If you’ve been following our Venture Capital Roundup, you may have noticed the new player in Philadelphia’s investment community actually isn’t from Philadelphia.
Boston’s OpenView Ventures has pulled a Ben Franklin, emerging seemingly out of no where from Boston to help spur Philadelphia’s startup ecosystem with investments in Philadelphia-based startups Monetate, Xtium and NextDocs.
The firm purposefully avoids New York and Silicon Valley and instead looks for regions that are outside of the hype cycle, so it is targeting Philadelphia as a channel for new deals.
“It’s clear to us that the businesses being funding out West are often not real businesses,” says Adam Marcus, managing director at Open View.
We spoke with Marcus about why the the lack of ego in Philly is a good thing and why he once had a job watching tall, drunk Celtics.
As always, edited for clarity and length.
How did you guys get roped in to the Philly community or were all of your investments independent of one another?
We look for interesting software companies regardless of where they are located. We got excited about the opportunities in Philly because they fit our profile for investing: there’s a good base of intellectual capital, there’s a good legacy of technology success in the region, the company managers were thoughtful and these were really businesses. We aren’t trying to find the next Twitter or Zynga. The folks in Philly are very pragmatic and focused on building real businesses and have had a lot of success.
How did the conversation with Monetate start?
We had been tracking them for two years. I had been down to visit them numerous times. NextDocs, it was the same thing. For Monetate we had reached out through Josh Kopelman and let him know that we were very interested in Monetate. We came down one time and had lunch with Josh and then met with [Monetate CEO David] Brussin in June or July. Many Silicon Valley VC’s don’t get on planes and want to find companies in 40 or 50 miles of where they live. We think there are great business being built all across the country.
Xtium came out of our market research. We were looking for cloud service providers specifically. We started a research project to find companies that fit that bill and Xtium kept coming up. We researched them and the “courtship” was more like six months. They were just hitting all of their goals revenue-wise.
So in all cases you found a market you wanted to get into and then found the company?
Correct. We also like areas that are traditionally underserved by venture firms like Houston, Dallas, Austin, Chicago, Seattle and Portland. Basically, not San Francisco and New York.
You look at a lot of non-traditional tech cities. How does Philly compare?
I think the overriding similarities is that people are very pragmatic and trying to build new businesses. The tenure of the employees in these geographies employee tenures are very long. In the Valley or in New York people are constantly jumping jobs and are very opportunistic.
If you talk to Philly companies, the dedication is phenomenal and that is just not the case elsewhere and that churn is detrimental on lots of fronts. In Philly you can build a real culture where the employee feels dedicated to the company and vice versa.
I was there when they sucked, around 2003 and 2004. I was there when Vin Baker was getting drunk before practice. My claim to fame there is seeing a towering man hammered playing basketball [laughs].-30-