Snapshots

Philadelphia’s share of regional VC funding is trending upward

In recent years, a larger percentage of VC funding coming into the region is going to Philadelphia-based firms

September 28, 2020
Philadelphia VC funding
 
  • From 2011 to 2015, 19.5% of all venture capital coming into the region was for companies based in Philadelphia. Since then, Philadelphia’s share of the regional venture capital funding pie has jumped drastically, with 50.5% of all VC funding since 2016 being destined for companies within city limits. Part of this trend can be attributed to more funding flowing to life sciences and biotech firms in the city. From 2011 to 2015, non-city biotech firms in the region raised $1.25 billion, but since then, there has only been $1.01 billion raised across that same geography. The city saw much less activity in the first half of the decade, with $233 million being raised by biotech firms, but since 2016, biotech-related VC activity in the city has skyrocketed to over $1.3 billion.

  • While biotech has been part of the story for the city’s recent rise, funding for city start-ups in other industries has trended upward as well. In e-commerce, goPuff has led the way with $858 million in funding over the last two years. Guru, an artificial intelligence firm, has had one of the largest funding rounds year to date, raising $30 million during April, bringing their two-year fundraising total to $55 million. 

  • With the start up scene in Philadelphia attracting more and more investment capital, each of the Philadelphia CBD submarkets are uniquely positioned to benefit from this rising tide. University City has blossomed into a thriving Life Sciences community, with One uCity Square kicking off construction earlier this year and Brandywine Realty Trust announcing that 3000 Market Street will be converted to a life sciences facility. A few miles south, The Navy Yard and its larger parcels present a unique opportunity for expansive, single-tenant lab and manufacturing facilities, which has already attracted the likes of WuXi and Iovance. For start-ups in other industries, Market Street East’s inventory of creative office buildings with larger floorplates and higher ceilings has proved attractive for companies expanding out of coworking. Lastly, with Market Street West’s large cluster of professional and business services firms, the rise of start-ups elsewhere in the city strengthens demand for the primary firms that make up Market Street West. 

  • While COVID-19 has reduced overall venture funding activity – Crunchbase tracked a 44 percent decrease in deals through June 2020 - performance and check size vary widely by industry, and new opportunities for innovation and VC funding will emerge in the wake of the crisis as firms in the fields of technology, life sciences, design, and logistics seek to meet the needs of a changed world. So while it appears that Philadelphia is on track to have a far slower year than the record-breaking 2019, there is reason to believe that our life sciences and startup ecosystems will drive ongoing VC investment, particularly as clarity around a vaccine emerges in 2021.