A partnership between the City of Philadelphia and the Philadelphia Industrial Development Corporation has earmarked $3.5 million in a two-tiered investment and grant-making initiative called Startup PHL, as Mayor Nutter will announce Friday morning.
The focus is to attract and retain tech startups and fuel the city’s nascent innovation community.
The initiative features $3 million from PIDC to be matched and managed by a private investment fund for early stage tech startups and $500,000 in grants for entrepreneurial focused innovations.
- Startup PHL Seed Fund: An RFP will be released for a private investment firm to receive, match and manage a $3 million investment from PIDC to be dedicated for early seed stage technology startups in Philadelphia. The PHL Seed Fund will come with residency requirements for the City of Philadelphia, but how long and how strict they are will be a part of negotiations with firms that respond to the RFP, says longtime Nutter aide Luke Butler. RFP deadline is Dec. 7. More information here.
- Startup PHL Call for Ideas: The city’s Commerce Department will begin accepting submissions for “innovative, exciting proposals for ideas and programs that support startups and entrepreneurs of all stripes in Philadelphia” that could win a portion of $500,000 in grant money. Says the release: “the goal of this fund is to make grants to proposals that enhance collaboration in the startup community; attract new entrepreneurs from both within and outside the city; foster networks for entrepreneurs to collaborate with each other, mentors, talent and investors and ultimately lead to more business and job creation in Philadelphia.” The submission deadline is Dec. 14. More information here.
The initiative is meant to be a glitzy showing of the Nutter administration’s interest in broadening the reach of this city’s half-decade-old creative technology community and its predecessors. The hope here seems to be to spread that early success to a wider swath of a city that hasn’t yet been fundamentally transformed by coworking, tech startups and incubator spaces.
This effort is decidedly in its beginning stages, says Butler. PIDC hopes to choose an investment firm to match and manage its $3 million by early 2013 and, though that chosen firm will make the investment decisions, deal flow could begin in summer 2013.
The PHL grants could begin to be distributed in early 2013 and, if proven successful, could inspire another round.
On the investment front, Butler was shy about discussing a possible profit return, noting there is a broader impact in mind, though he acknowledged that seeing more money come back is an ideal way to grow and reinvest the fund.
“We have broader goals than a return on investment, but we’re hoping to leverage a relatively small public investment that generates more private capital that highlights this important sector and conveys momentum here,” Butler said.
Though the PHL grants are calling for a broader look at innovation, why focus on technology for the city’s first foray into investment?
“The tech sector is an important part of our economy in that it’s going to be a driver of job creation and is [a way of] keeping college grads here,” Butler says.
Making a bet like this is no small hunch, but then, the landscape of the past decade has dramatically changed how city governments perceive fledgling software, mobile and gaming businesses.
The economy faltered, budgets have shrunk and entrepreneurship has become a perceived silver bullet, particularly in the magic box that is ‘technology.’
New York City, on which this program is modeled, is in the midst of a high-profile race toward a more meaningful place in early stage investment and STEM education. Boston, Seattle and Austin are ballyhooed for their investment pipelines. A coalition of foundations and state and local government groups launched an angel investment fund in Baltimore this year.
All of this has led to some questioning whether the hardline focus on technology is a smart one. Butler says the PHL grants are a hedge against that bet, hoping other innovations will find their way to the fore.
“We want to support and strengthen the culture in which ideas are created and people are hired. The city has broader initiatives and programs across organizations and individuals that support all sorts of entrepreneurs,” said Butler. “This is the latest in this suite of ways that the city can be supportive of what is already happening here.”
It seems the city is toeing the line between pushing forward what is growing here, without ignoring other corners of the city.
“If you have an idea, an organization or individual, that supports growing business, jobs in the city, we want to hear it, whatever it is,” he added.
If return on investment is valuable but not a key driver, then the question is what will make success a year after the project’s launch.
“We’ll see more companies started in Philadelphia, more companies that would have left staying in Philadelphia, more venture capital flowing into the city, and just an even further amount of programs and activities that support startups and entrepreneurs,” Butler said.