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Steel City keeps entrepreneurs coming back

Governor Corbett surveys work from inventor Kelly Collier

Thread founder Ian Rosenberger

Fabric from Thread

Inventor Kelly Collier at Demo Day

Whether they're at work developing devices to ease back pain, creating fabric from recycled plastic, or inventing groundbreaking breathing technologies, entrepreneurs are choosing Pittsburgh. One major factor is state-sponsored startup funder Innovation Works, an essential tool for the city's growing entrepreneurial ecosystem.
Since 1999, Innovation Works has invested in over 300 companies, and, according to CEO Rich Lunak, they currently provide seed funding for 72 percent of Pittsburgh companies that go on to raise outside financing through venture capital. A recent report by Ernst & Young and Innovation Works shows Pittsburgh ranking third in per capita early-stage dealmaking when compared with other benchmark regions.

"I love what I'm doing here," says Lunak. "It's a really great job when you can show up each day and work with so many driven and inspiring entrepreneurs. It's really a privilege to work with the companies we get to work with on a day to day basis." 

One of Lunak's favorite Innovation Works-funded ventures is ALung Technologies Inc. The company has devised a respiratory dialysis system that removes carbon dioxide from the blood stream directly, essentially performing the function of the lungs. This technology allows patients to avoid being on a respirator.

"ALung has an extremely sophisticated technology that can improve patient care significantly while lowering the costs of hospital treatment," says Lunak. "Each day patients are using these products and its impacting lives in a positive way."

Innovation Works, part of the Ben Franklin Technology Partners network, is one of several state-sponsored institutions dedicated to financing new business ideas in the Commonwealth. Pennsylvania has been known for innovation since the day Franklin first tied a key to a kite, and our founding father's legacy lives on through the many ventures funded in his name.

Before becoming CEO of Innovation Works, Pittsburgh-native Lunak grew his own company with funding from the Ben Franklin program. He helped found and launch Automated Healthcare after attending Carnegie Mellon University, developing a robotic solution for medication dispensation. When he left the Pittsburgh-based company years later, it had around 1800 employees in its automated division. 

"My story is not unique, and it's not about me," he explains. "It's about the hundreds of entrepreneurs building businesses here each day."

Ian Rosenberger, 32, founder of Thread LLC, is one of those entrepreneurs. He obtained funding from Innovation Works to support his business of converting street trash in developing countries into wearable fabrics. He got the idea while traveling to Haiti to assist earthquake victims and seeing streets littered with plastic. He decided to employ Haitians to collect the plastic, converting the waste into a raw material called "flake" that is transformed stateside into useable fabric.

"I was looking for ways to make a difference in the communities that we live and work in," says Rosenberger. "The reason we're called 'Thread' is because we believe everyone is connected." 

Thread's fabric appeals to apparel companies looking for responsibly-sourced materials. 

"Essentially what we're offering those companies is going from having a dirty supply chain to having a clean transparent supply chain," he explains. "The chain of custody tells a story from the moment a plastic bottle comes off the streets in Haiti to the second you have a shirt in your hand."

Thread recently sold product to its first partner, Moop -- handbags made from the fabric can be purchased this month at moopshop.com

"The funding from Innovation Works was critical," says Rosenberger. "When Innovation Works invests in you, it gives you more credibility with other angel investors and they introduce you to new partners and other funders." 

Innovation Works portfolio companies have gone on to raise nearly $2 billion in investment from other sources.

In addition to providing financial support, Innovation Works offers business training, running public workshops and giving individual guidance to the companies it funds. 

"A lot of times we will have a first time entrepreneur and they may have a background in a particular functional area but, when you build a company, it has to be successful on a lot of levels," explains Lunak. 

Inventor Kelly Collier first connected with Innovation Works to build her business skills. She had just finished a dual degree in materials science and biomedical engineering from Carnegie Mellon. As part of a class project -- and with guidance from a physician recognized as an expert on spine care and sports medicine -- Collier developed a device to ease back pain. With the makings of a prototype, she then faced challenges with business development. 

"It was hard to convince people to believe me," recalls Collier. "And to get people to believe that this product was going to work the way I said it was going to work."

She attended free public sessions and applied for Innovation Works' AlphaLab program, a business accelerator that funds entrepreneurs with a $25,000 investment and provides intense business mentoring. Collier then obtained additional funding from Innovation Works as her business, ActivAided Orthotics, grew. The RecoveryAid garment is now sold online and through medical supply companies across the country.

"The product works really well," says Collier. "My goal was to try to save the world one back at a time." 

Collier launched her company in 2012 and expects to turn a profit shortly. 

"You can get really far really fast in Pittsburgh on the little money that you have," she says, explaining her choice to remain in her hometown. "For me, for what I'm doing now, the most helpful thing I have is my network, and the core of my network is in Pittsburgh, so it wouldn't make any sense for me to move."

Rosenberger, who also hails from the Steel City, chose to return home after living in New York.

"It's a great town," he says. "There is incredible talent coming out of CMU and Pitt, and office space and overhead are easier. I can tell you that people are aching to start businesses and looking for reasons to stay."

ELIZABETH DALEY is a New York City native and freelance writer who relocated to Pittsburgh in search of a better life. Her work has appeared in USA Today, The Christian Science Monitor, Reuters and numerous San Francisco Bay Area publications. Follow her on twitter @fakepretty.

*This piece originally appeared in our sister publication, Keystone Edge
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