Venture Capital

It's a good time to ask for money - if you're a big corporation that can afford to issue bonds at today's record-low interest rates, or a well-connected real estate firm looking to fund distressed projects at fat discounts, or a small company in one of the high-tech sweet spots that wealthy private investors love. It's an awful time to ask for money - if you're a small business trying to borrow from regional banks caught between fallen real estate values that have devalued loan portfolios and the newly tough Washington bank examiners, who want to make sure the easy-money years are really over and lenders aren't taking too many risks.

Not even a lot of rain Thursday could dampen the entrepreneurial spirits of those at DreamIt Ventures Inc. That's because DreamIt disclosed the 15 start-ups that will spend the fall in its business acceleration program in West Philadelphia. And despite the 25 feet of rain that's fallen here since early August, not a one of them is trying to make a better umbrella or sump pump. DreamIt trends more to the Web-based or mobile business than the machine shop in part because that's where the interests of venture capital investors are. When Groupon , the Chicago online coupon firm, can claim a market valuation of $30 billion after just three years, you can see why. Starting Monday, the DreamIt companies will gather for 13 intense weeks of battle-testing their business plans and beta websites in their temporary home at the University City Science Center.

Last year, the Edison Venture Fund handed $1 million to Neutronics, a small Exton company specializing in environmental technology. When Neutronics used the money to finance the purchase of a Georgia outfit that had invented a machine to recycle chlorofluorocarbons (CFCs), the chemicals eating away the earth's ozone layer, Rick Defieux, the venture- capital fund's general partner who maneuvered the investment, didn't quite hold his breath. After all, aggressive outfits like Neutronics are supposed to gobble up other companies, particularly when there's innovative technology to be had in the bargain.

iF anyone represents Philadelphia's old and new economy it's Robert E. Keith Jr. Keith, 58, runs TL Ventures, the venture capital firm in Wayne that has struck gold investing in high-tech companies. Keith earned his pinstripes in the gray-flannel world of Philadelphia banking. He spent 20 years at Fidelity Bank, rising to become vice chairman. As a respected banking executive, Keith enjoyed all the corner-office perks: fat salary, expense account, and a small army of workers at his fingertips.

Get big fast and then implode was the trajectory of many Internet-related companies that gained momentum during the tech bubble. But some, such as Refinery Inc., of Huntingdon Valley, Montgomery County, managed to avoid that fateful arc. Unlike competitors, the Web-site-design firm did not seek venture capital that would have allowed it to grow quickly. It grew more slowly than most and did not veer from its core business. "We tried to be more grounded," said Andrew Sullivan, the company's cofounder and chief executive officer, who has a degree from New York University's film school.

No signs of an enthusiasm gap at last week's Impact 2010 venture capital conference in Philadelphia. A survey of more than 250 entrepreneurs, investors, and professional advisers conducted Nov. 10 by KPMG L.L.P. found plenty of optimism among the people who start, feed, and guide growing companies. The power of positive thinking would seem to be an essential ingredient in any risky effort, but it had been largely absent among the attendees of the 2008 and 2009 venture conferences in Philadelphia.

Also in the column: Big bank, small business Connolly on board Venture fund seeks money The lies bankers tell Chutes and ladders With stocks and bonds still volatile, and as Pennsylvania teachers are agitating for a pension increase, the Pennsylvania School Employees' Retirement System is trying to improve returns by pumping more cash into venture capital, real estate, and other privately held assets. At its May meeting, the system's board approved maximum investments of: Up to $330 million for Morgan Stanley Real Estate Fund IV, which says it will attempt to deliver 17 percent returns by investing in nonperforming loans, corporate restructuring, and real estate developments, mostly in foreign countries.

Five years ago, Rebecca Matthias, who has degrees in architecture and civil engineering from Columbia University and the Massachusetts Institute of Technology, was working in the finance department of a Boston-based computer company when she became pregnant with her first child. "I worked in an office that required me to wear a business suit four days a week. When I shopped for maternity clothes that I could wear to the office, I couldn't find anything. That's when I realized there was a market for maternity clothes for the professional woman," she said.

Community economic development in Philadelphia has always been intertwined with the capacity of neighborhood-based enterprises, for-profit and nonprofit, to participate fully in the local economy. The city has traditionally provided capacity-building and strategic-planning resources to neighborhood-based community development corporations through the Office of Housing and Community Development, funded through the federal Community Development Block Grant program. These resources have focused on producing low-income housing with little respect to employment opportunities.

Albert Koenig knows his way through the labyrinth of government and university research labs. And he wants to guide entrepreneurs with small- and medium-sized businesses through it so they can tap resources for product development. Koenig, a staffer of the Ben Franklin Technology Center of Southeastern Pennsylvania, recently moved to an office at the Chester County Development Council in Exton to serve county businesses. "We're trying to promote regional economic development with funding - bridge capital all the way up to venture capital - and provide technology services," he said.