At the beginning of 2012, a Philly media company opened its doors to three startups.
It was an experiment: Could the legacy media company behind the Philadelphia Inquirer, Daily News and Philly.com invigorate the tech scene while also modernizing its own offerings? (The following year, the New York Times launched a similar program.)
Four years later, Project Liberty, as its known, is in the middle of its sixth class of startups (they have yet to be announced). The program was initially funded for three cycles by a $250,000 Knight Foundation grant, which got renewed for $345,000 in the summer of 2013.
So, has the experiment succeeded? That remains to be seen, but here’s what we do know: those first three Project Liberty startups had a big winter, full of exits and fundraising. And at least two of them have had an impact on the region’s tech scene.
The startups — SnipSnap, CloudMine and Versa — all joined Project Liberty fresh off completing DreamIt Ventures. (The DreamIt accelerator provided mentorship to the first three classes of Project Liberty and now, it supports the program “in any way that [it] can,” said DreamIt cofounder Steve Welch.)
- Center City couponing app SnipSnap was acquired by Toronto’s Slyce for $6.5 million. SnipSnap’s five employees are remaining in Philadelphia.
- Center City mobile back-end CloudMine raised $5 million in a Series A led by local investor Safeguard Scientifics. CloudMine employs 16 and is currently hiring.
- Sponsored content startup Versa, formerly known as ElectNext, was acquired by online petition site Change.org for an undisclosed amount. At the time of the acquisition, Versa no longer had a Philly presence. Its three staffers, including CEO Keya Dannenbaum, are joining Change.org.
Two of the startups are prime examples of the type of economic development work that the program’s state-backed funding partner Ben Franklin Technology Partners hopes to do.
Participation in Project Liberty doesn’t guarantee an investment from BFTP, but it is a tailor-made way to get in front of the investment firm and BFTP often does end up investing, like it did with the first three Project Liberty startups. Here’s the nitty gritty on each investment, according to BFTP investment group director Omar Mencin and spokesman Jason Bannon.
- BFTP invested a total of $350,000 in SnipSnap over three separate investments starting in May 2011, when they were the first institutional investor. BFTP did the original due diligence that SnipSnap used for following investors. Each of these investments were convertible debt, which had not converted into equity, though BFTP did get a payout from the exit because DreamIt Ventures owned at least 6 percent equity, as per the initial DreamIt agreement, and BFTP is an investor in DreamIt. DreamIt may have owned more equity as it made a follow-on investment in SnipSnap but Welch declined to disclose those terms.
- BFTP invested a total of $340,000 in CloudMine over four separate investments starting in 2011, including the most recent Series A. Three of those investments were convertible debt that have turned into equity, while one was convertible debt that has already been paid off. BFTP called their investments in CloudMine a good example of the kind of investing they want to do
- BFTP invested $30,000 in Versa in the form of convertible debt. But since Versa left the region, the startup had to return the money, as per BFTP terms (since BFTP is state-backed and, unlike most other investment firms, has a stated mission to push local economic development). Versa did return the investment, BFTP and Versa CEO Dannenbaum confirmed. (For a while, Versa had two Philly staffers — developer Mike Toppa and COO Dave Zega — though the rest of Versa was in New York and San Francisco. Toppa and Zega both left the company in 2014.)