The Insider Archive
The Insider: Funding for Entrepreneurs - Philly's Assets are the Numbers
Innovation Matters, Volume 1, Issue 17 - June 4, 2008
A vibrant, successful, entrepreneurial community is essential to regional growth. Three issues of Innovation Matters are exploring key aspects that allow entrepreneurs to flourish within the Philadelphia Region: an entrepreneurial community, funding opportunities and entrepreneurial education.
In 2007 venture-capital investing reached a six-year high of $661.8 million in the Philadelphia area and $29.4 billion nationally, Linda Loyd of the Philadelphia Inquirer reported in January 2008. Loyd also reported that investing was "led by strong interest in life sciences, so-called clean technology and Internet-related businesses."
The for-profit, creative industry is making a big splash in venture capital. Loyd reported internet-related business as one of the top three strongest interests for investments. Deepak Kamra of the Canaan Partners venture-capital firm told the Inquirer "there's a lot going on in the digital-media and Internet space."
So what is the funding landscape for start-up business owners in the Philadelphia Region? Several recent polls on our website have indicated the following about entrepreneurs' need for funding:
- When asked what resource is most important to your business' growth - 85% responded funding
- When asked what is easier for entrepreneurs in the Philadelphia Region to access - 64% responded mezzanine funding to grow a business from the start-up phase to the next level over 29% responded to seed funding to start a business
"Venture capital funding for entrepreneurs in the Philadelphia Region has steadily grown in the last several years," said Glenn Rieger, General Partner of NewSpring Capital and Member of Innovation Philadelphia's Board of Directors. "Entrepreneurs looking to start and grow a business in the region have numerous funding opportunities that can substantial take their business ideas to the next level."
According to Select Greater Philadelphia's 2008 Regional Report, "Venture capital is an important indicator of a region's growth and ability to support new and innovative entrepreneurial endeavors. According to PricewaterhouseCoopers, in 2007, the 19-county Philadelphia Region as they define it, ranked 11th among all 18 U.S. regions based on the value of VC investments made here."
The report further adds venture capital facts for the Philadelphia Region in 2007 include:
- 125 venture capital deals
- $7.4 million average value per deal
- Total of $862 million in venture capital investments
There are numerous funding opportunities for entrepreneurs starting up in the Philadelphia Region. Loyd also reported that seed and early-stage investments were up 18 percent, to $6.3 billion in 2007.
"Entrepreneurs looking to start and grow their businesses in the Philadelphia Region have substantial venture capital investment opportunities here," said Chris Starr of Innovation Philadelphia's Investment Committee. "With a diverse amount of venture capital firms, entrepreneurs in all industries and at every stage of their business can find the financial backing they seek right here in Philadelphia."
The 2008 Philadelphia Business Journal's "Book of Lists" listed the largest venture capital firms in the Philadelphia Region. The following firms invest in pre-seed, early and expansion companies: TL Ventures, SCP Partners, LLR Partners Inc., Cross Atlantic Capital Partners, Edison Venture Fund, Quaker BioVentures, NewSpring Capital, EnerTech Capital, Argosy Partners, PA Early Stage Partners, TDH, Ben Franklin Technology Partners of SE Pa., BioAdvance and ETF Venture Funds.
Innovation Philadelphia's Entrepreneur's Resource Guide also lists investment capital companies within the Philadelphia Region. The Guide lists 20 firms/organizations provide funding opportunities to entrepreneurs in the region.
Starr notes that in addition to venture capital firms, there are numerous organized angel investment groups and economic development organizations serving the regions entrepreneurs.
Funding the Region's For-Profit, Creative Economy
A strong for-profit creative economy is vital to the economic growth of the Philadelphia Region. Innovation Philadelphia created the Creative Economy Investment Fund (CEIF) in October 2007 to support the growth of the Region's for-profit creative economy businesses by providing pre-seed and early-stage investments.
Innovation Philadelphia made its first two investments within the CEIF in late May to two local start-ups, Brown Partners and DreamIt Ventures. Brown Partners, a minority-owned and operated communications and advertising firm founded and owned by David Brown, received $50,000. DreamIt Ventures, a three-month business boot camp for start-up companies in the Philadelphia area founded by David Bookspan, Michael Levinson and Steve Welch, received $100,000.
A new investment model for Philadelphia
DreamIt Ventures offers a new, unique opportunity for entrepreneurs in the Philadelphia Region. This start-up organization provides pre-seed and seed funding to budding entrepreneurs in the Philadelphia Region. In addition, DreamIt Ventures provides experienced mentors and advisors, free legal, accounting and administrative help to form a company and introductions to funding sources. The DreamIt team consists of five groups working together to provide a platform for starting exciting, new companies. The groups include their founders, business partners, speakers, Gurus (mentors) and funding partners.
David Bookspan, Michael Levinson and Steve Welch, the founders of DreamIt, are three entrepreneurs. They each founded, built and successfully sold one or more business. With backgrounds in technology, finance, sales and marketing, and law, they all are currently angel investors and have invested in software/SaaS, chip, pharmaceutical, medical device, and many other startup companies.
After the "boot camp" process, participants have a chance to pitch their company/product to Venture Capital firms, angel investors, private investors, economic development groups, and other funding sources.
With a great opportunity to receive funding as an entrepreneur - combined with education and a supportive entrepreneurial community - the Philadelphia Region is an ideal place to start a business.
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