As NewSpring goes national, Philly venture capital 'in a lull'

NewSpring Capital, the Radnor firm founded 17 years ago by Mike DiPiano and partners (and one of the few local VCs to grow right through the dot.com era and the 2008 recession), has by now invested $1.6 billion in clients' money in 122 companies, and sold off 46 of them.

Focused at first in the Philadelphia area, DiPiano and his partners and professionals have grown far beyond -- and have lately made few investments here. 

2016 was "definitely the biggest year in terms of the number of deals," and the dollar value -- $175 million -- is also "the most we've ever done," partner Marc Lederman told me. 

Yet the list of NewSpring's 16 software, other engineering and retail investments from 2016 includes just one firm based within two hours of Philadelphia. Another 13 are based within a few hours' drive or fly time, across the eastern U.S., from New England to Florida to Minnesota. Two more are in California. NewSpring targets include healthcare, software and "mezzanine" (later-stage) venture-backed companies in diverse sectors: 

Advanced Call Center Technologies (Berwyn, PA)
Altus (debt collection; Kenner, LA., with branches in NJ and elsewhere)
Circonus (engineering analytics Fulton, MD)
Domaille Engineering (Rochester, MN)
Filling Machines & Systems (Rancho Cucamonga, CA)
Interactions ("Virtual Assistants"; Franklin, MA, with offices in NJ and others) 
NgcCare (mental health, foster care providers; Richmond, VA)
Otelco (telecom; Oneonta, AL, with clients in other states)
Rental Equipment Investment Corp.(Miami Beach, FL, with operations in Montana and other Western states)
Nelson Worldwide Holdings (engineering; Minneapolis, MN)
ReviMedia (sales leads; New York, offices in Netherlands, Ukraine, Panama)
Seniorlink (Boston, MA)
Snagajob (hourly jobs; Arlington, VA)
South Moon Under (women's retailer; Annapolis, MD)
Sparus Holdings (natural-gas leak detention; Norcross, GA)
Vertical Management Systems (recordkeeping; Pasadena, CA; 2017)

"We're staying U.S.-focused, 90 percent east of the Mississippi," Lederman confirmed.

"We started with a focus on the Amtrak corridor, D.C. up to Boston. We've started to extend it west -- we have an office in Chicago, we have teams focused on New Yprk and Boston, we have a new team in Atlanta. We're also focusing on areas that are a bit underserved in terms of capital." 

Why not more in Philadelphia? "Washington, D.C. and New York are ranked the top markets in the country for the Inc. 5000. Boston and Philadelphia are also in the Top 10," but NewSpring is too big to focus on the relatively limited opporutnities here, concluded Lederman, who remains a director of the region's leading tech-investment promotion group, the Philadelphia Association for Capital and Technology board.

He and his NewSpring colleagues often advise early-stage PACT members and watch them grow.

Indeed, "we made a lot of money in our early years from Philadelphia area companies,' including suburban firms like LiquidHub, TMG Health and eCount, in the late 2000s, Lederman recalled. eCount founders Matt Gillin and Paul Raden now run Relay Networks in Radnor, which NewSpring also backs. 

But as far as deal-sized companies are concerned, "right now we're in a lull in the Philadelphia area," Lederman concluded. 

The firm doesn't advertise its returns; most of its clients are private, though it has recently marketed to public pension funds, who will eventually report NewSpring returns from its recent funds.