REGION'S TECH FIRMS LURING OUT-OF-TOWNERS
BYLINE: CORILYN SHROPSHIRE, PITTSBURGH POST-GAZETTE
Officials from two Silicon Valley venture capital firms were in Pittsburgh last week, the latest in a growing number of deep-pocketed out-of-towners surveying the region's technology spoils.
Innovation Works chief Richard Lunak won't give up any names, but these not-so-secret visits by investors from elsewhere to prowl for hot new companies illustrates the "solid momentum" felt among the region's upstart firms, technology-spawning research institutions and the groups that support them.
Over coffee and bagels this morning, Mr. Lunak will unveil the Hazelwood-based economic development group's annual review that shows more than 230 local startups received assistance from Innovation Works last year, up 22 percent from 2005.
Innovation Works poured $5.1 million -- the bulk of its roughly $7 million annual budget -- into grants and investments ranging between $100,000 and $300,000 in 52 area firms in the past year. In turn, this crop of firms generated combined revenues of $287.1 million and boosted employment 28 percent to 3,609, Mr. Lunak said.
Perhaps the strongest indicator of an upswing among the region's ambitious tech sector, he added, is the $230 million reeled in by area startups in 2006, making the region one of the fastest-growing in the country for venture capital dollars. The startups in Innovation Works' "portfolio" landed $92 million in 2006 from venture capitalists and private "angel" investors, a jump of 33 percent from the year before, Mr. Lunak said.
Overall, some $2 billion of venture investments in the region have occurred in the past 10 years, he said, reflecting a maturing of the region's tech sector. Investment dollars, new ideas and talent are all contributors to this growth. "You need all three legs to be strong," Mr. Lunak said.
It's clear non-Pittsburghers are taking notice. Eight out of 10 of last year's venture capital investments were made by firms outside of the Pittsburgh region, according to Innovation Works' data.
Tired of battling with other investors in the ultra-competitive hot tech arenas such as Boston, Silicon Valley and Austin, Texas, venture capitalists increasingly are looking to untapped places such as Pittsburgh to find the "next big thing," said Darren Wallis, a partner with the Philadelphia-area venture firm Osage Ventures. Since 2005, it has pumped more than $1 million into Robinson-based software firm, Landslide Technologies.
Upstart firms in "overlooked areas" including Pittsburgh, Kentucky and Tennessee are starved for investment capital, Mr. Wallis said, and "now the message is starting to hit home [to investors] and the money is increasingly pouring in to these regions.''