By Stephen S. Tang

and Robert C. Wonderling

Philadelphia's innovation story began with Ben Franklin and continues to this day. As Mayor Nutter is quick to remind us, the United States is the original start-up, and our great country was launched here in Philadelphia.

If that story is to continue, there are three critical areas that should be a part of any conversation about the intersection of innovation and entrepreneurship: funding, talent, and business climate.

Let's start with money. Despite being the fifth most productive metro region for research and development, Philadelphia lags behind other markets in terms of venture capital investment. We rank 14th in the nation, well behind San Francisco, which leads the list, as well as Boston, New York, San Diego, Washington, and others.

We're making progress. First Round Capital, one of the leading VC firms in the nation, has moved to University City, and we're hopeful that others will follow. Start-ups are more likely to locate where the money is.

So, Job 1 is to continue to make the city more welcoming to investors, start-ups, and established companies. A change in the tax code made moving to the city a compelling business decision for First Round Capital. What else can be done to encourage other companies to consider locating in Philly?

Next is talent, an area where Philadelphia has a clear advantage. Our region boasts 101 degree-granting institutions that produce top-level scientists and engineers. In 2009-10, according to the National Center for Education Statistics, almost 86,000 certificates and degrees were awarded in the region, 31 percent of them advanced degrees.

Yet U.S. visa policies are forcing top-level talent from our colleges and universities to return to their home countries, which ultimately become our global competitors.

We need city, state, and federal support for policies that encourage the retention of foreign-born graduate students in the United States, particularly those engaged in research in STEM areas, and facilitate the growth of start-up companies by immigrant entrepreneurs.

The last issue to consider is business climate. Now is the time for municipal government to make structural changes to its revenue stream and create a more business-friendly environment. Taxing salaries and profits discourages entrepreneurship and lowers the demand for commercial space.

In addition, on the national level, the United States must structure its tax policies and rates to be competitive with world markets and to incentivize U.S. and foreign direct investment in all stages of technological development from research to commercialization - especially in Philadelphia area's target industries, including health care, health-care IT, energy, life sciences, and advanced manufacturing.

Examples of specific tax initiatives include expanding and making permanent the federal R&D tax credit; providing an incentive for the reinvestment of foreign earnings into domestic R&D, technology commercialization, and early stage investment; and making permanent the suspension of capital gains taxes for qualifying investments made in small businesses.

We have the ingredients for success in the Philadelphia area. Making these changes will help the region to build upon its legacy as a thriving entrepreneurial center. Imagine the companies that could locate here and change the world if we're successful.