Martin Fedorko did not cross the finish line the first time he tried to create a venture fund in York County. But he came away with valuable lessons he is applying to his latest effort: White Rose Ventures
Most importantly, he learned that York County’s would-be investors are indeed interested in backing local companies. They just need a vehicle with a broad-enough mandate.
“It was about finding the right opportunity for these folks to move forward with,” said Fedorko, a Pittsburgh native who moved to York in 2016 to work at health care consulting firm Benjamin & Bond. He had worked previously at Federated Investors, an investment firm in Pittsburgh now known as Federated Hermes.
Founded in 2020, White Rose Ventures aims to fill a long-recognized need in Central Pennsylvania: access to private capital.
The region has incubators, accelerators and a slew of programs aimed at helping entrepreneurs hone their ideas. But it lacks steady access to venture capital, which can help entrepreneurs bring their ideas to market.
Outside funders do find local companies. Cumberland County-based ReturnLogic recently raised $2 million in seed funding from a slew of venture investors, including Revolution Rise of the Rest Seed Fund, whose backers include Jeff Bezos of Amazon, Steve Case of AOL and Meg Whitman, former CEO of Hewlett Packard.
But local funds are few and far between, according to Bob McCormack, founder and managing partner of Murphy McCormack Capital Advisors, an investment banking firm based in Lewisburg.
Among them is 1855 Capital, based in State College, It has invested in PledgeIT, a sports-based crowdfunding platform in Harrisburg, and Reflexion, an athletic-training technology firm in Lancaster. Lancaster boasts Aspire Ventures, whose portfolio includes companies like MedStatix, which helps providers gauge the patient experience. But Aspire is focused on health care startups.
The challenge for a traditional venture fund in Central Pennsylvania is the dearth of traditional deals available, that is, the kind of disruptive startups beloved in places like Silicon Valley.
Nonetheless, McCormack said, a need exists for investment capital available to firms with between $500,000 and $2 million in earnings before interest, taxes, depreciation and amortization, or EBITDA. They may lack the internal capital to grow and they often struggle to attract mainstream lenders or private-equity firms looking for bigger deals.
“There is a need for that in the marketplace,” McCormack said.
Fedorko recognizes that there may be few traditional startups in York County. But he expects White Rose Ventures will inspire would-be entrepreneurs to come forward.
“The hope is that five years from now, the well of investable opportunities will be much deeper and that entrepreneurs will become more refined with how they present their business plans and pro formas,” he said.
Still, he said, the fund would be open to investing in the kinds of companies described by McCormack.
The open-minded approach stems, in part, from Fedorko’s experience at Benjamin & Bond. While there, he worked to start a fund focused exclusively on health information technology, he said. But it was hard to raise money from local investors and the firm eventually pulled the plug.
Feedback from would-be investors, though, encouraged him to continue, but with a broader, more local focus, Fedorko said.
He left Benjamin & Bond in April, before it was purchased by WellSpan Health. He has since recruited a former colleague, Alexa Born, to help get White Rose Ventures off the ground. He is the firm’s managing partner, she is the managing director.
Fedorko envisions the firm as a kind of matchmaker between investors with money and businesses that could benefit from it, kind of how the United Way helps to vet nonprofits for philanthropic donors.
“It’s just a matter of providing what I usually call an access point,” said Fedorko.
In addition to investing in York County businesses, Fedorko envisions his fund making a social impact through investments in minority-owned businesses and underserved communities.
White Rose Ventures also could be a boon for the budding entrepreneurial community growing up around York College, home to the J.D. Brown Center for Entrepreneurship.
“We’ve heard time and again that access to capital remains an issue, so clearly the timing for Martin’s initiative here, I think, couldn’t be better,” said Jeff Vermeulen, York College’s assistant vice president of external relations. He oversees the J.D. Brown Center and the college’s other economic-development initiatives. They include the construction of Knowledge Park, which is building on the work of the J.D. Brown Center.
Student entrepreneurs, meanwhile, can gain a front-row seat to how finance operates and learn from Fedorko as they hone their business pitches, said Dominic DelliCarpini, dean of York College’s Center for Community Engagement.
“And if Martin can prove the concept, I think others will follow,” DelliCarpini said. “This is a good leading edge.”
— By Joel Berg, editor of BizNewsPA