Philly’s venture funds capitalize on momentum

Philly’s venture funds capitalize on momentum

By: Sara Warden

2 min read March 2020 — According to a recent report by the Philadelphia Alliance for Capital and Technologies (PACT) and Pitchbook, Philadelphia’s 2019 venture investment of $2.5 billion puts the city in seventh place nationally as a VC giant. And as more and more funding flows into Philadelphia, venture capital investment shows no sign of slowing down.

 

In 2019, 225 deals were recorded in Philadelphia, totaling just over $2.5 billion, up just slightly in number of deals since 2018, but notably, deal value has skyrocketed. In 2018, Philly’s VC deals were worth just under $1.5 billion. Across all stages, median deal values have increased, with angel and seed investment in 2019 coming in at a median $1.2 million compared with $600,000 in 2018, early VC doubling to $3.8 million from $1.9 million in 2018 and late VC reaching $7.5 million from $4.2 million in 2018.

The most active investor is Ben Franklin Technology Partners of southeastern Pennsylvania, according to the report, having funded 356 deals. It is a leader in seed capital investments with over $200 million invested over 35 years, launching over 2,000 companies. It is not just volume that counts, but also value. In a record for a Philly-based company, the largest funding round in 2019 was for food delivery service goPuff, which raised $750 million.

But despite this momentum, Philadelphia still has a way to go before it can catch up to VC hubs such as San Francisco, the report says. “Deal size inflation for Philly—though broadly consistent with the YoY persistence of rising valuations across the US—has yet to push median deal sizes to levels reached elsewhere,” the report said. “For example, the median for an early-stage deal in Philadelphia was $3.8 million—roughly half the US median.”

So what are Philadelphia investors doing about it? One lawyer, Ajay Raju, is setting up three new VC funds in the city to capitalize on its success. “There is no shortage of talented founders with great ideas and road maps who are designing the future,” he told the Philadelphia Inquirer. The three companies – 215 Capital, Backswing Ventures and Togo Ventures – will target different investors and aim funds at different sectors. 

215 Capital will be an exclusive, subscription-only Series A pledge fund with just 100 investors and a focus on technology, whether in software as a service or real estate technology. Togo Ventures will focus on the pharma industry, from digital health to clinical trials. And Backswing will be “sector agnostic” to bridge the gap for anything in between. 

“We are geography-agnostic and return-devout,” Raju told the Inquirer in an interview, but admitted that Philadelphia has plenty of opportunities ripe for investment and entrepreneurs hungry for capital to realize their ideas. “Philly’s innovation ecosystem needs capital and plenty of it,” he said.

 

To learn more about our interviewees, visit:

https://www.sep.benfranklin.org/

https://gopuff.com/home

https://www.215capital.com/

https://www.backswingventures.com/

https://philadelphiapact.com/

https://pitchbook.com/

 

Healthcare in Philadelphia Going from Strength to Strength

Healthcare in Philadelphia Going from Strength to Strength

By: Sara Warden

2 min read January 2020 — Innovation in Philadelphia’s healthcare industry has long been recognized as exemplary, and it served as a focal point of Philly’s B.PHL Innovation Fest held in September. Recent developments show that healthcare pioneers were right to bet on Philadelphia.

It’s only a week in and already 2020 has been a big year for healthcare in Philadelphia. Healthcare software company Repisodic announced this week it has raised $1.75 million from a private stock sale led by VC company American Enterprise Ventures. Repisodic was nominated among just 17 early-stage companies that received a total of $3 million in pre-seed funding from Ben Franklin Technology Partners of Southeastern Pennsylvania in 2018.

The technology produced by the company is based on patient discharge care and was catalyzed by the “discharge planning rule” enacted by the Centers for Medicare and Medicaid Services (CMS) in November, which mandated that patients “be in the driver’s seat, playing an active role in their care transitions to ensure seamless coordination of care,” according to CMS Administrator Seema Verma.

Repisodic allows patients to access a list of post-acute care providers in a seamless and easy way, with search functions tailored to the patient’s specific medical records and requirements. “The sheet of paper (given to post-acute care patients by hospitals on discharge) may have names and addresses and phone numbers, but not a whole lot of other information,” Mike Cwalinski, the company’s co-founder and CEO, said to Philadelphia Business Journal. “We help patients make better and faster decisions at the time of discharge.”

