We already know that Philadelphia had its best year ever for venture capital in 2021, following an uncertain year in 2020.
But a new report from the Philadelphia Alliance for Capital and Technology, aka PACT, gives us a closer look into where that capital went.
At year’s end, companies in the Philadelphia region had raised $8 billion in investments across 395 deals, PitchBook data found. The region, which includes Camden and Wilmington, has been on a steady incline in VC dollars since a dot-com era boom in 2000. Totals for the year often landed around $1 billion until 2019, which hit more than $2 billion. But 2021 showed extreme growth beyond the norm.
PACT’s report uses the PitchBook data, but dives a little deeper into demographics. It also includes slightly different numbers, accounting for end-of-the-year deals that don’t always make it into the January report. This PACT report shows just under $8 billion in venture capital raised across 411 deals. It also notes that one Philly company — Callowhill’s Gopuff — was responsible for nearly half of that money, due to its $3.65 billion across multiple rounds (Series G and H), the report says.
“The sheer size of Gopuff’s fundraising and the scaling of the operations has positively demonstrated that you can build a global company out of Philadelphia,” said Dean Miller, PACT’s president and CEO. in a statement. “Philadelphia has been a center for biotech and healthcare entrepreneurs, and more recently, it has been an enterprise tech powerhouse. The region has not had many name-brand consumer successes, but Gopuff is changing that and spawning several other startups.”
Second in raises was “ugly” produce delivery company Misfits Market, for raising a two-part Series C last year, for a total of $425 million. Life sciences companies Nikang Therapeutics followed at $200 million in funding and Century Therapeutics came after with $160 million. dbt Labs came next with $150 million; the local SaaS company’s $222 million Series D won’t be counted until next year’s roundup.
HealthVerity, DuckDuckGo, Phenom, Aro Biotherapeutics, Sepax Technologies, Interius BioTherapeutics and Crossbeam rounded out the list of massive raises — $75 million and above — in 2021. (Worth noting: DuckDuckGo said it raised $100 million in 2020.)
Philly funding trends
A few trends have emerged showing companies are raising more money at earlier stages in their lives, the report shows. Since 2016, fewer deals fit in the under-$500,000 category, while more are falling into and above the $1 million to $5 million category. In 2021, about 70% of deals were this case, and a growing number — about 10% of deals — were above $25 million.
In 2021, more software companies were getting deals than ever before, too, the report shows, accounting for more than 30% of all deals. Pharma and biotech follow, with consumer goods and recreation after that. In terms of amount of money, Gopuff steals the show here, over-representing the consumer goods category, with software and pharma and biotech following.
Philadelphia’s women founders were also having their best year ever, with $426.3 million going to 57 companies with at least one woman founder last year. It’s basically double the amount that went to women founders in 2020, which makes for good progress, but the gender VC gap persists. The report also mentions funds specifically targeted to support and invest in underrepresented founders, but PitchBook’s data doesn’t show how much VC went to founders of color.
An interesting trend noted anecdotally, until now, was that Philly companies were gaining interest from outside investors. PACT’s report showed that year over year, 2021 saw a 78% jump in Bay Area investor participation, a 122% increase from New York investors, and a 48% increase from Boston-based firms. About a fourth of all Philly deals had Bay Area participation last year, the report found.
“Investors in traditional VC bastions are paying more attention to outside ecosystems, and VC portfolios are becoming much more geographically diverse. COVID-19 accelerated this trend, which had been percolating before the pandemic,” the report said of the trend.
Sector diversity and TBD IPOs
2021’s numbers show that Philly might be heading out of its traditional “eds and meds” ecosystem, with strong sector representation from other industries like software and consumer goods, Miller noted in the report. And when he pictures the next five to 10 years, he sees the city having multiple high-profile public companies — say, Gopuff? — that will draw attention for the next generation of startups.
“Entrepreneurs, tech workers, and students are attracted to Philadelphia, which will only further propel company formation and growth. Like many other cities, Philadelphia imports most of its VC from outside of the region, and I expect that we see more capital, particularly seed and early-stage capital, based in Philadelphia,” Miller said. “Finally, Philadelphia will deliver on its promise to have a more diverse tech and venture ecosystem given the breadth of initiatives underway to support underrepresented founders and tech workers.”