As the Philadelphia region's venture capital scene reached new highs in 2021, so did the amount of funding flowing into local women-owned startups.
Philadelphia-area startups brought in $8.1 billion in fresh funding, tripling the previous venture capital record of $2.7 billion set a year prior.
Feeding into the record 2021 were funding rounds like the $88 million Series A round from Aro Biotherapeutics, a startup founded by two former Johnson & Johnson executives, Sue Dillon and Karyn O'Neil.
Bolstered by firms like Aro, female-founded businesses in the Philadelphia area saw funding surge in 2021. Startups founded solely by women received 23 fundraising rounds totaling $127.1 million, according to a report from the Philadelphia Alliance for Capital and Technologies (PACT) using PitchBook data. That was a 262% increase over the $35 million that female entrepreneurs raised in 2020 and tops the amount female-founded companies brought in over the previous seven years combined. Just 10 years ago, female-founded ventures in the region brought in a collective $500,000 between just three startups in 2012, according to PACT's report.
PACT CEO Dean Miller expects the amount of money going to female-founded businesses to climb. The sum that Aro received in 2021 may be an outlier, but Miller said he focuses on the number of deals, which increased nearly four-fold since 2019.
"I don't see that stopping because success begets success," Miller said. "Philadelphia is a big enough venture capital community where you see businesses spawn and get inspiration from other businesses, especially from people who look like them."
Fundraising was higher than it's ever been in companies co-founded by women as well. There were 57 deals last year totaling $426.3 million in startups with at least one female founder.
As a whole, three of the region's unicorns — Gopuff, Misfit Markets and dbt Labs — collectively made up over half of the $8.1 billion raised in 2021.
So where is all the money coming from?
Most venture capital flowing into Greater Philadelphia is from outside the region. Aro's Series A round, for example, came largely from investors in Maryland and Chicago.
Overall, the unprecedented influx of capital in 2021 came in large part from investors in the Bay Area, New York and Boston. Roughly 250 of the 411 Philadelphia-area funding deals last year were with firms in those three regions.
Miller said that with capital becoming "increasingly portable," the rise in outside funding means entrepreneurs will be more apt to stay in Philadelphia, which only benefits the region's economy.
Total local deals involving a New York VC firm increased from 45 in 2020 to 100 last year, a 122% hike. Deals involving those firms totaled more $5.6 billion invested, according to PACT's report.
Bay Area investors were involved in 119 venture capital deals with Philadelphia firms in 2021, a 77% increase over 2020. Those deals totaled $3.41 billion. Boston VC firms participated in another 31 local deals, which totaled $3.4 billion.
The amount raised from outside investors is greater than the total cash that came into the region as some startups received rounds with firms from two or more cities. Dbt Labs, for example, raised $150 million in Series C funding in which it brought on Altimeter Capital, from Boston and Silicon Valley investors Sequoia Capital and Andreessen Horowitz.
In the report, Miller said that more money could be coming from the Philadelphia ecosystem in the coming years as companies continue to grow.
"Entrepreneurs, tech workers, and students are attracted to Philadelphia, which will only further propel company formation and growth," Miller said. "Like many other cities, Philadelphia imports most of its VC from outside of the region, and I expect that we see more capital, particularly seed and early-stage capital, based in Philadelphia."
