Bethlehem venture capital firm gets $2.5M to invest in start-ups

A Bethlehem-based company is one of two Pennsylvania venture capital firms that will make investments in early-stage technology companies, with help from $2.5 million from the Ben Franklin Technology Development Authority via the state Department of Community and Economic Development.

Activate Ventures III LP is a fund that will target investments of $1 million to $5 million in approximately 30 early-stage technology companies, with an emphasis on health care-related software businesses led by tenured entrepreneurs.

The group of investors leading Activate will include Managing Partners Glenn Bressner and Todd Pietri, formerly of Milestone Venture Partners. Joining them will be Pietri’s former Milestone Partner, Edwin A. Goodman, and fellow Bethlehem venture capitalist Jeff Davidson.

The mission of the Ben Franklin Technology Development Authority is to encourage and coordinate programs and investments, which advance the competitiveness of Pennsylvania’s companies and universities in the world economy. It is one of the oldest and most emulated state technology development programs in the nation, a release said.

Rick Siger, acting secretary of the Department of Community and Economic Development, added: “This funding will create opportunities for early-stage technology companies to grow right here in Pennsylvania, and ensure the commonwealth remains an economic leader driving innovation on a global scale. DCED is proud to work with the BFTDA to provide funding to companies at the cutting edge of industries that drive our economy forward. Investments like these are key to the future of Pennsylvania.”

More highs than lows in Lehigh Valley economy for 2022 

The 2022 economy was a wild ride in the Lehigh Valley. Still recovering from the COVID-19 pandemic, the region saw economic highs and lows in a year that was anything but typical. 

Overall, however, economic development officials in the Lehigh Valley said the 2022 economy is strong and has evolved greatly over the past 12 months. 

“It has been a tumultuous year,” said Rich Hobbs, president and CEO of the Manufacturers Resource Center of the Lehigh Valley. “There have been transformational changes.” 

The year began, he said, with a great number of challenges including supply chain issues, logistical and transportation problems and a significant workforce shortage. 

“At the beginning of the year there was a craze trying to hire workers which drove up wages,” he said. 

While there is still a hiring press, he said it’s not as crazed at the end of 2022 as it was in the beginning of the year and wages are starting to normalize to more stable levels. 

Don Cunningham, president and CEO of the Lehigh Valley Economic Deveopment Corp., said overall the economy was stronger in the Lehigh Valley in 2022 than in other parts of country.  

He noted that Site Selection Magazine, which tracks 350 metro regions, has named the Lehigh Valley as one of the top economic development markets for the last several years in both the Northeastern U.S and nationally among markets of its size. 

The region made the list because of the large number of new commercial developments each year, and 2022 was no exception. 

“We’re going full speed ahead in economic growth,” Cunningham said. 

He pointed to such projects as pet food manufacturer Spot & Tango moving to the Lehigh Valley as well as major expansion projects including the $200 million expansion at B Braun, a medical device manufacturer. 

According to the LVEDC, the region had a record low vacancy rate of 3.7%, and the Lehigh Valley’s real estate market grew to 145 million square feet, indicating a robust demand for space. 

“One of the biggest challenges is finding locations to open,” he said. 

Because of the low inventory and high demand, rent rose to $8.70 per square foot. The Lehigh Valley is still a bargain, however. The price is nearly half the rate of properties in nearby northern and central New Jersey.  

All totaled, 658,000 square feet of new industrial and flex space added to the market. 

For those manufacturers already doing business in the Lehigh Valley, supply chain and material costs have remained an issue, said Hobbs. 

“There’s still a lot of juggling with the supply chain,” said Hobbs. 

One bit of good news is that many companies, having learned from severe material shortages during the 2020 COVID-19 shutdown, are keeping more stock close at hand. 

“Many companies have stocked up,” he said. 

One continued weak spot in the local economy has been the professional office space sector, said Cunningham. 

He said that while elsewhere in the economy it’s been “pedal to the metal with nothing slowing down,” there is still a significant amount of vacancy in office space as many companies have allowed staffers to work from home. 

“Companies are not opening new office space right now,” he said. 

That has been a boost for the hospitality industry, however, as more companies are using hotel conference and meeting spaces as a substitute for offices when they plan meetings and conferences. 

According to Discover Lehigh Valley, which promotes tourism in Lehigh and Northampton counties, the region was top in hotel occupancy rates among communities of similar size in Pennsylvania.  

Alex Michaels, president and CEO of the authority sited a 2021-2022 report from Smith Travel Research, which showed overnight visitor stays reached 16.1 million in the Lehigh Valley for the fiscal year, that’s up 28.6% from 2020. 

The bottom line is that most economic development officials see things returning to “normal.” 

“We are continuing to measure things from a pre-pandemic perspective,” said Aaron Gantz, senior director of economic development for the Greater Reading Chamber Alliance. 

She said with a lower number of participants in the workforce, finding quality workers continues to be a struggle for employers and likely will for some time.  But, like Hobbs said, it’s not at the level it was in the beginning of the year.  

One advantage the Berks region has is its relative affordability compared to some surrounding regions. The Lower cost of living makes it more attractive for people to move to and find jobs in the area, which should help with the employment situation. 

And affordability was a big challenge across the Lehigh Valley as a whole. While, yes, housing and apartments are less expensive than nearby major metropolitan areas like New York City and Philadelphia, housing affordability is a concern. 

