What the Future Holds for the Philadelphia Technology Ecosystem
If you live in Philadelphia or if you move to Philadelphia and you start a new company, you’ll notice there are plenty of networking events that you can go to. During these events you’ll meet lots of wonderful people, smart people, passionate people, and you’ll hear a lot about the “tight-knit, tech community in Philadelphia”. And while, the community really is tight-knit, and very supportive, the investor community is not.
Technology is a huge part of our daily lives, whether we work in it, or not, it is something that has made the world much better, faster, interconnected, and saves us a lot of time. Then there are people (technologists), who develop and create this technology for others to use. Some of these technologists, are focused on helping others around them, which creates this tight-knit community.
The question is, why don’t Philadelphia investors support those who are supporting their startups, and their ecosystem? It’s a great question that I’ve asked roughly 50 entrepreneurs here in Philadelphia. Here are some of the answers I was given (with names removed to protect identities):
“I believe that my idea was created at the right time, but I think that I’m in the wrong place. I may be moving to Boston in the coming months. Investors need to get out of their B2B mentality and open their pockets to passionate entrepreneurs who have proven their concept.”
“I’m shocked that a wearable technology raised $1 million, but my wearable technology which I already have a prototype for, can’t raise a measly $100,000. It’s almost as if investors are cherry picking college students and not seasoned entrepreneurs. We have been there and done that, which leads to success more often than not.”
“I can’t believe how hard it is to raise money in this town, especially after I’ve already developed my platform, gotten some traction, revenue, and my team is sticking with me purely for equity and not a salary. Isn’t that what investors always ask for?”
“I think that unless you run an analytics company, subscription-based company, or a B2B company, investors simply don’t open their checkbooks. That’s kind of sad considering the world is filled with consumers, more-so than businesses.”
“After pitching virtually every investor in Philadelphia for my thriving startup which has gained more momentum than most startups in Philadelphia have, I think it’s time to finally move to California. It’s too bad investors don’t support entrepreneurs instead of just their ideas.”
“My team and I have helped several startups in Philadelphia succeed, and they’ve actually raised money, thanks to our help. While my team and I are still without funding. I suppose we will no longer support startups, because it’s very sad to see them succeed with our help while we can’t raise chump change compared to what they are raising. The funny thing is, if these investors could see the state of the startups they are investing in prior to us helping them, there’s no way in hell they would give them a penny!”
“It looks as if unless you have a degree from Wharton, graduated from UPenn, or have friends in politics, or your dad’s best friend is a lead investor, it’s very difficult to get money from any funds in Philadelphia.”
“I thought having traction, an already build platform, proof of concept, revenue, a solid team, and a growing market was exactly what investors wanted to support. Then how come not one investor will give my team and I even a tiny amount like $50,000?”
“Investors like to see companies running their startup full-time, but after two years, my team and I who collectively have six children between us, and homes with families, how can we continue to support ourselves. At this point we are all struggling to pay our bills, but our startup is thriving. How can investors not support us? We are extremely confused and disheartened, especially when we see the types of startups that do get funding. Sometimes I feel it’s who you know, and not how innovative you are, and that shouldn’t be the case.”
“I hear a lot from investors that say they want us to create new jobs in Philadelphia, well that’s exactly what we would use an investment for, to hire more developers, more marketing personnel, and create plenty of new jobs in Philadelphia. When our startup succeeds, Philadelphia would reap the benefits of having helped us grow. But every time we tell investors this, they still don’t invest, so what is the real truth here?”
“After running startups here in Philadelphia for over 8 years, and never getting one penny from investors, it’s safe to say that this town does not invest in entrepreneurs, it invests in B2B companies. It’s time I take my friends job offer in San Francisco, goodbye Philadelphia, I will miss you. We had good times, but not good enough.”
“What I find interesting about the investor community in Philadelphia is that if one investor says no, every investor says no. How does this make any sense? Because one investor doesn’t like the market you’re in, or doesn’t invest in companies like yours, why does that mean the company has to suffer at the hands of all the investors in Philadelphia? This seems like the complete opposite of a thriving tech community.”
“When I recently saw that a local tech startup completely blew $500,000 without anything to show for it, and then raised even more money to further try to prove their concept, it fascinates me as to how my team and I have done the complete opposite with almost no money at all. So why can’t we get some support to take our idea even further now that we’ve mitigated the risk for investors? I guess they would rather put hundreds of thousands of dollars into companies that have proven failure, and that will not succeed.”
I agree with every single one of these, and I actually have over 40 more quotes, but I wanted to keep this article short. I do want to add one thing. Although investors will not support you guys, I will continue to do so. There will be a day when I will be able to personally invest my own money in your companies, whether old or new. There will be a day, when investors finally open their eyes and their checkbooks and realize that we are passionate, successful entrepreneurs, who just need a little bit of help. I just hope you stick around long enough to see that day come.
Some of these entrepreneurs, are leaders in the community, in fact most of them are. And no, I’m not talking about the front-facing millionaires or CEOs that have had big exits who claim to be leaders. I’m talking about the entrepreneurs who day in and day out help organize events, help startups grow, mentor college and high school students, and volunteer their time and their money to help the Philadelphia ecosystem grow.
I recently had the honor of sitting down with Republican politician, councilman and attorney David Oh at City Hall and he made it very clear that he sees the importance of the innovations that the creators in the tech community bring to Philadelphia. “Without education, technology, innovators and creators, we simply can’t reach our goals.” Said Oh. “Entrepreneurs like you are at the heart of my dream for a better Philadelphia.” Not only was Councilman Oh helpful, but he related to our funding woes and offered to help in any way he can. If he runs for mayor…he’s got our vote.
Shouldn’t investors start to support the pillars of the community, without whom, the ecosystem could potentially fall apart? What does the future truly hold for the tech ecosystem in Philadelphia? The truth is that the investor community has the answer right in front of them. They simply have to start looking at other methods of investing. Instead of funding B2B companies, they should look at the entrepreneurs first, how much work was put in secondly, the plan of action for the next 12 months third, and then finally they can look at the concept. If investors started to do this here in Philadelphia, entrepreneurs wouldn’t leave the city to go where the money is. They would stay here and make magic happen. And so what if the company doesn’t take off, at least you are making the tech ecosystem stronger, because while these entrepreneurs are building their companies, they are helping others around them. But without funding, that is impossible to do. So, investors, when you don’t fund brilliant entrepreneurs, you are also not funding the tech ecosystem.
Will investors start to open their minds and checkbooks? I suppose only time will tell…good luck to you Philadelphia. I hope things turn around for you, and you can finally move up the ranks to become more like New York City, Boston, and Silicon Valley. Once that happens, I firmly believe that we will become the most unique, creative, and thriving tech ecosystem in America.
