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Techies tell state to keep up good work

Thursday, March 09, 2000

By Frank Reeves, Post-Gazette Staff Writer

One of Gov. Ridge's top economic advisors came to the North Side yesterday to hear what some of the region's high-tech entrepreneurs and venture capitalists think Pittsburgh needs for the new digital economy to blossom.

Sam McCullough, secretary of the Department of Community and Economic Development, left with an earful following a 90-minute roundtable with business leaders at the Bidwell Training Center.

Ridge has already proposed a 10-year phase-out of the capital stock and franchise tax -- a levy businesses must pay whether they make a profit or not. But Mark Kurtzrock, interim president of the Pittsburgh Technology Council, said high-tech companies would like it phased out more quickly.

In recent years, the region has begun to attract more venture capital, noted Tim Parks, president of the Pittsburgh Regional Alliance, an economic marketing organization. Just 18 months ago, the region attracted about $10 million to $12 million in venture capital annually. Last year, Parks said, it attracted about $160 million.

But despite the turnaround, there remains a dearth of "seed money" for start-ups in emerging technology, several panelists told McCullough.

"I urge the Ridge administration to continue to find ways to use the resources of the Commonwealth and the [state] pension funds to invest and attract capital," Parks said.

He called on the administration "to hang tough" in pushing for a proposal to use a portion of the state's tobacco settlement money for a venture capital fund for biomedical research companies.

Sean Sebastian, managing principal of Birchmere Investments, a venture capital firm, said opportunities in the region have grown faster than the availability of capital.

But he predicted this would change.

"Pittsburgh is beginning to be seen as a place to invest. Funds are moving here from the West Coast," Sebastian said.

He said the region is about $500 million away from a "critical mass" of venture capital that could stimulate business growth in the area.

Ted Wilke, chief executive officer of Carnegie Mellon Research Institute, said the state could play an important role in helping Carnegie Mellon University and the University of Pittsburgh in obtaining more federal R&D money.

Site Selection magazine, based in Atlanta, Ga., has ranked Pennsylvania No. 9 among the states in attracting new businesses and expanding existing facilities. Five years ago, the magazine ranked Pennsylvania 24th.

Site Selection's Tim Venable, who attended yesterday's panel discussion, said Pennsylvania officials "should keep doing the things you are doing," including business tax cuts and an overhaul of the state's regulatory climate.

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