Pennsylvania has released details of a new $125 million state-led fund designed to help startups raise capital, move new technologies from research to commercialization, and strengthen the Commonwealth’s innovation economy. Innovate in PA 2.0 was authorized in the 2026-27 state budget and builds on the original Innovate in PA program launched in 2013. The program will be funded through the sale of state Insurance Premium Tax Credits. The program will focus on several initiatives, including: Recapitalizing the Ben Franklin Technology Development Authority, a statewide nonprofit that supports technology innovation and startups, with the goal of attracting private venture capital and increasing investment in Pennsylvania companies. Matching outside funding, including federal grants, with state dollars to help Pennsylvania companies and researchers secure additional investment. Providing grants to venture studios, which create and develop startups from the ground up rather than primarily investing in existing companies. Creating a statewide clinical trial network to support Pennsylvania’s life sciences industry. Pennsylvania Department of Community and Economic Development (DCED) Secretary Rick Siger told the Pittsburgh Business Times the program is intended to help “close the gap between invention and commercialization and hoping to attract outside investment from Pennsylvania to help our companies grow here and stay here.” The new program comes as Pennsylvania startups, particularly those in the life sciences, have faced headwinds in raising capital in recent years. “We have about 963 member companies across the Commonwealth with 376 of those companies being startups,” said Chris Molineaux, president and CEO of Life Sciences PA, the statewide trade group representing the life sciences industry. “It is a vibrant ecosystem that is truly unmatched across the country, but the last three years have been difficult for startups raising capital.” Molineaux said Innovate in PA 2.0 could give Pennsylvania an advantage in attracting investment. “Now, Innovate in PA 2.0 is a true differentiator for Pennsylvania,” he said. The new investment builds on recent efforts to make Pennsylvania more competitive for startups. The PA Chamber spearheaded reforms in the 2024-25 state budget that put Pennsylvania on the path to eliminate its Startup Tax by gradually increasing the amount of taxable income an employer can deduct with operating losses from a previous tax year. The deduction cap rose from 40 percent to 50 percent in 2026 and will increase by 10 percentage points each year until reaching 80 percent in 2029, aligning Pennsylvania with the federal standard and most other states. Additionally, Pennsylvania also continues to attract major private-sector investment in life sciences. Several PA Chamber members, including Johnson & Johnson, Eli Lilly, Merck, B. Braun, and GSK, have announced significant expansions in the Commonwealth in the past year. Pennsylvania’s life sciences sector employs more than 100,000 people across more than 3,000 companies and research institutions. Life sciences researchers and companies in the Commonwealth have secured more than 10,000 patents over the past five years, the fourth-highest total among states.