Investing in You: Philadelphia is sizzling hot for start-ups

Philadelphia is as cool as Silicon Valley or Manhattan for start-ups and aspiring entrepreneurs.

Yes, really.

Got an idea? Go for it.

"Philly is a great sandbox. You can try, fail, try again, tweak, and you're not under a huge microscope," says venture capitalist Patrick FitzGerald.

Just ask Allison Berliner, who earned an M.B.A. from the Wharton School of Business at the University of Pennsylvania. She spent a semester in San Francisco, but came back east to work at Wanderfly, then co-founded a fashion brands-matchmaking website, PopInShop, in Philly.

"There are all kinds of events, like hackathons, weekend-long get-togethers where we work on projects and turn out a product or idea in a day," Berliner says.

PopInShop is funded by FitzGerald, who founded RecycleBank a decade ago. His start-up incubator, DreamIt Ventures, with offices in University City, is a so-called accelerator program, funding and launching entrepreneurs in 90 days. DreamIt connected PopInShop with a mentor in Curalate, another local start-up.

In Philly, women have just as much opportunity as men to fund and operate start-up businesses, Berliner says.

DreamIt Ventures' 2014 cohort included four other start-ups founded or co-founded by women, she says, and Berliner is now connected with the Alliance of Women Entrepreneurs, considered the Mid-Atlantic region's largest organization fostering high-growth businesses founded or led by women.

Access to capital? Unavailable here until a few big successes like Josh Kopelman's Half.com and Fitzgerald's RecycleBank raised millions.

"When I started RecycleBank here, there was no start-up ecosystem. Not at all," FitzGerald recalls.

Access to talent like developers? That changed "once the universities caught on and realized they had to catch these start-ups while they were still in their college dorm rooms. Wharton, Drexel, Temple all created a support network and an ecosystem, so the talent doesn't leave, they stay in Philly now," FitzGerald says.

Adding to the cool factor: Donna DeCarolis, founding head of Drexel's Close School of Entrepreneurship, who was among the scheduled speakers at last week's Pennsylvania Conference for Women at the Convention Center.

This week, the Forbes Under 30 Summit comes to town, with speakers including Spanx founder Sara Blakely, who as a 27-year-old fax-machine saleswoman launched her idea to snip pantyhose at the ankles into a shapewear empire.

Put aside your longtime resident's cynicism about this city and look through the eyes of a twentysomething.

"I'm not surprised at all," says Troy Carter, a judge for Forbes Under 30 pitch sessions.

"It's the same reason Jay Z hosts the Made in America concerts here," says Carter, Lady Gaga's onetime manager and now a successful venture capitalist.

Kopelman, founder of First Round Capital, says, "Never in history has it been cheaper or faster to start a company."

In Kopelman's own career, costs to get to "first product ship" started at $5 million in 1991 [Infonautics], then dropped to $2.5 million in 1999 [Half.com] and to $750,000 in 2004 [Turntide].

"Barriers are way down. It's democratized entrepreneurship by orders of magnitude. In Penn or Drexel's dorms, there are probably hundreds of developers who can create an app for $100, which can then be distributed to hundreds of millions of iPhones," Kopelman says.

The start-up buzz in Philly has heated up in the last 24 to 36 months, he adds.

"Technology is enabling these businesses to get started anywhere. Previously, location was defined by industry. Now, it's where you want to live."

Godfathers of the Internet such as Steve Case, founder of AOL, want to fund entrepreneurs outside Silicon Valley. Case also will judge at the Forbes Under 30 Summit pitch-fest, sort of a live version of TV's Shark Tank.

Why look here?

"America was sort of birthed in Philadelphia," Case says. "It makes sense to propel start-ups forward here."

States other than New York and California "aren't getting as much attention . . . so we thought, 'How do we use this to elevate entrepreneurs in the other 48 states?' " Case adds.

Philly's cheap co-working spaces, such as Indy Hall, Benjamin's Desk, and Venturef0rth act as ecosystems fertilizing start-ups. (Way cheaper than New York.)

Then there's the community support here.

"We started here because of the talent," Berliner said. "We built a phenomenal team with folks from Penn and Drexel. As long as that plays out, we'll remain here."

Philadelphia is becoming the Silicon Valley of start-ups. H22EndText