With more than than 15 hospitals and research universities like Drexel, Penn and Temple, Philadelphia has been dubbed an “eds and meds” city for many years now. Recently, however, we’ve seen the rise of a new major player – fintech.
There’s certainly a rich history of financial services in Greater Philadelphia. Local big shots like Vanguard, Susquehanna Bank and SEI Investments have contributed greatly to the region’s economic development for decades. These organizations have found the need to shift towards modernization; conversely, the need for technology to accommodate this shift has flourished.
Fintech is no longer just a buzzword but an entire industry that’s poised for continued growth, according to Jeff Shanahan, CEO of CardConnect, in a recent Technical.ly Philly piece. He’s right. Bank spending on new technologies in North America is projected to reach $19.9 billion in 2017.
With such a confluence of financial services and wealth management organizations in the region, fintech could surely play out to be one of those sleeper categories that develops well for Philly. Historically, the Philly technology community has been a predominately B2B- and enterprise-focused space, thus lending itself to a similar industry like fintech. In addition, Philly can surely leverage its close proximity to regional fintech hubs like New York City and Wilmington, Delaware.
Recently, we’ve seen good pipeline for fintech activity in Philadelphia, surely something that the city can make headway on.
Within the last few years alone, developments in the Philly fintech ecosystem include:
- Vanguard’s announcement of its Vanguard Innovation Center, a 20-person R&D facility slated to open this year in Center City;
- The King of Prussia-based CardConnect, a payment processing firm, became a publicly traded company valued at nearly $900 billion;
- eMoney Advisor, a 15-year-old Conshohocken-based software provider for financial advisors, was acquired by Fidelity Investments, the second biggest mutual fund in the country;
- Inc.’s list of America’s fast-growing companies included Greenphire for the fourth year in a row
- AlphaPoint, which provides a series of blockchain-enabled solutions to issue, track and trade digital assets, closed a $1.35M round in 2014 and recently completed a successful blockchain trial with major Canadian bank, Scotiabank;
- Paoli-based Chaikin Analytics raised $4.8 million from 2010-2013 and launched a new product that resulted in major revenue growth;
- BizEquity, a Wayne-based business valuation firm, raised $5.1 million in its first round of institutional funding in 2014;
- Perpay, boosted by a $2 million raise, moved into a 5,600-square-foot office at 12th and Sansom;
- WealthHub Solutions, the 2-year-old Conshohocken-based provider of software for trusts administration professionals, raised $1.6 million in 2016.
Last, but certainly not least, is an immediate opportunity for fintech companies from Ben Franklin.
Alongside D.C.-based Village Capital, Ben Franklin is piloting a program for fintech startups in the Greater Philadelphia area. The program, which is about to kick off, is open to a very broadly defined fintech space.
The 12-week program concentrates on three, 4-day development and mentorship workshops hosted at our headquarters in the Navy Yard. It’s the first time Ben Franklin has hosted such an intensive learning network. By doing so, it’s looking to boost businesses to the next level of investment readiness – whether they are seeking an early round or a subsequent round of financing.
The cohort members will use Village Capital’s peer review process to assess each other with an investor mindset. At the end, the peer cohort will deem two companies as the winners of $25,000 investments. Financially more significant, companies may also qualify for other Ben Franklin investment or draw the attention of the varied investors participating.
What will loom large, however, is the experience of thinking like an investor and engaging candidly with investors. Allowing startups to engage and build relationships throughout the program is priceless for early stage ventures. Companies will receive customized, one-on-one attention from the program’s Advisory Group. Comprised of Philadelphia-based and NYC-based investors with deep interests in fintech, the Advisory Group contains some of the sharpest players in this space, including representatives from organizations like FS Investments, Safeguard Scientifics, Vanguard, the Federal Reserve Board, SEI Investments, PWC and super-successful fintech startup, Instamed.