Three years ago, investment firm Emerald Asset Management Inc. created a venture capital firm. That division, called Emerald Venture Capital, quickly began soliciting investors for money to developan incubator for technology businesses in Lancaster.
Originally, Emerald Venture Capital was hoping to raise the tens of millions of dollars it needed to start the project within six months to a year, said Ed Pohl, Emerald Asset Management’s chief operating and financial officer. The company is based in Manheim Township, Lancaster County. Although Emerald Venture Capital is about $5 million shy of the $50 million it needs to advance its plans, it likely will take a while to raise the rest, he said.
“It’s been terrible out there,” Pohl said. “Venture capital firms took a real hit. They were really going strong in 1999. They were taking companies, building them up and making fortunes. But then the Internet bubble burst. We’re lucky we haven’t lost money, but a lot of venture capital is no longer there because so many people got burned.” Emerald Venture Capital was spared because it was established after the economic slowdown began, he said.
Market conditions are more difficult than ever for venture capitalists and the high-tech companies they support, said Fred Beste, chief executive officer and president of MidAtlantic Venture Funds. As a result, his Bethlehem-based venture capital firm has had to support companies for a longer time than it intended, he said, because no higher-level venture capital groups are able to take over the young businesses.
Despite its struggles, Emerald Venture Capital is confident it will raise the remaining $5 million it needs to incubate technology firms at the former Lancaster Press building, at 401 N. Prince St., Pohl said.
Next year, the venture capital firm hopes to move its headquarters from King of Prussia to the old press building, he said, so that it can do business at the same place as the technology companies it would operate and fund.
But before -Ernerald Venture Capital can begin running its incubator, the company also must secure money to renovate the building. To that end, the business has applied for more than $1 million in grants from the state, Pohl said.
Last year, the company got a $250,000 state grant.
In addition, the company plans to apply for a federal grant under a program that recently gave Lancaster $1.2 million to develop an industrial park off South Prince Street in the city, Pohl said. Charles Maneval, director of the city’s community and economic development department, confirmed that the city might request federal money for the old press building.
Through its incubator, Emerald Venture Capital plans to give money to relatively new tech firms to make them more profitable, expand them and move them out of the building to other venture capital groups with more money to take the companies to the next level, he said.
Investors include technology firms, Pohl said. He declined to identify any of the investors.
It would take between nine months and a year to complete construction at the former Lancaster Press building, Pohl said. Emerald Venture Capital is debating whether to build a parking garage at the building that would cost about $2 million, he said.
Also, the company is weighing whether to expand the building by 10,000 square feet to 15,000 square feet, he said.
The six-story building has about 85,000 square feet, said Lancaster Mayor Charlie Smithgall. The city bought the building for $41,000 four years ago, he said.
The city plans to sell the building to Emerald Venture Capital when the company finishes raising its money, he said.
Since 1992, the building has been occupied for just over a year. The structure used to house the Lancaster Press Co.’s printing plant, Maneval said. Decades ago, the building was used as a tobacco warehouse.
Emerald Venture Capital’s project could get a boost if Gov. Ed Rendell follows through on his plan to create a Keystone Innovation Zone that would include the former press building, Smithgall said.
In February, the governor spoke about his initiative at the building. The KIZ initiative would give tax credits to businesses that locate near designated colleges, universities or hospitals. The zones are intended to keep young graduates in Pennsylvania.
Copyright Journal Publications Inc. May 02, 2003
