One of the engines of Pittsburgh's dynamic economy is sputtering slightly this year.

Innovation Works, a nonprofit that depends on state funds to help entrepreneurs get tech companies off the ground, took a 40 percent cut in the recently passed state budget, dropping the funding available for startup technology companies from $6.9 million last year to $4 million for the current fiscal year, which runs concurrently with the state's, starting in July.

That bad news, however, was tempered by news that the state is providing $10 million to the organization to be used over five years for companies that are developing green energy technology.

But the cut in the Ben Franklin Technology Partners funding that goes to robotics, technology and life sciences means there will be a smaller pool of those startup companies in coming years.

"These companies represent the future engines of growth in our region," said Rich Lunak, the CEO of Innovation Works.

Innovation Works is one of the four state-funded Ben Franklin Technology Partner investment firms that provide early stage funding to get new technologies to the point that they can attract venture capital.

Mike Stubler, the managing director of Draper Triangle Ventures, which has provided capital to companies that started with Innovation Works help, said the early stage money was critical to future economic development.

"We don't typically invest in a raw startup that's just a couple of people with an idea but no product," Mr. Stubler said.

So, while energy related ventures are getting a boost, the money for other emerging technologies is much tighter.

"These dollars will be even more competitive," said Mr. Lunak. "We're going to fight even harder than ever before."

Mr. Lunak said he would be trying to raise money from foundations and to use federal money for new companies.

Venture capitalists have been meeting with some of the principals of new companies at the Innovation Works offices in Hazelwood recently, and Mr. Lunak said he and Matt Harbaugh, the groups' chief investment officer, would be traveling to Washington, D.C., to talk to investors there about financing new companies in the earliest stages.

Mr. Lunak said 71 percent of the local companies that attracted venture capital last year had received earlier investments from Innovation Works.

"There's no replacement for those dollars," he said.

The state money for Innovation Works comes through the Department of Community and Economic Development from the state's Ben Franklin Technology Development Authority, which also pays for the other three Ben Franklin Technology Partners in the commonwealth. The Ben Franklin money was a casualty in the most recent battle over the state budget, taking a hit that cut the overall fund from $50 million last year to $20 million this year.

That seed money is allowed to be use on only technology companies that have the potential of providing jobs with higher salaries than other industries. Those industries are information technology, robotics, life sciences and advanced materials, such as polymers.

David Palmer, the CEO of Ross-based Clear Count Medical Solutions, said his company had received $600,000 from Innovation Works and other money from the Pittsburgh Life Sciences Greenhouse. The company has developed a process that uses radio frequencies to track sponges used in medical procedures so that they aren't left behind in a patient.

In addition to the money that Innovation Works provides, the due diligence done by the organization is critical to attracting money from other investors, Mr. Palmer said.

Call it the Innovation Works Seal of Approval.

The money from the state and investors has supported Clear Count from 2004 until now, when the company signed up its first customer, Memorial Sloane-Kettering Cancer Center in New York City.

While the model for Innovation Works has changed in recent years so that the money invested also earns an equity stake in a company that at some point in the future could be used to finance future companies, that is not why the organization exists.

"They're less about making profits than helping companies get off the ground and grow," Mr. Stubler said. "They help sustain an entrepreneurial ecosystem."

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