Can Philly reposition to become the champ of startups? Photo via Wikipedia

Philadelphia isn’t routinely thought of as a startup hub. But the City of Brotherly Love is hoping to now sprinkle some of that love to entrepreneurs — in the form of cash.

Mayor Michael Nutter today introduced a new public-private investment program called Startup PHL designed to boost seed-stage capital in the city and support newbie entrepreneurs.

“The goal of Startup PHL is to build upon and support so much of the good work that is already being done, building more businesses, creating more jobs, and expanding entrepreneurial opportunities to even more Philadelphians,” said Mayor Nutter in a press release announcing the program. The fund includes $3 million from the Philadelphia Industrial Development Corp., a figure that is to be matched by an investment firm which will manage the money and seek out promising startups in the city.

We’ve seen these programs before, including Oregon’s very own Portland Seed Fund. But do they work?

Seattle politicians have largely avoided these types of public-private initiatives, though the state-operated Life Sciences Discovery Fund and recently launched University of Washington W Fund (with money from both private and public coffers) are examples of public money being used for startup ideas. (Some have argued that the Life Sciences Discovery Fund is an example of how not to do public-private partnerships.

The jury is out whether these types of programs should fall under government agencies. Interestingly, the topic has become a key talking point in the race for governor in Washington state. Candidate Rob McKenna has continued to hammer Jay Inslee over an idea, which he has since dropped, to pump state pension money into startups.

Whether you agree or not that government funds should be used to cultivate new businesses, there is a problem here that needs addressed. And it is taking on added significance in Seattle given that several venture capital firms in the area — most recently OVP Venture Partners and Frazier Technology Ventures — are getting out of the investing business. Others, such as Ignition Partners, are pumping an increasingly large number of dollars into companies outside of the state.

Entrepreneurs in the Seattle area have long complained about the lack of seed-stage capital on attractive terms, causing some to head to Silicon Valley to raise cash.

Programs such as TechStars are trying to fill the gap as are angel investment groups, but there’s still an ongoing perception (disputed by some in the venture community) that there’s not enough early-stage capital in Seattle.

So, what do you think? Would you welcome a City of Seattle-supported startup program? (Sounds like some might want it more than drones flying overhead!)

Personally, I have some doubts whether that’s the right approach. However, I do envy cities such as New York, Portland and, now Philly, which have leadership who take startups seriously. Let us know what you think.

Previously on GeekWire:  Mayor McGinn convenes startup roundtable: Could these 5 ideas transform Seattle’s startup community

Comments

  • http://twitter.com/RedRussak Red Russak

    Seattle should definitely give this a try. We have the Office of Economic Development which has a similar budget and timeline to the ‘Fund Your Ideas’ campaign StartupPHL is running. Curious if the city would be interested in running something similar through a new identity. StartupSeattle perhaps? ;-)

  • http://twitter.com/mcclintock072 James McClintock

    Any one who would stand in line for Microsoft must be soft in the head. Microsoft support is the worst in the world. I tried to order a surface on oct.22 and still have no confirmation on it.

  • http://www.facebook.com/phil.barrett.7161 Phil Barrett

    I have serious doubts that a city lead effort could ever work. A good investor brings more than just money – business insight and connections, for example. A government agency will be hard pressed to provide that sort of thing.

    • RyanM

      It sounds like Philadelphia is providing $3M to a VC/similar – who will be required to match the amount – to invest. So, the city of Philadelphia is essentially an LP in this case, right?

      • johnhcook

        That’s right. They aren’t directly investing as I understand it, but choosing the VC who would invest the money.

  • http://twitter.com/chrisamccoy Chris McCoy

    I think every city in America should have its own “TechStars” that focuses on local and regional biz. Not more Farmvilles. Should be funded by local entrepreneurs and local wealthy folks. The city should match the fund.

    This would immediately solve the talent gap that most all cities see as it relates to early-stage and entrepreneurship.

    There’s most cash on the sidelines than talent in the game.

    Every city needs this and their is a right model for it.

    It’s why I’m for a guy like Michael Bloomberg as President. He actually gets it–and would push this agenda at federal level.

    America needs entrepreneurship as much as when we came over here in boats in the first place.

    Problem is we’re risk-adverse now. But uber talented.

    So much more capital needs to be in early-stage with a focus on local and regional businesses.

    This is how you get the economy going.

  • marklipsky

    Imagine what might have been had $535M gone into a start-up fund rather than into Solydra. No fewer than 1,000 new companies would have had a shot at the American Dream not to mention the many jobs such a program would have generated across every State of the Union for administration of the project. Worst case, the fund would have been poorly administered, only a tiny percentage of those companies would have succeeded and tens of thousands of job seekers would have found work – even if only for a year or so. But such plan could – and likely would – have succeeded well beyond worst case. It could still happen and the possibilities for such a thing would be virtually endless.

  • http://twitter.com/lunarmobiscuit Michael ‘Luni’ Libes

    Seattle doesn’t need this. For tech companies, we have TechStars, Founders Co-op, multiple Angel groups, and a handful of venture capital funds. Most cities have nothing comparable. Looking one city south, Portland, Beaverton, and Hillsboro created a fund like Philadelphia’s, to kick-start a handful of Portland-based companies. The Portland Seed Fund takes public money and hands out small convertible debt investments. This does not replace the need for either Angels or VCs, but at least brings a modicum of funding to our neighboring city that has no local professional capital. Philly is simply doing the same, trying to take a small step at keeping up with the money from NYC.

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