$78 million invested as Innovation Works celebrates 20 years
Aethon turned a couple hundred thousand dollars into an international robotics company with delivery robots in hospitals and hotels.
TissueInformatics used a six-figure grant to build a ground-breaking tissue engineering company that raised more than $25 million before a top biotech company bought it.
Both Pittsburgh-area companies were among the first to receive funding from Innovation Works decades ago. And both said that the initial investment led to millions more.
“Without Innovation Works, we probably would not have gotten started as a company,” said Aldo Zini, CEO of Aethon. “It wasn’t just the money, but they also opened some doors for us in order to raise more.”
Innovation Works has been providing early-stage investment to young Pittsburgh startup companies for 20 years. The organization celebrated its anniversary last week by recognizing the achievements of the companies it has helped start and fund.
In its 20 years, Innovation Works, now based in the North Side’s Nova Place, has worked with more than 1,000 companies. Nearly 300 were formed with direct assistance from the organization, and 376 companies received investments totaling $78 million. The companies went on to raise an additional $2.1 billion.
Innovation Works claimed it has created or retained nearly 12,000 jobs, nearly two-thirds of which don’t require an advanced degree. More than half of the companies have a woman founder; 72 percent of the founders came from local universities, and 86 percent of the companies work source from vendors in Pittsburgh, according to information complied by Innovation Works.
“I’m proud of the companies and the entrepreneurs. We have a saying here that we succeed when they succeed. At the end of the day, it’s not about us,” said Rich Lunak, president and CEO of Innovation Works, where he has worked since 2005. “We all take a lot of pride in that.”
The organization calculated that $3.60 was returned to the state economy for every $1 of state money invested. The company receives $3.5 million a year in state money.
Zini said there was a lot of skepticism over robotics companies in the early 2000s, when Aethon was just getting its start. The dot-com bubble had just burst and some investments in robotics in the 1990s didn’t pan out, leaving investors shy.
“Innovation Works, they stepped up,” Zini said.
The organization invested a few hundred thousand in Aethon over a two rounds of investing starting in 2002. Since, Aethon raised more than $50 million. ST Engineering bought Aethon in 2017. The Singapore firm kept the company in the Pittsburgh-area and allowed it to grow.
Aethon has added 18 people to its team over the last 10 months and plans to add another 10, Zini said. The company is moving into a larger building. It has robots in China, Turkey, Singapore, Australia and all over Europe.
But Zini hasn’t forgotten who helped the company at the beginning. He’ll talk to the staff at Innovation Works whenever he is looking for new hires or advice.
“And they’re still helpful,” Zini said.
When four doctors and scientists at University of Pittsburgh spun TissueInformatics in 1997, the startup scene in Pittsburgh was shaky. The city, and its reputation, was still recovering from the collapse of the steel industry, said Dr. Peter Johnson, who came to Pitt in 1987 to train as a plastic surgeon and was one of the three founders of TissueInformatics, which used machine vision to identify pathology slides.
Johnson said building a biotech company in Pittsburgh was rare at that time.
“They took a leap as one of the first to say this was a sector that we really need to invest in,” Johnson said.
TissueInformatics went on to raise $25 million over five years. In 2004, Paradigm Genetics, a North Carolina company, bought the startup. Johnson moved to the Raleigh area where he still lives. He recently bought a 40-acre farm, grows barley and plans to open a distillery.
Innovation Works invited Johnson back to Pittsburgh two years ago to speak. He was impressed the growth of the tech scene. And he expects Innovation Works to keep it growing by finding undiscovered technologies and taking chances, just like it did years ago.
“They’re going to figure out where the fringe is,” Johnson said.
Aaron Aupperlee is a Tribune-Review staff writer. You can contact Aaron at 412-336-8448, [email protected] or via Twitter @tinynotebook.