At IMPACT: Do Philly tech investors think too small?
It's 1999 all over again!
Is there money and skill for new tech companies to thrive in Philadelphia? "The last time we had this level of energy was in the mid to late 1990s, in that tech bubble build-up," said Steve Zarrilli, boss at Wayne-based Safeguard Scientifics, which for 60 years has tried to read tech trends and back winners, at an investors' panel at this year's Greater Philadelphia Alliance for Capital and Technologies' IMPACT conference in Center City.
"We lost our mojo" for awhile after that, he added, speaking for Philly tech as an ecosystem (the way these guys do). "We felt we didn't have the chops to compete iwth resources or talent elsewhere in the country. We are starting to believe in ourselves again."
He credited the improved quality of life in Center City and other neighborhoods (where "the next generation of entrepreneurs is wanting to work and live,") alongside a greater flow of early-stage capital from:
start-up incubator David Bookspan and his partners at DreamIt Ventures; state-backed Ben Franklin Technology Partners of Southeastern Pennsylvania (under Roseann Rosenthal); Drexel U; the chamber of commerce; investors like marketing mogul turned start-up backer/research philanthropist Richard Vague and his Gabriel Partners; and Michael DiPiano's NewSpring Ventures, which with its partners lately sold iPipeline, the Exton insurance software firm (currently looking for 30+ developers and other tech pros) to private equity backers, for hundreds of millions of dollars.
Philadelphia, with its relatively abundant talent, relatively low rents, Northeast location and supportive research hospitals and other institutions, is "capital efficient, a good place to invest," added investor Sashi Reddi. The university hospitals are a "natural resource" that should make Philadelphia a top healthcare-tech center, said DreamIt's Bookspan.
"We were led to invest in Philly because of the dearth of early stage capital here," added Vague. While "there's more and more early-stage money," and the city is beginning to attract out-of-town entrepreneurs, "there's still a deficit around the A money, that's where we lose folks. When they need three, four, five million, they tend to move somewhere else. That's where we have a leak in the system."
Vague added, "Between Penn and CHOP alone there's almost a billion dollars a year in core research. Yet we have a relatively light biotech community." It's not enough that doctors at Penn are finding hopeful cancer cures. "Jonas Salk cured polio in Pennsylvania. But the Jonas Salk Institute is in Los Angeles," he said. "We need to feed and cultivate biotech here or we are going to lose it to other parts of the country."
Too many leave, agreed Michael Heller, CEO at conference sponsor Cozen O'Connor. He pointed to Philadelphia's own Carl Daikeler, chairman and CEO at Beachbody LLC, a "multi-level marketing company that's growing like crazy," according to Heller -- in Santa Monica, Calif.