Among the handful of venture-capital firms based in Philadelphia's leafy suburbs, First Round Capital stands out for its national reach and its rapid pace - more than a deal a week.
Now it's moving downtown.
Josh Kopelman, a 1993 graduate of Penn's Wharton School, started venture-backed Infonautics (he took it public in the dot.com boom), auctioneer Half.com (now part of eBay), and security firm TurnTide (sold to Symantec) before setting up First Round with Penn computer-scientist-turned-investor Howard Morgan in 2004. It's now the third-busiest venture-capital firm in the United States.
First Round invested in 71 technology companies last year, trailing only Silicon Valley-based rivals New Enterprise Associates and Kleiner, Perkins, Caulfield & Byers, though First Round's deals tend to be smaller.
Kopelman plans to announce Wednesday that he's moving First Round's main office from West Conshohocken, near his Main Line home, to 4040 Locust St., a half-block from Penn. His new base is a heavy-beamed brick building that housed one of Urban Outfitters' early stores. First Round has satellite offices in Silicon Valley and Manhattan.
Kopelman "is one of the preeminent venture guys in the country. His cards say, 'Menlo Park, New York, and West Conshohocken'?" said David J. Adelman, head of Campus Apartments and co-owner of First Round's new home, with Steve Herman's University Enterprises. "I told [Kopelman], 'We have great space. It's time to get you down here.' "
Obstacles included the city's investment-partnerships tax, which discouraged private firms such as First Round from rooting east of City Avenue. But City Council members, led by Bill Green (D., at-large), obligingly killed that levy in April, with Mayor Nutter's backing. Nutter calls the First Round move "a game-changer."
What's in it for Kopelman?
"We've seen a lot of successful companies - like AdMob and Invite Media [both now part of Google Inc.] and Diapers.com [now part of Quidsi Inc.] - get their start in Philadelphia and then move away because of the lack of capital and resources here," Kopelman told me. "We want to foster a more entrepreneurial community. We hope all the venture firms and private-equity firms from Radnor and Wayne and Bala Cynwyd will follow."
The firm is moving only 10 people. "But we're also opening up the 10,000-square-foot facility to give us plenty of room to host a half-dozen companies" backed by First Round, Kopelman added.
He's hoping to repeat First Round's success with firms such as Monetate, the web retail-analytics firm hatched three years ago in First Round's old West Conshohocken headquarters. The company now employs 100 and has been advertising on SEPTA's Paoli Local to recruit engineers and salespeople.
It's easier to find people on campuses like Penn and Drexel and easier to meet with clients and targets in town than out in the 'burbs, Kopelman contends.
He wants to promote a high-tech neighborhood "ecosystem," reversing the postgraduate brain drain that began when Penn chased the builders of pioneering computer E
NIAC out of West Philadelphia by trying to seize control of its creation after World War II.
Keeping college-fed tech employers in town has been a long-term goal of the University City Science Center, a consortium of Penn, Drexel, and other institutions that is a major office landlord west of the Schuylkill. However, the high rents paid by medical offices and professors have limited the space available to start-ups in the neighborhood.
Special state and city tax breaks helped attract Ira Lubert's Independence Capital funds to the Cira Centre office building north of 30th Street Station.
Now, Kopelman is hoping to make it easier and more natural for company founders and new graduates to phase into start-up firms.
"We won't make a change overnight. But we are hoping it will catalyze other folks about moving here," Kopelman said. "We want to spend more time and more resources here. We see good trends happening in the city."
Contact Joseph N. DiStefano
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