Innovation Works engages more tech firms

BYLINE: Rick Stouffer, The Pittsburgh Tribune-Review

Jun. 13--More Western Pennsylvania startup technology companies are taking advantage of the funding and services offered by Innovation Works, executives said Tuesday.

The primarily state-funded organization showed off 2006 successes at its annual community meeting yesterday. This past year, 52 companies received direct investments and/or grants from Innovation Works totaling $5.1 million, compared to 36 companies receiving $5.4 million in funding one year earlier.

The companies Innovation Works helps via funding, advice and other services jumped to 230 in 2006, up from 188 in 2005.

"We really try to work with entrepreneurs, we hope to contribute to their success," said Rich Lunak, CEO of Innovation Works and co-founder of what now is McKesson Automated Healthcare. "We think the local entrepreneur community is showing great momentum."

Innovation Works is an early-stage, high-risk investor that services what the organization calls the technology economy in Allegheny, Armstrong, Beaver, Butler, Fayette, Greene, Lawrence, Washington and Westmoreland counties. Seven years ago, it grew out of the scandal-touched Ben Franklin Technology Center of Western Pennsylvania.

In the past seven years, the stock of startup companies in the region has jumped. Lunak offered some 200 attendees a comparison between venture capital activity in 1997 and 2006. The meeting was at search-technology company Vivisimo Inc.'s Squirrel Hill headquarters.

"In 1997, there was $33 million in venture capital investment in the region; in 2006, it was $230 million," Lunak said. "In 1997, we were 31st out of 40 regions nationwide in terms of venture capital investment per capita; in 2006, we were 11th.

"Back then, cities like Rochester, N.Y., and Hartford, Conn., were doing better than Pittsburgh in terms of venture capital investment. Now, we're ahead of cities like Phoenix."

Still, the Innovation Works' ability to assist fledgling firms wasn't always a given or accepted by every new chief executive in town.

Four years ago, RedZone Robotics CEO Eric Close was concerned that Innovation Works was in the business of controlling startup companies instead of helping them grow.

"Every time I would talk with an angel investor, they would ask me 'are you part of Innovation Works?'" said Close, who was returning to Pittsburgh at the request of Carnegie Mellon University professor and robotics guru William L. "Red" Whittaker, to run the company Whittaker co-founded in 1987.

"I thought Innovation Works controlled all seed capital for startup companies, that I was being forced into using Innovation Works," Close said.

"I was a skeptic, but now I'm one of its biggest supporters and fans," Close said.

RedZone Robotics is known for making robots that examine underground sewers and water pipes.

Close said his company moved from skepticism to embracing everything Innovation Works offers.

"We've used the internship program, it's worked well for us. We've received $600,000 in funding in four years, and we've leveraged the HR (Human Resources) program at Innovation Works, as we recently hired our first chief financial officer to complete our team," Close said.

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