City jumps into venture capitalism with $200K investment

A sample of lunches from the menu page of Real Food Works' website.
A sample of lunches from the menu page of Real Food Works' website.
Posted: October 26, 2013

Philadelphia jumped into venture capitalism with both feet Thursday, investing in wild rice masala with seared salmon.

Well, that might be a bit misleading.

The city, through Startup PHL Seed Fund, has invested in Real Food Works, a young company that delivers fresh, healthy meals to clients looking to eat well and lose weight.

Startup PHL, a joint effort of the city's Commerce Department and the Philadelphia Industrial Development Corp. (PIDC), will provide $200,000 in seed money to Real Food.

That means the Startup PHL has an equity share of a company that hopes, according to its founder, Lucinda Duncalfe, to one day generate about $75 million revenue a year and have branches in New York and Los Angeles. At the moment, the year-old firm operates in nine counties locally and has headquarters at 224 N. Juniper St. in Philadelphia.

The $200,000 investment is the first by Startup PHL, which was launched by the city a year ago with the goal of providing seed money for new companies struggling to get off the ground.

The city, through PIDC, invested $3 million in the start-up fund, with another $3 million provided by First Round Capital, a private investment firm. The fund is managed by First Round Capital managing partner Josh Kopelman.

Real Food Works fits the profile of a company that Startup PHL was designed to help, according to Alan Greenberger, the city's commerce director.

Duncalfe has a proven track record (a previous business of hers sold for $28 million), he said, and Real Food looks to need just a little boost to launch. And Duncalfe agreed to move her firm from Conshohocken.

Companies that accept money from the Startup PHL Seed Fund must agree to keep their operations in the city for 18 to 24 months.

Startup PHL is modeled after the NYC Entrepreneurial Fund started by the Bloomberg administration in 2009 in New York, and is a rare example of a city-sponsored seed fund.

"The goal of Startup PHL is to help innovative new companies to start and grow in Philadelphia, and this investment in Real Food Works is an example of that strategy," Mayor Nutter said in a statement.

In addition to $200,000 from Startup PHL, Real Food received a $175,000 investment from the Benjamin Franklin Technology Partners of Southeast Pennsylvania.

Duncalfe's company now has 10 employees and works with 17 area restaurants to create the meals for clients.

As for the sudden infusion of $375,000, Duncalfe said it would go to marketing.

"This is a very big deal, not just for Real Foods," Duncalfe said, "but for the city and the start-up community as well."