PhillyInc: Philadelphia-area firms get $58M in venture funding

Posted: July 25, 2012

While we intuitively know that "money isn't everything," that doesn't stop many of us from wanting more of it.

That's how I felt reading over the most recent statistics on venture capital investment in the Philadelphia region and nationally.

Twenty-seven companies in the Philadelphia metropolitan area attracted $57.76 million in April, May and June, according to the PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report.

That placed Philadelphia 14th among the regions that the consulting firm and trade association monitor to determine the health of the industry that funds growth companies. In contrast, Silicon Valley companies were flooded with $3.23 billion, while firms in New England welcomed $843.21 million.

In fact, those two regions accounted for more than half the $7.04 billion invested by venture funds in 898 companies nationwide in the second quarter, up from $6.04 billion in 809 companies in the first quarter. (In the second quarter of 2011, the total amount invested was $8.01 billion in 1,057 firms.)

For a region that prides itself on an up-and-coming knowledge economy, Philadelphia doesn't seem to be on speed dial for many venture capitalists.

PhaseBio Pharmaceuticals Inc., a Malvern biopharmaceutical firm developing treatments for diabetes, metabolic disease and cardiovascular disease, raised $23.22 million in a financing announced in early June that proved to be the largest local venture deal in the quarter.

PhaseBio, which employs 22 people at its Chester County headquarters and research laboratory, is led by Christopher Prior, a serial entrepreneur who relocated the company from North Carolina to Malvern about two years ago.

Technically, the $23 million investment was an extension of a venture round first announced in December 2009. Still, even if you added up all three tranches of its Series B round (a total of $48.52 million, according to a filing with the Securities and Exchange Commission), PhaseBio's deal wouldn't rank in the top 10 nationally for the second quarter.

Tops was Fisker Automotive Inc., an Anaheim, Calif., firm that at one time had hoped to make one of its electric vehicles in northern Delaware. Fisker raised $147.6 million. The second-biggest deal involved Waltham, Mass.-based Harvest Power Inc., a producer of renewable energy and organic fertilizer that received $112.0 million.

Nationally, software led all industries with $2.3 billion invested in the second quarter, compared with $1.7 billion in the first quarter, according to the MoneyTree Report, which is based on data from Thomson Reuters. The number of deals involving software firms rose to 290 from 251.

Conversely, investing in life sciences continues to fall out of favor. Nationally, $697 million was raised by 90 biotechnology firms, which the NVCA said was the lowest quarterly total for the sector since the first quarter of 2003.

Still, life sciences remains the Philadelphia area's capital magnet. Of the 27 companies that received venture investment in the second quarter, eight were classified as software firms, which raised a total of $11.9 million. But, the biotech industry attracted the most capital - $37.22 million - to just four companies, including Ceptaris Therapeutics Inc., a Malvern firm that raised $10 million in June.


Contact Mike Armstrong

at 215-854-2980 or marmstrong@phillynews.com, or @PhillyInc on Twitter. Read his blog, "PhillyInc," at www.phillyinc.biz.

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