For 25 years, Ben Franklin Technology Partners (BFTP) has provided capital and business savvy to fledgling companies throughout Pennsylvania. But until a few years ago, the 32-county central northern region of the state was seriously lacking in what is known as "follow-on" funding, typically provided by venture capital firms.

A few years ago, Penn Venture Partners became one of the first venture funds established in the 32-county central/northern region of Pennsylvania.

Enter Penn Venture Partners. "Compared with Philadelphia, Pittsburgh and the Lehigh Valley, central northern Pennsylvania has historically only received 5 percent of the venture capital, so there was a clear need for it," says Dean Kline, fund manager at Penn Venture Partners, which a few years ago became one of the first venture funds established in the region.

Focus on Technology
Penn Venture Partners, a $25 million fund, is considered multisector, but according to Kline, most of the companies it invests in have a significant technological focus.

"It can be difficult for technology companies to get financing because they don't have a lot of collateral in the early stages, so they look for alternative sources," says Kline. "We don't invest in very early stage companies. We pick up where Ben Franklin leaves off."

So far, the northern central area of Pennsylvania has benefited tremendously from Penn Venture Partners. "For one, there is more employment," Kline says. "Plus, a number of companies have hired qualified young professionals who might otherwise have left the area." Kline adds that most of the companies Penn Venture invests in have a nontraditional culture that is enticing to young people.

A Comforting Partnership
Two of the companies in which Penn Venture has invested—ETravCo and Probity Medical—are former BFTP companies. ETravCo is a multi-channel marketing and distribution network for the travel sector, and Probity Medical is a successful and fast-growing medical transcription and document management firm.

"Working with Ben Franklin provides us with a lot of confidence," says Kline. "They do a great deal of due diligence—they have more evaluation resources than we do, and we can rely on them; they do good work," Kline says. "Typically, we have to go in fairly blind into an investment and figure things out, which makes the gestation period longer. We get a lot of comfort out of knowing that Ben Franklin has watched these companies grow."

In addition to a $3.8 million financial investment in Penn Venture, BFTP also helps the fund with deal flow. "Even if we don't ultimately invest because a company is in too early a stage, Ben Franklin gives us a good sense of what is happening in different sectors, and they refer companies to us," Kline says.

A Formal Role
Ben Franklin also has a more formal role in Penn Venture. "Our investments are approved by an investment committee," says Kline, "and Ben Franklin holds two out of five seats on that committee. Overall, we have a really good relationship with Ben Franklin, and that's hard to find."

Penn Venture officially started operation in October 2003, but Ben Franklin and a few others were trying to get it started for a year or two prior to that. "It is very difficult to start a venture capital fund, particularly in an area where there aren't other funds, so Ben Franklin did a pretty amazing job," Kline says.