When it comes to funding new businesses, the Delaware Valley is a pretty languid place, according to Jeffrey Babin, a lecturer on entrepreneurship at the University of Pennsylvania's Wharton School of Business and an angel investor himself at his firm Antiphony Partners LLC. Data from PricewaterhouseCoopers LLC shows that the Philadelphia area attracted $195.8 million in funding from venture capital funds in the second quarter this year. That was below the $278.7 million a year earlier and less even than the quarterly median of $205.3 million over the preceding decade. (See data here.)
These figures are near the middle of pack for major U.S. venture markets and far below areas like Boston and San Diego. That's something Babin calls concerning for the region and Wharton, which not only wants to train people to start businesses but also keep them here.
Babin, who funds small startups in the hopes that they may become the next Google and serves as program advisor to Wharton's Venture Initiation Program, discussed the region's advantages and obstacles in an interview Jonathan Berr for PhillyInc.
PhillyInc: How has the entrepreneurial climate in Philadelphia changed?
Babin: The balance of power has shifted more to the entrepreneur. ... We still have a fair bit of money that people need to invest.
Q: What types of deals are getting done?
A: One thing we have really seen is a lot of increased activity in medical device, life science related ventures. It's an area where we have tremendous resources and tremendous infrastructure.
Q: Is it tougher now for entrepreneurs to find investors?
A: You'll hear two different stories. If an entrepreneur is experienced and has a good idea, then they are able to find funding.
Q: What about for high-tech?
A: You contrast our region to the traditional Silicon Valley. As a culture in this region, we are not as specialized as Silicon Valley.
Q: Is that a bad thing?
A: I don't think it's necessarily a bad thing. Silicon Valley is unique. We are kind of middle of the pack in terms of total dollars invested. We are getting beat in total dollars invested, as well as the number of deals, by D.C., Texas and the Northwest. Even the Midwest has more money invested than the Philly Metro area.
Q: Why is that?
A: It's a really complex question. ... Those (biotech and medical device) deals almost by nature are different from Internet deals and IT services deals. They require a lot more money and a lot more time to get to market.
Q: Is there anything more that local governments should do to help entrepreneurs?
A: We've got great support. ... We’ve got great schools here, but are we able to keep the talent? Are [the graduates] going to want to move to California or New York to start their business?
Comments (2)
Hi Jonathan, there was no mention of food manufacturing in your article, is there no investor interest in that area. I make goat milk gelato (wholesale only) and I have a distributor. I've been in business about a year and now find the need to raise capital to grow. To date I haven't been very aggressive in my search, but the articles never mention food. Maybe investors only think of restaurants, which are admittedly high risk, but food manufacturing can be almost as sexy. So where's the interest? I'd really like to know.
Thanks,
Bob Bada, Pres.
Gelati di Capri
Posted by Bob Bada | October 8, 2007 10:32 PM
Posted on October 8, 2007 22:32
Have been trying to reopen a business that I had for 25 years and cannot get funding. We will be the 5yh company of its nature in the Country and my prior customer are driving me crazy with orders but it gets horrendus running from pillar to post to get things manufactured when I did this all in my establishment. I woul like to talk to Mr Babin.
I was invited to attend the meeting that they had on Oct. 4, 2007 for Entrepenuers but could not attend. Morton Smiler, President,CEO, Smiler Msonic Associates, LLFC, 2201 Tremont Street, Suite A-305, Phila., PA. 19115-5043,
Tel/Fax 215.,673.7324, ASI Decorator 700007, UPIC: Smiler, email, smile.m@comcast.net
Posted by Morton Smiler | October 8, 2007 5:44 PM
Posted on October 8, 2007 17:44