All Of The Startups Are Eschewing Suburban Office Parks For City-Based HQs, Except In Philadelphia

startup chartup

We’ve all seen it. It’s the cool thing now. When movies need a hip young lad or lady to have a cool job that’s totally not stuck-up — a role that used to fall to journalists and architects — BOOM, throw ‘em in a start-up. They don’t require suit jackets. They’re all staffed by cool, young, attractive people. And they are all headquartered in cool city lofts with exposed brick walls. Well, except in Philadelphia (but what about ATHLEAD?).

Granted, the start-up scene grows and shifts quickly, but according to The Atlantic Cities, Philadelphia is the only city of the eleven they looked at (the top 11 metro areas for venture capital investment in 2011) that still has a majority of its start-up scene kicking off in the suburbs:

Predominantly urban zip codes accounted for just over half of venture capital investment in Chicago in 2011, more than 60 percent in Washington, D.C., and sprawling Dallas, and roughly three quarters of the investment in Boston, New York, and Los Angeles. Urban zip codes accounted for more than 80 percent of venture capital investments in San Diego, Seattle, Austin, and San Francisco. Nowhere is this urban shift more apparent than in New York, where all but one of the metro’s top ten zip codes for venture capital investment could be found in midtown or lower Manhattan. The proportion of venture capital investment centered in suburban zip codes is especially low (below 20 percent) in western cities like Austin, Seattle and San Diego, at least in part a function of the more generous history of suburban annexation throughout the 20th century. Of the metros we examined, only Philadelphia has a lingering suburban orientation to its start-up scene.”

And Philadelphia’s urban vs. suburban numbers are astronomically skewed in the other direction. The smallest urban share other than Philadelphia’s 15.6% is Chicago’s 54.0%. But we’re going to look at this data and choose to believe things have changed a bunch since 2011 (plus, we actually believe they have). Also, we don’t want to believe that some of these start-ups are setting up shop in … Delco.

  • http://www.JoeTaylorJr.com/ Joe Taylor Jr.

    Of course, this is 2011 data. 76 Capital and First Round (among others) moving within the city limits over the last year should significantly improve the figures once 2013 data becomes available.

  • Chuck Moore

    And, to be fair, some of those places are really nothing more than one big suburb…I’m looking at you, Dallas.

  • Azar Habib

    Philly is also the only city to levy a gross receipts tax, so of course the numbers are what they are. Nothing surprising there.

  • Jim Moran

    Most of the difference is probably due to Philly’s distinctly unfriendly business climate – taxes and regulatory bureaucracy (I am a progressive, but also a business owner and it is tough to do business here). Another part of it could be the type of start-ups – Philly’s mix may lean more towards biotech and healthcare service companies that may be looking for a different skill set from their employees than the average internet start-up. Just some guesses.

  • thegreengrass

    Wait, this goes against every other kind of piece of news about companies and people either starting up in or moving into the city over the past few years. What the hell?

    There are startups in Callowhill ( http://www.venturef0rth.com/ ), there are startups working out of Indy Hall ( http://www.indyhall.org/ ), as someone mentioned, First Round thought the city was the place to be enough that they opened up in University City. http://weworkinphilly.com/companies has a pretty comprehensive list of companies all over the city.

    (And I’m calling Bullshit on “Boston”. When they say Boston, they have to be counting Cambridge, which is not Boston, but it’s own town. That would be like including Conshohoken in with Philadelphia. Boston itself as a city is not attracting companies anything like Cambridge at all.)

  • Bill Green

    Most of these cities do have a “gross receipts” tax. They do not have a “net income” tax which penalizes profitable Philadelphia businesses – and my colleague María Quinoñes-Sánchez has introduced legislation (which I co-sponsor) to change that – http://ow.ly/oBryd
    Already established exemptions for software manufacturers (http://ow.ly/mS7xG) and investment companies (http://ow.ly/nIYqz) which the BizJournal says is paying off: ow.ly/oiY28

  • DTurner

    This is totally correct, between the Philly wage tax and the city’s preference for providing large companies with substantial subsidies, instead of making the business climate better for all, it is easy to see why start ups prefer to locate in close-in suburbs on the Main Line and the like.

    I would say this is one of the biggest problems Philly has, as many of our suburbs are reasonably transit-accessible and are far less likely to become the casualties of the demographic shift towards urban living, as opposed to the Dallas suburbs and the like. This city needs to get its act together or we will start losing businesses (and young professionals) to the “urban suburbs”.

  • Azar Habib

    I’m all for hometown pride but take the blinders off man. You cite 3 examples in Phila while simultaneously there are 3,000 in philly’s suburbs and 30,000 in the Bay Area. Yes Philly has gotten a lot better and through social coattails has built up a “tech scene” (though not sure if we qualify as “one fuck of a”) but the reality is phila is missing out, again, on a huge wave of investment and capital due mostly to our own inbred stubbornness.

  • thegreengrass

    It’s like the Metro read Philebrity yesterday. There’s an article today about teh city offering tax breaks to startups. http://www.metro.us/philadelphia/news/local/2013/09/05/new-website-takes-advantage-of-philly-tax-breaks/

  • thegreengrass

    Couple things.

    I didn’t cite only three. I gave three examples and then linked to a site with quite a lot more. I hope you didn’t miss that link.

    Why do you assume that we miss capital investment due to “inbred stubbornness”? Philly being 90 miles from the capital of everything doesn’t exactly help us. I don’t think it’s a secret that when people think of huge East Coast markets where they can make a shitload of money, they’re gonna think of New York. The idiocy of our business tax structure obviously doesn’t do anyone any favors, but it’s not like just over the river in New Jersey it’s a startup haven. There’s more at work here. We’re an entire region; no place exists on its own.

    As for blinders, I’m not wearing any. I spent the last four years living up in the Boston area surrounded by its hyper-competitive startup and tech scene. It’s great up there if you like that kind of thing, but I personally hated it. I knew so many people who worked all the time for their huge paychecks, continually stressed out and too busy to actually live. Do you know anything about it up there? People, even outside the tech scene, spend so much of their time focused on being successful, they start to miss out on life. It’s the opposite of laid back and fun.

    The reason I really do think we’ve got a fuck of a tech scene is because it built itself up in a true Philly way. Rather than bitch about tax structure and missed investment, people and companies set up shop on their own, making a community out of people who wanted to do cool things. Indy Hall, Technically Philly, all those 3rd Street companies, Geekadelphia, and everyone I’ve already either mentioned or linked to (important), it’s just a far more awesome group of people than I’ve ever encountered my entire time since leaving school. There’s heart here, and really, that’s why Philly’s where I, and obviously a lot of other people, gotta be.

  • Joshua Siegel

    I agree, if they looked at 2013 stats it would already be a different picture as plenty of companies have relocated from the burbs in just the past year.

    Also calling shenanigans on Boston stats since that whole area is suburbs with a small actual city. Very few companies are based in Boston proper, they’re in Sommervile, Cambridge, etc. Counting those startups defeats the purpose of the article.