Is Philly still stuck in Nerdistan?

STEPHANIE AARONSON / STAFF PHOTOGRAPHER Bob Moul's Artisan Mobile, in Old City, bucked the trend and received $5.5 million in venture-capital funding earlier this year.
STEPHANIE AARONSON / STAFF PHOTOGRAPHER Bob Moul's Artisan Mobile, in Old City, bucked the trend and received $5.5 million in venture-capital funding earlier this year.
Posted: September 19, 2013

IN 1991, GEORGE Gendron, then-editor of Inc. magazine, penned a column about the best places to do business in the United States.

He wrote that Philadelphia was "the Baghdad of the U.S. economy. Nothing works. Don't tell me about all the hot young Philly growth companies. Of the 20 Inc. 500 companies in the metro area, 19 are located as far out of town as they can get."

So what's changed in 22 years? Not much, according to a report Sept. 4 on the website The Atlantic Cities.

Urban-studies theorist Richard Florida wrote that a major shift is underway as startups choose urban lofts over suburban office parks, with the shift abetted by venture capital.

Florida looked at 11 major metro areas and used area codes and ZIP codes to compare startup activity. He said Philly was the only metro area that still had "a lingering suburban orientation to its startup scene."

The implication? Philly was again behind the proverbial eight ball, still stuck in Nerdistan. (Nerdistan, a term coined in 1997 by urban scholar Joel Kotkin, referred to upscale suburban office parks that connect a network of roads and gated communities inhabited by college-educated techies and professionals.)

Using data from 2011 supplied by Dow Jones, Florida found that 84 percent of venture capital invested here was in the 'burbs and just 16 percent in the city. For all other metro areas, the investment was mainly in cities.

What's missing from Florida's analysis is an explanation of why Philly might be an outlier - if indeed it really is.

One reason is that Philadelphia's startup strength (and major draw for venture capital) has long been in its biotech/life-sciences/pharma community, which is almost exclusively located in the 'burbs, said David Thornburgh, executive director of the Fels Institute of Government at Penn. That alone would skew the numbers here toward the 'burbs.

Countless reports have documented the crippling effects of the city's wage- and business-tax burdens, which have put a damper on startup activity.

That being said, the city has made significant strides since 2011 as a hub for startups, with firms including Artisan Mobile, Curalate and RJ Metrics all attracting millions of dollars from venture-capital firms.

What's more, venture capital is only one indicator of startup growth. Some bootstrap; some raise money from family and friends. Others get clients and generate revenue and still others use crowd-funding sites.

"My reaction [to the story] was we've thought of yet another way to put Philadelphia at the bottom of some list," said Bob Moul, chief executive of Artisan Mobile in Old City, which earlier this year won $5.5 million in funding from a venture-capital firm in Boston.


On Twitter: @MHinkelman

Online: ph.ly/YourBusiness

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