According to Rent Café, the average rent for an apartment in Lehigh Valley is $1,585. That varies greatly based on location, size and quality. 

And in single family homes there has also been a struggle. By year’s end the average home price in Pennsylvania was about 9.5% higher than a year prior, but the average home price was still lower than the record high of $219,154, which was set in July.   

Pennsylvania Association of Realtors President Christopher Beadling said affordability has become an issue for many potential homebuyers.  

“The number of sales has leveled out with the higher interest rates. These higher rates are primarily affecting first-time buyers who need a mortgage,” he said. 

While growth may have slowed in home sales and new commercial construction, the economy is still strong, just stabilizing in the Lehigh Valley, said Mark Chubb, senior managing director for Colliers commercial real estate. 

“There’s no reason to panic,” he said. “There’s still plenty of growth.” 

He said the Lehigh Valley remains a strong target for economic development. 

Coworking space debuts in Easton

A multi-story building that’s been vacant for several years is now home to new coworking space in downtown Easton.

Mark Calafatello and his wife, Maryanne Russell, two former New Yorkers who live in Williams Township near Easton, completed the transformation of the six-story building at 403 Northampton St. into high-end co-working space and had a soft opening last week.

They plan to have an official ribbon cutting on March 2 and will begin their advertising campaign in mid-March.

The property, Reeds403 Co-working Lounge, has 3,000 square feet available on the first and second floors, and another 3,000 square feet on the upper floors if needed.

So far, the feedback they’ve received is positive, he said. Users have 24-hour access to the building via a key on the member’s smartphone. Members pay $100 per month to use the space.

“The range of age and industry has been great, everything from professors at Lafayette to people who are newly displaced and looking for places to work,” Calafatello said.

People are also showing interest in using the space as a gathering place, including women’s groups who want to use it for potluck dinners, he added.

The space as not just serving office workers but people in the community looking for a place with a relaxing, yet high-end vibe.

He’s seeing different types of people getting together in the space, “bridging communities with like-minded ideas.”

“For me, diversity is what keeps it exciting and interesting,” Calafatello said. “So far, all the feedback has been great.”


Study says ArtsQuest created nearly $100M in ‘social capital’ last year

ArtsQuest’s Musikfest in Bethlehem attracts more than one million visitors to the city each year. A new study by ProSocial Valuation Service examines the social capital produced by ArtsQuest. (Contributed) –

An 18-month study of ArtsQuest found that in 2019, the Bethlehem arts organization created nearly $100 million in social capital for the Lehigh Valley.

On Wednesday, ArtsQuest shared the findings of the study, conducted by ProSocial Valuation Service, which used a different approach to measuring the value of ArtsQuest by studying its social, rather than economic impact.

For this study, PSV used research to examine community, civic, human and intellectual capital and converted each unit of these social capital elements into the more common currency of money. The company’s effort strives to show how ArtsQuest’s existence provides the community with key aspects of well-being.

“Many of ArtsQuest’s most valuable outcomes are in the public goods it creates, yet these were never measured, so its contributions to things like personal and community welfare have taken a backseat to economic impact,” said Lesa Ukman, founder of PSV.

While researchers often use economic impact to determine the positive affect an organization has on a community so it can share that information with stakeholders, Guzman’s company used social capital to determine value.

By allocating half ArtsQuest’s annual budget to social impact and the other half to economic impact, PSV found that the return on investment of ArtsQuest is 900 percent. For every dollar invested in ArtsQuest, it creates $9 in social capital, according to PSV. When combining economic and social impacts, ArtsQuest had a $236 million impact on the region in 2019.

To reach their conclusions, PSV researchers created an inventory of ArtsQuest’s assets; identified outcomes associated with those assets, and conducted a series of interviews to gain insights into the outcomes. PSV researched more than 1,500 ArtsQuest attendees.

Ukman said social and economic impact are two very different things and the company did not include economic impact for this study.

“That does not begin to capture the full range of value that ArtsQuest has to Bethlehem,” Ukman said.

As an example, one of the elements of social capital that the study looked at is the value of ArtsQuest recruiting and retaining about 2,000 volunteers each year for its massive Musikfest summer concert series.

“When you just use standard methods, you are not capturing well-being,” Ukman said. “It really requires a different approach.”

With each of the social capital elements, the study focused on outcomes. As an example, when measuring human capital, researchers studied how individuals gained skills and knowledge from ArtsQuest programs, which contributed to their health and well-being.

ArtsQuest invested about $30,000 for PSV’s service, said Curt Mosel, chief operating officer for ArtsQuest. The Bethlehem organization collaborated with the Levitt Foundation, a nonprofit of Beverly Hills, California, to fund the investment, he added.

ArtsQuest plans to use the results of the study in its capital campaign.

“Our plan is to change a lot of conversations we are having with our stakeholders into thinking a little bit differently about how they tell our story,” Mosel said. “The outcome is that they want to attract new talent, what’s going to help them do that?”

Now, for the first time, they can actually demonstrate to people that this is the good that they are doing, Ukman said.

“These are outcomes to having an arts-centric approach to community development,” Ukman said.

In addition, the Greater Lehigh Valley Chamber of Commerce could use the study to help attract new businesses, she added.

“Our sponsors love this,” she said. “So much emphasis is being put on community. It’s not enough to just maximize profits for shareholders.”