Elsewhere, Philly-based gene therapy company Spirovant Sciences was last week acquired by Japanese pharma company Sumitomo Dainippon Pharma in a $3 billion transaction. “(Sumitomo) is incredibly committed to Spirovant and to gene therapy, particularly the work going on here in the Philadelphia area,” said Joan Lau, Spirovant’s CEO, in an interview with Philadelphia Business Journal. “They will be spending time here to get to know the area more intimately.”

Spirovant’s gene therapies aim to repair mutations that come as a side-effect from cystic fibrosis and cause difficulties with breathing. Earlier in the year Spirovant had been acquired by New York-based Roivant, which sold its ownership stake in five companies – one of which was Spirovant – to Sumitomo. “I think it’s a testament to our underlying technology from the University of Iowa and CHOP,” said Lau when asked about being acquired twice in one year. “We’ve been able to show strong preclinical data.”

 

To learn more, visit:

https://www.repisodic.com/

https://benfranklin.org/

https://www.cms.gov/

https://spirovant.com/

https://www.ds-pharma.com/

https://bphlfest.com/

https://www.americanenterprise.com/aeventures

 

Philly Bets Big on Biotech

Philly Bets Big on Biotech

By: Sara Warden

2 min read December 2019 — The biotech industry is unlike almost any other. Companies spend billions of dollars in drug development that can end in failure, generate little to no revenue but can still be worth billions of dollars. According to Toptal Finance, almost 80% of the companies listed on the Nasdaq Biotech Index (NBI) – around 150 – have no earnings, but they represent over $250 billion in market capitalization.

The average venture investment in biotech has more than doubled over the past decade, from $4.6 billion in 2005 to $12.9 billion in 2015. Why? Because when a biotech company wins, it wins big. And Philadelphia is one of the cities channeling its energies into attracting biotech investment.

“In general, we are punching below our weight,” said Dean Miller, the president of the Philadelphia Alliance for Capital and Technologies (PACT), during the Regional Biotech Conference hosted by the Pennsylvania Biotechnology Center last month.

In 2018, Philadelphia made it into the Top 10 ranking in the country in terms of most venture capital deals completed with 214, amounting to around $1.4 billion. During the first nine months of 2019, the number stood at 178. About 80% of VC is from other regions, said Miller, but “that’s not a big thing because capital is portable,” he added.

But Miller believes the $50 million Hatch BioFund life science incubator, established in July, will turn that trend around and allow Philadelphia-based companies to invest more in life sciences. “Entrepreneurs selected for the investment program will have the opportunity to be part of a highly successful ecosystem of support, resources, collaboration and knowledge sharing. We have tremendous talent and knowledge in our network, and are excited to bring the ideas and science that are incubating to the forefront of the life sciences industry,” said Vladimir Walko, CEO of Hatch Management, in a press release.

Another factor that boosts the sector is the fact that more and more companies are moving to the city daily as they can see the benefits it provides as a biotech hub. The latest to move to Philadelphia is Diverse Biotech, a biopharmaceutical company developing cannabidoil therapeutics for hard-to-treat cancers, including basal cell carcinoma, pancreatic cancer and glioblastoma.

The Pennsylvania Biotechnology Center, which opened in 2006, is one of the primary reasons why the company decided to make the move. Already home to a network of around 50 biotechnology, pharmaceutical and medical devices companies, Stella Vnook, Diverse Biotech’s CEO, said in an interview with the Philadelphia Business Journal that the center is “truly a tremendous scientific community and a perfect place for Diverse Biotech to continue its growth journey.”

Bradley Campbell, president and chief operations officer of Philadelphia-based Amicus Therapeutics, said innovation, talent and like-minded companies make the city one of the best places to set down roots for biotech companies. “We could’ve gone to Silicon Valley or to Cambridge, anywhere in the world really, but it was clear to us that we needed to be near the momentum, that spark of innovation, the entrepreneurship, the acquisitions, the medical centers — Penn, Temple, and Drexel, all right here in Philadelphia,” he told Philly Mag. “Being in proximity to so much innovation has been amazing for us.”

To learn more, visit:

https://www.toptal.com/finance

https://philadelphiapact.com/

http://www.pabiotechbc.org/

https://hatchbiofund.com/

https://diversebiotech.com/

https://www.amicusrx.com/