Innovation Works
Ven Raju chats with Sophie Burkholder, investment associate at Innovation Works. Photo courtesy of Innovation Works.

Ven Raju, president & CEO of early-stage investor Innovation Works, holds a bachelor’s and a master’s degree in engineering but never pursued the field. 

As a student, “I didn’t know exactly what I wanted to do or what industry I wanted to work in,” he says. “I thought consulting was a good platform by which I could get experience in different industries and in effect, defer the decision.”

His indecision led Raju, 44, to jobs at Boston Consulting Group and PricewaterhouseCoopers, where he advised Fortune 100 and Fortune 500 firms that were acquiring and selling off units in a mix of business sectors including automotive and pharmaceuticals.

While earning an MBA at the University of Pennsylvania’s Wharton School, Raju found his career niche in private equity and venture capital and went on to work for two decades at investment firms where his role included advising entrepreneurs on product development and strategy.

At Innovation Works, where he was named president & CEO in October, Raju is tapping both skill sets — consulting and capital investing — as he works with fledgling technology firms in the Pittsburgh region that are trying to grow and attract funding.

Since it launched in 1999, Innovation Works has committed more than $117 million to a diverse portfolio of 700-plus startups in the Pittsburgh region since.

The nonprofit provides seed funding and follow-on investments — including state dollars — as part of Pennsylvania’s Ben Franklin Technology PArtners.

It also offers hands-on assistance through education programs, networking and its three accelerators — AlphaLab, AlphaLab Gear and AlphaLab Health — that serve as physical incubators for early-stage ventures. 

On Jan. 18, Innovation Works announced the creation of the Robotics Factory, an accelerator program for robotics startups. The federal Economic Development Administration is funding the factory with $12 million over four years as part of the Biden administration’s Build Back Better initiative. Innovation Works will match some of that amount to provide seed capital for up to six robotics startups. Applications for the factory open Feb. 1.

Ven Raju, president & CEO of Innovation Works. Photo courtesy of Innovation Works.

Innovation Works has long been associated with the technology sector broadly defined as computer software, hardware and life sciences, but its portfolio is sprinkled with firms that at first glance don’t seem to fit those categories. 

Take microbrewery Aurochs Brewery in Emsworth, fashion retailer ModCloth and 4Moms, a baby products manufacturer. 

“I would say the common thread is that they are all tech-enabled,” says Raju. “For the most part, they have some tech … to help deliver their product or service or make it more efficient.”

Homegrown success stories in which Innovation Works invested early and that were later sold to much larger firms include Deeplocal, a digital marketing business that spun out of Carnegie Mellon University; and ALung Technologies, a University of Pittsburgh spinout which developed an artificial lung to support or replace ventilators. 

Right now, the climate for startups in southwestern Pennsylvania is “vibrant and robust,” Raju said during a December interview at the Innovation Works offices in Nova Place on the North Side. 

Annual capital investment in the region’s technology sector totaled $3.6 billion in 2021, according to a report from Innovation Works and advisory firm Ernst & Young.

“That’s 10 times more than where we were 10 years ago and six times more than three years ago,” noted Raju.

Of the total invested, roughly one-third went to life sciences firms, a third went to robotics and artificial intelligence businesses, and the rest to software enterprises. 

Years of investment growth could be headed for a pause, however. 

The current economic climate of rising interest rates, soaring inflation and fears of recession has put “downward pressure” on venture assets, says Raju. “Companies that were looking to raise a large round [of capital] may have toned down their plans. Private and venture investors are being more conservative in how they value companies.”

Total dollars invested in Pittsburgh firms will likely take a hit with the disappearance of Argo AI, the self-driving automobile venture funded by Ford and Volkswagen. The company, which employed 800 here, announced in October that it was shutting down.

Ford’s investment in Argo AI “represents the majority of the region’s total corporate investment,” according to the 2021 report from Innovation Works and Ernst & Young.

Ven Raju (far left) with winners and sponsors of the 2022 UpPrize competition. Precision Neuroscopics won first place in the event funded by BNY Mellon. Photo courtesy of Ya Momz House.

Raju joined Innovation Works in July 2021 as chief investment officer.

Last year, when Rich Lunak announced his retirement as president & CEO after leading Innovation Works for 17 years, the board conducted a national search and considered 135 candidates before tapping Raju. 

Raised in the Atlanta area with Indian heritage, Raju said there’s growing awareness that “the venture and startup worlds need to do a better job in terms of diversity.” 

“We have to do better as an industry and a region,” he says. 

Of firms in which Innovation Works has invested, 60% have minorities or women on their founding teams and “we’re very proud of that,” says Raju.

Among Raju’s goals as CEO is to attract more local capital to the region’s emerging firms. Of the nearly $4 billion invested here in 2021, only about 2% came from resident investors, he says, compared with 25% to 35% in places like Nashville, Raleigh-Durham and Philadelphia.

One way to bolster local funding would be for more local entrepreneurs to successfully “exit” or sell their firms and redeploy money locally, says Raju.

Pandemic work trends may also help. 

During Covid lockdowns, he says, “East Coast and West Coast venture capitalists were forced to look outside their 50- to 100-mile radius” and found they could “do a Zoom board meeting from Palo Alto, California, to Pittsburgh as easily as from Palo Alto to any city in California.”

Remote working also allowed companies to become better at managing employees in scattered locations.

“We have fantastic tech talent in Pittsburgh,” says Raju. “But we don’t have the breadth of business and C-suite talent as say a New York or San Francisco. Now we can access those labor pools with a founder, tech team or scientific team based here and some part of the business team in other parts of the country and it works relatively seamlessly.”

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Joyce GannonContributor

Joyce Gannon is a Pittsburgh-based freelance writer.