Warning - long blog post ahead.
For those of you who just want the punchline, First Round Capital is moving our headquarters from the suburbs of West Conshohocken to the City of Philadelphia Here is why:
I’ve lived in the Philadelphia area for over 20 years – ever since I was a freshman at Penn. I helped to found three startups in the Philly area. I launched First Round Capital in the Philly area. Yet, for most of my professional career I’ve been “bi-coastal”. Recognizing that Silicon Valley is the center of the technology ecosystem, I’ve made countless trips out there. I’m there so often that I know the flight attendants on the PHL-SFO flights by name. It’s why this blog is called RedEyeVC – and why it has carried the subtitle “A view of the startup ecosystem from a coastally challenged VC”.
As a result, I’ve often found myself making a mental distinction between my “professional community” and my “personal community”. Philly is where I live and socialize – and it is where my wife and I have chosen to raise our family. But while I live in Philadelphia, First Round Capital is a national firm. And as a result, I feel like I have stronger professional ties to San Francisco and New York (where we also have offices). When I’m in Philly, I spend far more time talking to NY or SF-based entrepreneurs on the phone (and videoconference) than I do meeting entrepreneurs face-to-face in my office. And the First Round Capital portfolio reflects that – with over 80% of our portfolio companies based in either California or New York.
Over the years I’ve been contacted by many Philadelphia-based organizations that have sought to improve Philly’s tech ecosystem. And while I’ve tried to help, it was always in a limited fashion. I joined the boards of Innovation Philadelphia and the Wharton Entrepreneurial Center. I’ve spoken at dozens of local events and met with hundreds of local entrepreneurs. But I never picked up the “Philadelphia Tech” torch myself -- I always played a more supporting role…providing advice from the sidelines. And when people have asked me “how do we make Philly more like Silicon Valley” I’ve always thought that was like someone saying “how can I make Philadelphia Chinatown more like China”.
Yet over the last few years, I’ve seen several encouraging changes.
- First, I’ve seen capital get portable. When I co-founded Infonautics back in the early 90’s there were several Silicon Valley venture capitalists who offered us term sheets on the condition that we move out west. Yet today, capital is more geography agnostic. With e-mail, instant messenger, skype, videoconferencing – and cloud-based reporting platforms that encourage transparency – distance doesn’t matter as much. And like First Round Capital, more VCs are investing outside of their core geography.
- Second, we’ve seen the growth of more efficient ways of knowledge transfer. As recently as 10 years ago if you wanted to start a technology company, the only dedicated publications that catered to you were magazines such as Upside and the Red Herring. And most startup knowledge was passed on from person to person – you learned from in-person interactions with other entrepreneurs and investors. This created real network effects for technology ecosystems (like Silicon Valley). Today, however, there are so many online resources to help people shorten their learning curve and build their own networks. From Techcrunch (and their awesome Crunchbase) to PandoDaily (where I am an investor) to AllThingsD, it has never been easier to keep up to date on the industry. Tools such as Angellist, Gust and FundersClub connect entrepreneurs to capital. There are dozens of blogs written by venture capitalists and founders. Online communities such as Hacker News have emerged. And social media has made everyone and everything much more accessible.
- Finally, it’s gotten much cheaper to start a company. I (and hundreds of other people) have blogged about this before. Five years ago if you wanted to build a mobile app you needed to plan on spending a year negotiating with AT&T and Verizon. Today, anyone can build an app from their dorm room in a few days.
And as a result of these changes, I’ve seen more and more interesting startups get created in more and more diverse places. Cities such as Boulder. Austin. Portland. Providence. And, yes, Philadelphia. From Invite Media, Monetate, Curalate, Relay Network, PackLate, Solve Media and Warby Parker (which we were fortunate enough to invest in) to AdMob, Diapers.com, Milo, Venmo, DuckDuckGo and Lore (where we didn’t invest) we’ve begun to see more really exciting companies get their start in Philadelphia. Every year I see more entrepreneurial activity at Philadelphia’s universities. Indeed, just last week PandoDaily suggested that the University of Pennsylvania was like “the Stanford of the East”. And we’ve also begun to see other positive signs in the ecosystem. Grassroots organizations such as Philadelphia Startup Leaders (which I recently joined the board of) have emerged to provide some “connective glue” for the ecosystem. Incubators like DreamIt and co-working spaces such as IndyHall, Venturef0rth, Benjamin's Desk, SeedPhilly, and many others have begun to emerge. Several of our portfolio companies have already expanded into Philly – such as Uber and PublicStuff (which is powering Philadelphia’s mobile 311 app). We’ve seen the launch of Philly tech blogs like Technically Philly. And Mayor Nutter is a regular speaker at startup events (like Philly Tech Week) and a real booster for tech entrepreneurship.
Change doesn’t occur overnight. I’m a big proponent of the what Fred Wilson calls “the Darwinian Evolution of Startup Hubs” – and recognize that in order for an ecosystem to grow you need the alumni from successful companies. And while it takes multiple generations of successful companies to create a true startup hub, I’m encouraged by the quantity and quality of the current generation of startups. Monetate, for example, employs over 100 people in the Phialdelphia area (and is looking to hire another 25 people now). Their team is incredible -- and has the technical chops of a Silicon Valley company. It isn’t random luck that the company’s founder and CEO, David Brussin, was the CTO and co-founder of Turntide – an earlier Philadelphia success story that sold to Symantec. The best way to create a more vibrant startup ecosystem in Philadelphia is to help the current class of startups succeed – so that Monetate’s employees will be our next batch of upcoming entrepreneurs. This doesn’t just create value today – but it also has a compounding effect as today’s successful companies create the next generation of entrepreneurs through their alumni.
That’s why I’m done sitting on the sidelines. And so is First Round Capital. And I am super-excited to announce that First Round Capital is moving our headquarters from the suburbs of West Conshohocken into the city of Philadelphia. I’m trading my sterile suburban office park environment (and short commute) for proximity to Philadelphia’s entrepreneurs. We’ll be opening a 10,000 square foot facility in University City – right next to Penn’s campus. In addition to housing our Philadelphia team, the office will have space for startups – both for our portfolio companies (such as Uber’s Philly team, Curalate and Perceptual Networks) as well as other companies (like Technically Philly – who will be locating their offices there as well). It will have space to host educational and networking events. And it will have space for entrepreneurs to hang out and work.
But for me this is more than just an office move. It is my acknowledgement that I can do more to help local entrepreneurs get their business off the ground. And while I don’t expect that I will slow down my travel schedule or that our new office location will immediately result in us funding dozens of Philadelphia area companies – I do want to play a more active role in helping the current generation of Philadelphia entrepreneurs make their mark. I’m not trying to turn Philadelphia into Silicon Valley (or Chinatown into China) – but I do think we can enable more great companies to be built here in Philadelphia.
And I can’t wait to get started.