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Coatesville is home to a $5M start-up accelerator in former Lukens Steel offices

Coatesville won a Keystone Innovation Zone designation in January.

Susan Springsteen of nth Solutions outside of an old steel mill building that is will house the nth Innovation Center at 190 W. Lincoln Highway in Coatesville, Pa. on Tuesday, Feb. 23, 2021. Several start-up companies will move into the building, and take advantage of Keystone Innovation Zone tax credits.
Susan Springsteen of nth Solutions outside of an old steel mill building that is will house the nth Innovation Center at 190 W. Lincoln Highway in Coatesville, Pa. on Tuesday, Feb. 23, 2021. Several start-up companies will move into the building, and take advantage of Keystone Innovation Zone tax credits.Read moreHEATHER KHALIFA / Staff Photographer

This story has been updated.

In a bid to turn around the city of Coatesville, an innovation center and start-up accelerator is springing up in the former offices of the once-giant Lukens Steel plant there.

The two-acre site is under construction to become a 30,000-square-foot start-up hub with space for at least 30 people, as well as an engineering and fabricating center. It should open next month.

Pivotal to the project at 190 West Lincoln Highway is that the hub will operate within a newly designated state Keystone Innovation Zone (KIZ). This will afford companies who locate there significant state tax breaks.

Notably, firms will be eligible for credits that they can use either to slash their own tax load or simply sell to raise capital.

“190 West Lincoln Highway represents an important milestone as the first major commercial construction in the city of Coatesville during the past 50 years,” Ed Simpson, a city council member, said in January when the zone received state approval.

The Coatesville property is one of 29 such innovation zones in Pennsylvania, which include the Philadelphia Navy Yard in South Philadelphia and an area in North Philadelphia near Temple University

In Coatesville, Chester County, the zone’s lead tenant is nth Innovation, a business incubation company. Susan Springsteen, the firm’s managing partner, and her partner Eric Canfield are investing in the start-up center.

“We expect at least seven early-stage tech start-ups to be housed here,” Springsteen said. “We’ll offer everything from our expertise to a photo-video studio, marketing help with logos and websites. Anything that gets them from concept to commercialization.”

She added: “People stop me on the street and tell me they’re so encouraged by this, that it shows Coatesville really matters.”

When business was booming 75 years ago during the Second World War, Lukens Steel provided good jobs to as many as 6,000 steelworkers. The mill now employs just 600.

But city leaders hope that the mill’s purchase last year by Cleveland-Cliffs, an Ohio-based steel and iron ore company, will keep it alive and competitive.

For their parts, Springsteen and Canfield bought the long-vacant Lukens Steel office building and began renovation in early 2020. The technology hub sits directly next to the mill. The developer, Proudfoot Capital, is investing $5 million into the renovation.

More than a dozen products will be manufactured at the site. The hope is to create high-tech jobs. “People who start out in higher-paying careers tend to make more over a lifetime,” Springsteen said.

Currently, nth Solutions employs 10 full-time and 15 part-time employees, with 25 additional jobs projected in the first 18 months of operation.

Among the firm joining nth Solutions at the innovation center will be Proudfoot Capital, a local developer, H2O Connected, a maker of devices that detects water loss in homes and businesses, and Priority Green, a traffic-signal manufacturer for emergency vehicles

BioForce Analytics, a maker of motion-measurement devices for industry and education, is also setting up shop there.

“Capital is king for early-stage technology companies like BioForce Analytics, so it’s a big bonus to have access to a sophisticated yet affordable workforce,” said Francis “Chip” Uricchio, co-founder of the company, which is moving from Exton. “This combined with the benefits of the KIZ and the high-energy, collaborative environment made the decision to move there an easy one.”

A powerful tax break

Under the Keystone Innovation Zone program, businesses must be less than eight years old to qualify for help. The aim is to assist young companies to become viable. According to the latest annual report, over 150 small businesses take part in the KIZ program across Pennsylvania.

Statewide, some $15 million worth of KIZ tax credits are awarded annually, capped at $100,000 per company. They can be sold off or used over four years. A KIZ company can claim a tax credit equal to 50% of the increase in its gross revenues year to year.

Maura Shenker, who directs Temple University’s Small Business Development Center at 15th Street and Cecil B. Moore Avenue in North Philadelphia, said the tax credit can be a powerful way for firms to raise money. Her center operates in the BioLaunch611 Keystone Innovation Zone and can offer start-ups a business address in the KIZ.

“There are brokers who will facilitate selling these credits, and it’s possible to get 90 cents on the dollar,” Shenker said. “So instead of a $100,000 tax credit that a start-up with no profit can’t use, they can sell their tax credit — all of it or just the unused portion — for cash.”

That way, she said, sellers can “use that money to fund growth without having to go into debt or give up equity.”

Temple’s incubator boasts medical technology start-ups, two of which, according to Shenker, sold off its credits “pretty successfully.”

“It’s really helpful for start-ups and becomes less useful when companies get really big,” she said.

In Coatesville, city manager James Logan said he hopes the new center will be part of a movement to “attract new partners from educational institutions, light manufacturing, and fintech companies to our area.”

Springsteen had already set up a high school internship program, drawing in budding entrepreneurs.

“They’ll be working alongside professionals to launch products in a real-world setting,” she said. “The rebirth of this vacant building has inspired a lot of people. They want to be a part of what’s happening here.”

Updated April 8th, 2021:

Springsteen in early April said her corporate entity filed for Chapter 11 bankruptcy, but that didn’t affect the innovation center’s plan to open in May.

“The pandemic affected nth Solutions like it has so many businesses. We are using Chapter 11 Subchapter V to responsibly pause, reorganize, and emerge healthy and ready to move forward. Day-to-day operations have not changed. We are still providing the same quality product development and manufacturing services to clients and customers. We are still committed to Coatesville,” she said in a statement.

The new nth Innovation Center, under construction in Coatesville, is unaffected, as it is separate from nth Solutions LLC, and on schedule to open its doors.

Her company, nth Solutions LLC, and the nth Innovation Center are separate entities with separate ownership.