The upstarts take to start-ups

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Youth-movement leader Blake Jennelle takes in the view from the catbird seat at this month’s Entrepreneur Expo.

ONLY THREE years have passed since Blake Jennelle started his first company here, but the founder of Philly Startup Leaders says that the city's young-entrepreneur community has gone from nonexistent to booming.

"I thought I was the only person crazy enough to start a company in Philly," says Jennelle of his decision back in 2007 to launch Anthillz, a tech company that no longer exists.

So, Jennelle organized a happy hour for other young entrepreneurs at a Center City bar. That first night, eight people showed up to drink beer and trade ideas.

"I called it Philly Startup Leaders so people would think it was a regular event," Jennelle says.

Word spread, and 18 people showed up the next month. Then 40. And PSL, now Philadelphia's largest community of start-up entrepreneurs, was born.

Starting a company alone is tough, says Jennelle, who is currently forming another community, Missioneurs.com, to strengthen the connection between social missions and profit-making.

"No one in your life really understands it," he says. "People are supportive, but they don't get it."

According to a Kauffman Foundation study, Philadelphia had the lowest entrepreneurial rate of the 15 largest metropolitan areas in the U.S. in 2008. But if Fast Company magazine is right, this trend may be changing: In March, it named Philadelphia one of the country's emerging entrepreneurial hubs.

This recent boom in entrepreneurship is due in large part to Philadelphia's growing community of young entrepreneurs, who have organized grassroots communities to swap advice about everything from deciding when to outsource to using social networking for marketing.

With more than 400 members - many of whom are starting tech companies - PSL now hosts about 30 events a year, including the monthly happy hours, a speakers series and its second annual Entrepreneur Expo, held at the University of the Arts on April 13.

Jennelle describes the expo as a "show and tell" for startup leaders, a chance for them to share their fledgling companies with peers (and, yes, some venture capitalists and angel investors).

At this year's expo was Matthew Baron, 32, a South Philadelphia native and president of Awesome LLC, who's in the process of patenting the Woofer, a dog coat that turns your pooch into a pair of iPod speakers.

The expo's the kind of event that a young entrepreneur like Sirena Moore, 28, might have been looking for back in 2002 when she started Elohim Cleaning Contractors with her father and brother.

"I was frustrated when I was getting started because I wanted to talk to someone who had done this," Moore says about being a young new-business owner in the Philadelphia area. "The business world changes quickly, and it's so much better to hear from someone who's living it and doing it."

Based just outside the city in Bristol, Bucks County, Elohim had $2 million in revenue in 2008, providing final cleaning services on construction sites, mostly for general contractors. A certified minority- and woman-owned business, its impressive list of clients includes the Comcast Center, the Please Touch Museum and Target.

Only 17 when she began researching how to start a business, Moore now has a wealth of advice to offer young entrepreneurs. She's even started a second business, SirenaSpeaks, to spread this wealth (see sidebar).

One of the greatest challenges for young entrepreneurs, Moore says, is securing funding.

"I was showing growth," she recalls. "The business literally quadrupled each year. But we could not get a loan. But I was only 22 or 23. I didn't own a home. I couldn't guarantee enough credit."

Through networking, Moore was eventually able to secure a loan through the Small Business Administration, which guaranteed the $180,000 line of credit she received from TD Bank. This funding, which enabled Elohim to take on larger projects, like Philadelphia Park Casino, in Bensalem, was essential for the company's growth.

"Without the line of credit," she says, "we never could have hired the people we needed."

Moore, who was named 2010's Young Entrepreneur of the Year by the SBA's Philadelphia office, isn't the only young entrepreneur in the area to encounter this dilemma.

"We approached a few banks," says Andrew Aversa, 22, president of Space Whale Studios, a new Philadelphia-based video-game development studio. "To our surprise - or maybe not - not a single bank was willing to hear us out because we were a start-up."

A shaky economy hasn't helped, Aversa says, and, as a result, he and his four partners are currently funding Space Whale out of pocket.

And, thanks to its complicated tax structure, Philadelphia also presents challenges for entrepreneurs, young and old .

The challenges posed by the city tax structure are one reason why Damon Alberts, 38, co-founded the Videogame Growth Initiative (VGI), a network dedicated to making Philadelphia a video-game industry cluster.

"There are great tax incentives in states like Louisiana, Georgia and Texas for gaming professionals," says Alberts, co-owner of Center City's Burst Online Entertainment. The folks at VGI have been meeting with city and state government officials in hopes of creating similar incentives in Philadelphia.

"The more game-development activity here, the greater the talent pool will be," Alberts says. With Drexel and Penn producing top-notch video-game developers, it's a shame to watch them leave Philadelphia for gaming hubs in California or Arizona.

Ultimately, though, the city's young entrepreneurs are going to find ways to get their businesses up and running, despite whatever obstacles are thrown in their way.

"I was starting Burst no matter what," Alberts says about his company, which is scheduled to debut its Web-based game portal this fall.

"No one was stopping me."