A popular term in economics is scalability: the implication that a business model can propagate and yield better results. It is too easy to fall prey to the mindset of a startup, the comfort and essence of innovation. In reality, the only way to survive in the world of business is to reach out and network, keep up with markets, and play the odds to the top. Unless a startup shifts societal paradigms, it is guaranteed to fail.
|Startup Industries||Percent Still Operating After 4 Years|
|Finance Insurance and Real Estate||58%|
|Education and Health||56%|
|Transportation, Communication and Utilities||45%|
An investigation in 2016 conducted by the University of Tennessee found that close to 50% of startups failed in the first four years. That same study found that “unbalanced experience or lack of managerial experience” accounted for 30% of the failures (Harden, 2016). As unnecessary as it may seem, scalability and networking are required tools for any emerging startup leader.
Luckily, Philadelphia is very compassionate toward startups, especially those in the technology sector. Danny Cabrera, cofounder of BioBots, said in an interview, “We managed to take advantage of a lot of great resources; it’s been very cost effective for us” (Rogers, 2016). Philadelphia hosts many startup events to encourage innovation within the city. Some examples are Bootcamp, which occurs every fall and is “a great opportunity to network with experienced entrepreneurs, investors, and community leaders”; the Founders Factory, “a day-long conference for Philly entrepreneurs”; and the Entrepreneur Expo, “a large exhibition of startups in our region” (Yarden, 2015).
Philadelphia is not only good for networking but also offers open office space where startups can scale properly. Co-working arrangements are surfacing all over the city and allow startups to purchase passes to use general office space in which to do their work. This allows startups to focus on their goals without worrying about running out of room for employees. Different kinds of options are available. “For example, Industrious and Benjamin’s Desk both house smaller startups, but Industrious has closed office cubes, while Benjamin’s Desk has a more open floor plan” (Yarden, 2015). Taking advantage of co-working spaces can significantly reduce the cost associated with purchasing land or renting space in the city.
Another great option for scaling is working with venture capitalists: people or industries that specialize in making the initial investment in a startup and helping it grow. In Philadelphia, venture funds such as Mid-Atlantic Diamond Ventures and Robin Hood Ventures are usually run by angels. Students can apply to the Dorm Room Fund, managed by First Round Capital. The StartupPHL Venture Program is for entrepreneurs from socially or economically disadvantaged backgrounds.
“Philly also has some individual angels who invest locally, but you’ll have to do some research (i.e. networking) in order to identify them,” Yuval Yarden says (2015). A venture or angel’s interest is important because it establishes a startup on the market so that others can consider its worth. Taking the funding is up to the leader of the startup, but it’s better to have an estimate when presenting yourself at these events. Venture capitalists also provide many benefits in return for the shares of the startup they consume. It is important to note that owning a majority share will prevent ventures from completely controlling the startup.
Finally, Philadelphia offers tech startups an immediate pool of talent and employees to draw from. “Because Philadelphia is home to so many excellent colleges and universities, as well as companies which attract top talent, employers in the Philadelphia region can have their pick of an abundant pool of qualified job candidates of various skill levels and backgrounds” (Bachalli, 2015). Philadelphia has the University of Pennsylvania, Temple University, and Drexel University; they are filled with students seeking opportunities to change the world. Having proper employees is critical to a startup, because they drive most of the changes to the product.
Besides students, the city itself hosts events to find great employees experienced in the tech industry, such as “Code for Philly, Girl Develop It, IT Pros Philly, N3rd Street Unplugged, Philly NetSquared (technology for nonprofits), Quack & Hack – Philadelphia, The Philly Front-end/UX Meetup, and Virtual Reality Philly” (Yarden, 2015). Attending these events narrows the search for tech startups. People attend these events only to demonstrate their talents and abilities. The best aspect of hiring someone from these events is that they have most likely heard of recent developments and are eager to work for startups they believe will shape the city and the world.
Clearly, Philadelphia has a plethora of resources when it comes to scaling and networking. It is important to remember to take advantage of them so that your business can continue to prosper and grow. By supporting opportunities that range from hiring students to renting office space, Philadelphia does its best to help startups establish themselves and build roots in the city. Chances to scale up your business are constantly being offered in the city, and networking is the means of acquiring that growth. As long as a tech startup is surrounded by these resources, bootstrapping in Philadelphia will be as easy as starting a conversation with a fellow citizen about technology and enterprise.
- Harden, S. (2016). “Startup Business Failure Rate by Industry.” Statistic Brain. https://www.statisticbrain.com/startup-failure-by-industry/.
- Rogers, K., and CNBC. (2016, September 28). “Start-Ups Are Thriving in the City of Brotherly Love.” https://www.cnbc.com/2016/09/28/start-ups-are-thriving-in-philadelphia.html.
- Yarden, Y. (2015, September 7). Start a socially responsible business. The Philadelphia Citizen. https://thephiladelphiacitizen.org/do-something/start-a-socially-responsible-business/.
- Bachalli, S. (2015, August 17). “5 reasons more startups are setting up shop in Philadelphia.” Philadelphia. https://www.phillymag.com/business/2015/08/17/startups-philadelphia/.