The Philadelphia startup scene has been developing for many years but has recently begun to expand in new ways. Comcast has opened a new “Lift Lab” in order to help young companies develop capital to fund their ideas. Local universities have all leaned into creating and developing new ideas and talent. Philadelphia is comfortably located between Washington D.C and New York city, allowing startups to develop locally and branch out to nearby large cities to secure more capital.
On October 29, 2018, the Temple Business Law Society and Tax and Bankruptcy Law Society hosted several prominent figures in the Philadelphia startup scene. The panel discussion, titled “Philadelphia Startups & The Law,” was moderated by Temple Law Professor Olufunmilayo Arewa, an internationally recognized expert on entrepreneurship who teaches Corporate Finance and Intellectual Property. The panelists were:
- Gregory Seltzer LAW ’03, who is a partner at Ballard Spahr, where he serves as the practice group leader of the Emerging Growth and Venture Capital Group;
- Chris McDemus, managing partner at Baer Crossey McDemus, who focuses his practice on venture funding, private equity, and emerging technology;
- Matthew Brinker LAW ’12, who is an associate at Royer Cooper Cohen Braunfeld LLC and focuses his practice on emerging companies, venture capital, and private equity; and
- Ellen Weber, Executive Director of Robin Hood, a venture capital fund, and professor at the Temple Fox School of business. She is also the Executive Director of Temple University’s Innovation and Entrepreneurship Institute and Mid-Atlantic Diamond Ventures.
The panelists discussed everything from the local startup environment to recommendations on how to improve the startup scene, to advice for law students hoping to get involved in corporate law and startups.
Many of the panelists referred to the Philly startup scene as an “ecosystem.” Matthew Brinker commented on the growth of co-operative spaces in the Philadelphia region where entrepreneurs can gather and have a space to work in order to develop their ideas.
Ellen Weber stressed that Philly Startup Leaders, a 501(c)(3) non-profit, has helped spur the growth of the startup area. With the emergence of Philly Startup Leaders, entrepreneurs have been able to centralize and amplify their voice to tell outside actors how to best aid their growth. These initiatives have helped spur the growth of startups in the region and ensure the health of the startup ecosystem. However, in order to ensure the ecosystem continues to thrive, improvement must continue.
The two senior lawyers in the group, Chris McDemus and Gregory Seltzer, both commented on the need for more financing in the area. According to McDemus, raising money in Philadelphia may be easy for serial entrepreneurs in the region who are already known to the major financial players. Unfortunately, new entrepreneurs may struggle without these connections and may have to secure funding from Washington D.C. and New York city. Improvements have been made in this area, such as the Comcast Lift Lab and Penn Innovations. However, the lack of financing is preventing Philadelphia startups from growing here.
Seltzer compared Philadelphia to other strong startup scenes across the country, such as Boston and Austin. These cities became strong startup scenes because of the local universities who have supported startups through professors and their students. These cities also have a low cost of living which allowed the companies to grow and develop while remaining there. As the cost of living in these cities has increased, start-ups have begun to move to cities like Baltimore and Philadelphia because of their respective university communities and low cost of living. This environment provides companies with a capable workforce at a manageable price.
Local Philadelphia law firms continue to cultivate relationships with startups. The Ballard Spahr Academy for Student Entrepreneurs (also known as BASE), developed by Seltzer, educates entrepreneurs on topics such as financing, how to hire employees, and structuring benefit plans.
Other firms interested in startups, such as McDemus’ firm, Baer Crossey, recognize that relationships with startups require investment from entrepreneurs and their lawyers. Law firms now understand that relationships with startups need to be developed and cultivated. Firms not only conduct a practical analysis when taking on new clients; they also consider if the business model is viable and if the decision-makers within the company make well-reasoned choices. Seltzer stressed that the entrepreneurs Ballard takes on need to not only have good ideas, but must also be coachable so that he can help them grow their business.
Law students interested in transactional work or specifically in getting involved with the startup scene need to focus on soft skills like patience, but also develop practical legal skills. Successful startup lawyers are patient and can explain complex issues in a simple way to entrepreneurs who may have technical skill but little business or legal background. Lawyers working with early stage startups need to dive deep into the business models of their clients in order to counsel them to make prudent decisions but also to motivate them to persevere. Weber explained that the lawyers she works with are problem solvers and are able to come up with creative solutions.
For law students, this translates to taking practical courses. Seltzer and Brinker, both Temple Law graduates, stressed the practical skills one can earn in courses like Temple’s Introduction to Transactional Skills (ITS) and Integrated Transactional Practice (ITP). Courses like ITS and ITP allow law students to experience the competing goals and interests clients in the real world often face. ITS is one of the few courses in law school that force you to consider the goals of your own client as well as other actors to try and work towards the best solution for your client. Lawyering for Entrepreneurship, a simulation course developed by Professor Jonathan Lipson and ’16 grad Matt Devine, is devoted entirely to lawyering for startups and those who invest them.
Outside of the classroom, Seltzer and Weber both recommended immersing yourself in the local startup scene. Attend a Philly Startup Leaders event and get to know the people there. Understanding the startup scene will allow you to understand the entrepreneurs’ concerns and goals. As young lawyers move into their careers, it’s important to practice and to lean on the relationships cultivated in law school. Take the time now to create relationships with your professors and other students so that any number of years down the line, you have a long list of contacts to refer clients to. You can’t see now what relationships you will need, or wish you had, down the line.