When Americans think about Philadelphia, hometown of the Super Bowl-bound Eagles, images that first come to mind likely revolve around cheesesteaks, Rocky and the Liberty Bell.
Startups, not so much.
In reality, however, Philly and its environs actually constitute one of the larger U.S. hubs for health and biotech founders. The City of Brotherly Love is also no slouch in the tech and fintech departments.
Search less. Close more.
Grow your revenue with all-in-one prospecting solutions powered by the leader in private-company data.
Funding numbers back up that assessment. Since 2022, investors have poured over $2.5 billion into venture and growth rounds for local companies, according to an analysis of Crunchbase data. Life sciences funding increased sharply year over year for the region, even as overall U.S.venture funding declined, with the seven biggest financings highlighted below:
“There’s a lot of positive momentum,” said Audrey Greenberg, co-founder of the Center for Breakthrough Medicines, a cell and gene therapy contract development, manufacturing and testing organization. The King of Prussia, Pennsylvania-based company closed on $350 million last year in the metro area’s largest startup funding round.
Not the underdog
With the Eagles poised for what could be their second Super Bowl victory in six years, Greenberg sees similarities between the local football and life science trajectories. The common theme: A city with a longtime underdog reputation is staging a serious comeback.
It’s a notion Greenberg likes to promote with two of her favored hashtags: #NotTheUnderdog and #celliconvalley. While the first could refer to either sports or science, the second one is definitively a nod to Philadelphia’s history as a hub for cell and gene therapy.
In recent years, the University of Pennsylvania, and the on-campus Children’s Hospital of Pennsylvania, in particular, have gained a reputation as research pioneers in immuno-oncology, cell and gene therapy. The first FDA-approved gene therapy — for a rare form of retinal blindness — had its roots in local labs. And Philadelphia-based Spark Therapeutics (now owned by Roche), played a lead role in clinical trials and commercializing breakthrough gene therapies.
Among U.S. life sciences hubs, Philly consistently makes the top 10 lists by such metrics as local talent pool, square footage of dedicated facilities, and venture funding. While Boston, San Diego and the San Francisco Bay Area are bigger for now, Philadelphia has been steadily moving up in the ranks.
Affordability, Whiz and provolone
Local startup boosters see affordability as one driver of growth. While greater Philly isn’t exactly cheap, the cost of living is significantly lower than Boston and major California metros, with housing in particular far more affordable.
For better or worse, Philly’s startup scene is also pretty suburban. Out of total funding to the metro area, less than half went to companies in Philadelphia proper, with the rest going to surrounding towns and smaller cities.
In practice, what this means is mental images of scrappy startups in gritty urban digs probably aren’t too representative of actual reality. While the archetypal Philadelphian may be someone scarfing a Whiz-laden cheesesteak on a street corner, the typical startup worker is more likely to order lunch from some place in the suburbs with provolone 1 as the default cheese.
Still, Philly proper does attract its share of startups too. For 2022, the top tech funding recipient was dbt Labs, a developer of data engineering tools that pulled in $222 million in Series D financing. At the earlier stage, QuotaPath, a sales commission tracking platform, also landed a big round, with $41 million in an April Series B.
On the biotech side, meanwhile, one of the top funding recipients based in the city is Vitara Biomedical, a startup with ties to the children’s hospital, that is developing technology to help premature babies acclimate outside the womb. The company has raised $100 million to date.
Contender to winner
With the IPO market mostly on hold and M&A action fairly quiet, Philly’s startup scene hasn’t delivered a big exit recently. However, one local biotech — hypertension therapy developer Mineralys Therapeutics — did move closer to its debut, submitting an amended filing this month to raise up to $160 million in a planned IPO.
Given the sizable concentration of well-funded biotechs in the area, one would expect a series of other offerings should the market show signs of a sustained thaw.
Once that happens, the hope for Philadelphia’s startups is that their fortunes will look a little more like the Eagles’ track record this season: Few losses and lots of big wins.
Photo: Emy111 at English Wikipedia, Public domain, via Wikimedia Commons
Among Philadelphians, the topic of Cheez Whiz vs. provolone has historically been a subject of much debate, with strong proponents on both sides. Your author is strongly of the provolone persuasion and would recommend Whiz only for such uses as stocking your doomsday bunker.↩
Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.