Sunday, March 29, 2015

POSTED: Monday, March 9, 2015, 11:50 AM

When recent Penn Engineering grads Ricardo Solorzano, Danny Cabrera and Sohaib Hashmi sought funding to improve the 3-D printer for biologically-active materials Solorzano had prototyped in his dorm room last year, they turned first to Pennvention the Penn investors’ competition. They won $5,000, and plowed it back into the machine. Hashmi then “boiled the ocean” working scholarly contacts to find potential buyers, says Cabrera.

As I write in today's Inquirer: "When cash next ran low, they approached DreamIt Health, the Philadelphia-based venture support program, through Penn Engineering Prof. Elliot Menschik." DreamIt "gave us $50,000, office space, and legal services” from Duane Morris, in exchange for 8 percent of the fledgling firm, Cabrera said." The lawyers “legitimized everything we were doing, incorporated us, and got us thinking about building a business. Instead of, you know, just hacking and selling things. Phase Two will be figuring out how to integrate this into pharma companies, so they can test everything from cosmetics to cancer drugs, without using animals.”

Here’s how BioBot works, simplfied, Cabrera showed me: “You design a 3-D structure on your computer, which plugs directly into this device. You fill these disposable plastic syringes with goop -- a mixture of biocompatible material and living cells. You use collagen and skin cells, to print skin; or cartilige... You place it in the cylinder, connect it with the needle gauge, cap it with plastic hose.

POSTED: Friday, March 6, 2015, 9:31 AM

Projecting U.S. spending on local water projects, Ryan Connors, veteran utility analyst, covers a lot of ground in a short report today to clients of Boenning and Scattergood, West Conshohocken:

PENSION BUSTING BENEFITS: "Municipal bond issuance more than doubled in February to $32.4 billion, water utility employment is hitting multi-year highs, and water pricing is re-accelerating" after years of budget tightening by cash-srapped municipal governments, Connors writes.

The U.S. Supreme Court's M&G v. Tackett decision, which held that "municipal workers’ healthcare benefits cannot be construed as lifetime" unless guaranteed by union contracts, will make it easier for towns to stiff retires and cut costs. That, plus Detroit's "recent precedent on reducing pensions in bankruptcy," will make it easier to cut retirement payments to ex-city workers, enabling towns "to increase funding for other budget priorities, such as infrastructure."

POSTED: Friday, March 6, 2015, 9:00 AM

After three quiet quarters, Safeguard Scientifics, the Wayne-based, publicly-traded healthcare and software investment company, "is primed for an acceleration in liquidity events {that's venture-ese for 'they will probably sell more companies') after an eleven-month period of zero catalysts" (no recent sales), writes analyst Paul Knight in a report to clients of Janney Capital Markets, Philadelphia.

"These events could be spectacular in size," especially for digital-ad auction site MediaMath, based in New York with offices across the U.S. and foreign markets, and Maine-based veterinary drugmaker Putney Animal Health, Knight adds.

Safeguard's investment of around $25 million in MediaMath in 2009 and 2011 could be worth as much as $250 million, if Yahoo's purchase of BrightRoll for 6.4x past annual sales is a guide. Similarly, Putney, which raised $15 million from Safeguard in 2011 and is on track to sell $30 million of pet therapies this year, "could generate significant returns" if a buyer juices the price to approach what a rival, startup NextVet. raised in its initial public stock offering, Knight writes.

POSTED: Friday, March 6, 2015, 8:28 AM

(UPDATED with company comment) SAP SE, the German-based business-software company with North American headquarters in Newtown Square, says it will cut 2,200 of its 74,000+ worldwide jobs as it pushes cloud-based and in-memory database services, to offset the drop in sales growth for enterprise software systems as old-line business-software giants like SAP, Oracle and IBM compete more with specialized vendors like Salesforce.com.

SAP, which employs 2,500 in Newtown Square, will keep hiring: "We're looking for people who can contribute to growth," who have "networks" of business contacts they can approach to sell SAP's newer products, SAP spokesman Andy Kendzie told me.

SAP is pushing sales of Hana in-memory-database-based services and other products corporations can use to speed connections between their secure data in remote (cloud) servers, with staff and customers in the field, via smartphones and iPads, SAP spokesman Andrew Kendzie told me. He added that the company hopes not to have to lay off most of the 2,200, instead not replacing people who leave voluntarily and shifting employees in surplus jobs to new positions.

POSTED: Thursday, March 5, 2015, 3:38 PM

When, after years of late hours writing it, software works -- when, after months of sales calls, clients start buying it -- then the talk gets big: “We are changing the way code is built,” says Chris Gali, cofounder of Enterprise
Cloudworks.

