years and has an excellent track record.”
Kichline bristles at the notion the county needs to do things like establish Venture Chesco to attract young workers.
“Contrary to much of the hype, Chester County is already a desirable place that attracts millennials,” she said. “Our primary hope for the new Venture Chesco venture fund is to help us grow and retain technology companies here in Chester County. If that occurs, we can reasonably expect that millennials will be attracted to the jobs in those companies.”