Ven Raju of Innovation Works sees a “vibrant” climate for local technology

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Early-stage investor Ven Raju, president and CEO of Innovation Works, holds bachelor’s and master’s degrees in engineering but has never delved into 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 that consultancy was a good platform by which I could gain experience in different fields and actually put off the decision.

His indecisiveness led Raju, 44, to work at Boston Consulting Group and PricewaterhouseCoopers, where he advised Fortune 100 and Fortune 500 companies that were buying and selling units in a mix of business sectors including automotive and pharmaceuticals.

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

At Innovation Works, where he was named president and CEO in October, Raju is leveraging both advisory skills and capital investment as he works with fledgling technology companies in the Pittsburgh region that are looking to grow and attract funding.

Since its launch in 1999, Innovation Works has committed more than $117 million to a diverse portfolio of more than 700 startups in the Pittsburgh region.

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 educational programs, networking, and its three accelerators AlphaLab, AlphaLab Gear, and AlphaLab Health that serve as physical incubators for early-stage initiatives.

On January 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 part of that amount to provide seed capital for up to six robotics startups. Applications for the factory open February 1.

Ven Raju, president and 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 littered with companies that don’t appear to fit into those categories at first glance.

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

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

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

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

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

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

Of the total invested, about a third went to life sciences companies, a third to robotics and artificial intelligence companies, and the rest to software companies.

However, years of investment growth could come to a halt.

The current economic climate of rising interest rates, rising inflation and fears of recession has put downward pressure on risk assets, Raju says. Companies that were looking to raise a big round [of capital] it may have tempered their plans. Private and venture investors are more cautious in valuing companies.

Total dollars invested in Pittsburgh companies will likely take a hit with the demise of Argo AI, the self-driving car venture funded by Ford and Volkswagen. The company, which employed 800 people here, announced its closure in October.

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 the winners and sponsors of the 2022 UpPrize competition. Precision Neuroscopics won first place in the BNY Mellon-funded event. 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 chairman and chief executive officer after leading Innovation Works for 17 years, the board conducted a nationwide search and considered 135 candidates before tapping Raju.

Raised in the Atlanta area with Indian ancestry, Raju said there is a growing awareness that the corporate and startup worlds need to do a better job of diversity.

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

Of the companies Innovation Works has invested in, 60 percent have minorities or women on the founding teams and he was very proud of that, says Raju.

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

One way to boost local funding would be for more local entrepreneurs to successfully exit or sell their businesses and redeploy the money locally, says Raju.

Pandemic work trends can help too.

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

Remote working has also enabled companies to improve employee management across dispersed locations.

We have fantastic tech talent in Pittsburgh, says Raju. But we don’t have the breadth of corporate and C-suite talent like we say in New York or San Francisco. We can now access those manpower pools with a founder, technical team or science team based here and part of the corporate team elsewhere in the country and it’s running relatively smoothly. Related stories

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