“Right now we are 52 people. By the end of the year we will be 75 or 80. My belief is that in two and a half years we’ll be 350, 400, right here on Market Street, Philadelphia,” says Jim Rourke, the firm’s president.

Enterprise Cloudworks’ chief product is Graphite GTC (Graph To Code), a software platform Gali says you don’t have to be a programmer to use. More in my column in the March 8 Philadelphia Inquirer here. 

POSTED: Thursday, March 5, 2015, 1:51 PM

Ten cold protesters from a national group called Fed Up gathered at the Federal Reserve of Philadelphia in the storm this afternoon to urge the Fed to pay more attention to boosting employment and listening to groups representing wage workers and poor people.

The group, which includes labor union and church groups as well as local affilates such as North Philadelphia-based Action United, says its national leaders met with Federal Reserve Chairman Janet Yellen in Washington last year, but they have had a tough time getting Fed officials who oversee regional banks and regulatory teams, such as Charles Plosser, the free-market economist who retired in March (corrected) as the Philly Fed President, to take them seriously. Other Fed Up affilates held protests in New York, Charlotte, St. Louis, and other Fed cities today. More are planned, said Shawn Sebastian of the liberal, Brooklyn-based Center for Popular Democracy, one of the groups supporting Fed Up.

"Plosser never gave us a meeting," said Action United leader Kendra Brooks, who said she's been organziing poor people to press for improved government job, education and housing programs since she was laid off from her management job at an Easter Seals affiliate in 2012. Philly Fed corporate secretary Herb Taylor and other local Fed officials did meet with a Fed Up delegation last fall, and Philly Fed leaders have also held meetings with labor unions and community groups, Fed spokesman Jim Ely reminded the group.

POSTED: Wednesday, March 4, 2015, 1:59 PM

Pennsylvania Gov. Tom Wolf's new budget proposes several steps he says will trim $10 billion from the $50 billion-plus shortfall between what the state has invested to pay hundreds of thousands of retired teachers and state workers, and the much larger sums it will have to pay them. (See also http://www.philly.com/philly/blogs/inq-phillydeals/295019951.html)

(The shortfall forces state Treasury and school district property tax "contributions" to the pension fund higher every year -- which is why ex-Gov. Tom Corbett called pensions "a tapeworm" -- and is a leading reason Pennsylvania has the third-worst Moody's credit rating of any state: only Illinois and New Jersey, which have also over-promised and under-funded pensions, rate worse.) I reviewed Wolf's pension plans here, and sent a copy to Wolf's office with a request for further comment. "Thanks, Joe. I don't have anything to add right now," Wolf spokesman Jeff Sheridan told me. So I asked around:

1) MONTCO'S VANGUARD WAY: Josh Shapiro, the ambitious head of Montgomery County's Democratic-dominated government, is cheered by Wolf's proposal to fire high-fee "Wall Street" (as Wolf calls them) investment managers and replace them by low-fee "passive" managers like the ones Shapiro and colleagues hired to run Montgomery County's pension fund in mid-2013.

POSTED: Tuesday, March 3, 2015, 3:56 PM

Pennsylvania Gov. Tom Wolf in his new budget proposal says he will reduce the $50 billion-plus gap between what Pennsylvania owes current and future retirees, and what it has invested so far to pay them -- a gap that has required large and growing annual taxpayer increases in pension funding -- "by more than $10 billion," through these steps:

- FIRE PRIVATE MONEY MANAGERS: The budget would "institute pension investment reforms to significantly reduce excessive management fees and overreliance on high risk investment strategies," and instead "seek less costly passive investment approaches where appropriate." 

Wolf appears to favor the kind of index funds and other low-fee investments chosen by Democratic-run Montgomery County in 2013 when it fired more expensive "active" investment managers and bought indexed funds from Malvern-based Vanguard Group. Montco says its investments returned 14.2% in 2013, as it was implementing the new indexed approach. The Pennsylvania state pension system, which uses hundreds of high-fee money managers and strategies, returned 13.6%. Both expect to report 2014 numbers soon.

Wolf says these "management reforms would signficantly reduce taxpayer costs." Wolf appears to assume these savings will be passed along to the pension systems with no change in investment returns, as if the only difference between buying actively-managed stock, hedge, real estate or private equity funds, and buying index funds, is that the actively-managed funds cost more and the net, after-fee return from index funds is correspondingly higher.

- BORROW BILLIONS AND BET: "A portion of the current unfunded liability for PSERS would be refinanced to take advantage of historically low interest rates, with all savings reinvested to reduce that liability." Wolf wants to borrow $3 billion and give it to PSERS so it can reduce the recent increase in pension subsidies by school districts and the state treasury.

About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

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