Recent growth offers reason for optimism

By AJ Jordan
East Central Strategic Growth Markets Leader and Partner, Ernst & Young LLP

It’s always sunny in Philadelphia — at least judging by the city’s current venture capital market. Against the backdrop of last year’s nationwide decline in venture capital dollars, Philadelphia’s 17% increase in financing deals and increased investment totals gave the region a sound reason for optimism.

A report jointly produced by Ernst & Young LLP (EY), Ben Franklin Technology Partners of Southeastern Pennsylvania and the Greater Philadelphia Alliance for Capital and Technologies (PACT) examines the region’s growth during the past five-and-a-half years. The report, entitled Venture impact, provides some staggering figures, including the $1b+ infusion into Greater Philadelphia companies during the past year-and-a-half.

Venture impact was released at the IMPACT 2013 Venture Summit held on October 22-23. Hosted by PACT, the Summit offers company and investment presentations, industry-specific panels and noted keynote speakers. The Summit has played a significant role in enhancing business development and fostering a strong network for both sides of the venture capital equation. Over the course of the two days, the Summit drew more than 1,000 attendees including entrepreneurs, investors and advisory firms … including many executives from EY.

AJ Jordan, EY’s East Central Region Strategic Growth Markets Leader, was proud of EY’s platinum-level sponsorship of IMPACT 2013, stating, “During this anniversary year, EY will once again work … to continue to support the region’s entrepreneurial community.” As a former chairman of IMPACT and current treasurer of PACT, Jordan is focused on the region’s growth, rallying active PACT supporters and local businesses throughout the year. For most of the event’s 20-year history, EY has been a top sponsor, demonstrating the firm’s commitment to regional growth and innovation.

It’s that kind of commitment — from EY and countless others in the larger Philadelphia technology investment community — that has spurred progress. Jordan notes “the impressive inflow of dollars to the market over the [last] 18 months” that is delineated in the report. “We continue to be impressed by the amount of exits in our region,” he said, “and, in particular, the consistency in IPO activity over the past five years, which has increased over the past six months.”

IPOs, along with other growth indicators cited in the report, reveal Greater Philadelphia’s robust constitution:

  • There have been 10 IPOs and 162 acquisitions since 2008, totaling a disclosed value of $7.5b.
  • Over the duration of the report, $4.1b was invested in the region’s early-stage technology companies.
  • Venture capital firms accounted for 81% of the capital invested in the region’s technology sector.
  • Despite a dip in the total dollars available for early-stage companies, levels of indigenous venture capital have seen a recent increase.
  • Philadelphia’s investment performance during 2012 showed a significant 17% increase in the number of financings (from 158 to 191), compared to a national decline of 3% (from 3,616 to 3,505).
  • Similarly, invested dollars increased dollars locally from $612m to $698m, while dollars invested nationally dropped $35.1b to $29.7b.

These statistics and more from Venture impact demonstrate Greater Philadelphia’s remarkable performance in contrast to the unprecedented challenges of the recent past.

While this movement of capital represents current financial support, it also is the blueprint for — and a vote of confidence in — future growth. 2012 was the first year that witnessed an increase in the number and amount of fund-raising rounds in the Greater Philadelphia region since 2008. Early results from 2013 indicate that the region is on track to crest the five-year average annual investment amount of $750 million.

“The companies who are showcased in the IMPACT Summit and who are highlighted in the Venture impact report are the future of the Greater Philadelphia region,” says Jordan, noting that these entities — like EY — are working to build a better working world. “Using resources from our Strategic Growth Markets practice, EY’s global network of professionals can advise this full spectrum of dynamic, fast-moving and groundbreaking companies, both here in Greater Philadelphia and around the world.”

To request copies of Venture impact please contact Jennifer Cohen jcohen@philadelphiapact.com.

About EY

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