Mar 22, 2022 - Business

Women-owned startups see record venture capital gains in Philly

Number of venture capital deals in Philadelphia for startups founded solely by women
Data: PitchBook; Chart: Will Chase/Axios

In a record-breaking year for venture capital funding in Philadelphia, startups founded by women made major strides.

What's happening: Startups owned solely by women in Philly accounted for 23 deals in 2021, valued at more than $127 million, according to the Philadelphia Alliance for Capital and Technologies (PACT), which gave Axios an exclusive first look at its latest annual VC report.

  • In 2020, $35 million was invested in women-only-led startups, well up from $2 million a decade ago.

Yes, but: That's still just a sliver of the record 411 funding deals in the city last year, valued at nearly $8 billion.

  • Despite talk of more equity nationwide, progress for funding women-founded companies has plateaued across the U.S. in recent years, Axios' Lucinda Shen reports.

By the numbers: Aro Biotherapeutics — a Philadelphia-based biotechnology company cofounded by Susan Dillon and Karyn O'Neil — makes up a massive portion of last year's total for all-women teams after scoring a more than $90 million round.

  • Meanwhile, startups with at least one woman co-founder totaled 57 deals valued at $426.3 million last year.
  • In 2020, startups with at least one female co-founder made 56 deals valued at $214.5 million, according to PACT.

The big picture: Philadelphia's record year for venture capital funding obliterated its previous record of $2.6 billion in 2019.

  • Standouts include food delivery-related businesses GoPuff, which contributed to half of the nearly $8 billion figure, and Misfits Market.
  • But the biotech and enterprise technology industries remain the largest sectors to attract venture capital funds.

Of note: The report doesn't share any data about startups owned by people of color because that historically hasn't been tracked, but PACT acknowledges this group is underrepresented.

  • Black entrepreneurs received 1%, and women entrepreneurs received 2% of the $137 billion in venture capital invested in U.S. startups in the first half of last year, according to Crunchbase data.

What to watch: It was common for Philly startups to move to bigger cities before they exit, but that is beginning to change. Startups seem to be staying put as outside investors are coming to them, usually from Silicon Valley, New York and Boston.

  • The pandemic spurred traditional VC hubs to pay more attention to outside markets, and VC portfolios are becoming more geographically diverse with the rise of remote work.
  • Experts foresee this benefitting smaller hubs like Philadelphia, which has a lower cost of living compared to larger markets.

What they're saying: Dean Miller, the CEO of PACT, said he expects overall growth to persist.

  • "We've got the benefit of diversity of different types of industries, and that’s only going to continue," he said.

Sylvester Mobley, managing partner of Plain Sight Capital, said this time of growth in Philly should be an opportunity to prioritize marginalized entrepreneurs.

  • "Philadelphia is an underrated city that has the potential to push equitable growth in tech and innovation from the beginning," Mobley said.

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