A slow flow in funding new businesses
Q&A: Jeffrey Babin, entrepreneurship expert 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 L.L.C.
Q&A: Jeffrey Babin, entrepreneurship expert
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 L.L.C.
Data from PricewaterhouseCoopers L.L.C. show 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 last decade.
These figures are near the middle of the pack for major U.S. venture markets and far below areas such as Boston and San Diego. That's something Babin calls a concern for the region and Wharton, which not only wants to train people to start businesses but also keep them here.
Babin, who funds small start-ups in the hopes that they may become the next Google and who serves as program adviser to Wharton's Venture Initiation Program, discussed the region's advantages and obstacles in an interview with 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?