Center City Startup Incubator to Close

"We're competing with co-working spaces who are giving away seats for free or close to free."

Seed Philly is closing its doors. Brad Denenberg‘s incubator space at 1650 Arch Street will cease operations at the end of October.

After opening in December 2011, the non-profit Seed Philly grew to house 23 startup companies under one roof, but by late 2015, that number had dwindled to nine, Denenberg told me in an interview on Monday. The companies housed there are now seeking space elsewhere.

1650 Arch has recently been sold to CBRE Investments, and now the company has terminated Seed Philly’s lease, according to Denenberg. But he also blames the rise of free space at co-working spaces for Seed Philly’s inability to catch on and become a go-to incubator for Philly startups.

“It’s been difficult to maximize the value we can offer to entrepreneurs. While we’re competing with co-working spaces who are giving away seats for free or close to free (and providing little additional value), the job of running an incubator becomes much more difficult,” said Denenberg.

Early on, Seed Philly saw a constant stream of entrepreneurs, investors and interested parties coming through the door, said Denenberg. Seed Philly is a non-profit that doesn’t make investments in its tenant companies. Denenberg estimates that over the years, Seed Philly has housed approximately 130 companies that created around 500 jobs.

“We provide a value to our people other than desk space,” he said, “Our startups got access to 50 different corporate partners and 50 different venture funds.” Denenberg said that he was able facilitate meetings for local startups with the likes of Adobe, Google, Microsoft, Amazon and Samsung.

Will Seed Philly come back in some other form? In a letter to the startup community, Denenberg said his “hope is to keep our non-profit entity alive, to serve as the gateway to our tech startup and innovation community, and the glue that binds our components together.” (Denenberg has a startup of his own called Decibly, which is a fan-engagement tool for concerts that allows users to share photos, communicate and buy merchandise while inside the venue.)

Denenberg had some strong words about what it’s going to take to get the Philadelphia startup community recognized on a national level. He said it’s going to take state and city funding as well as a startup center where hundreds of companies are under one roof.

“I firmly believe, for Philadelphia to compete on a national level, we need one large critical mass of startup companies,” he said. “If we can’t have everything under one roof, we need a virtual directory. Right now, the landscape is too difficult to navigate.”

Here’s Denenberg’s letter announcing the closure. Read it in its entirety here.

Since becoming involved in the Philadelphia tech startup scene nearly a decade ago, it’s been my passion to make this region a better place in which to start a company. Over the years, I’ve worked with many great people who’ve shared in that vision. Guided by an all volunteer team, Seed Philly has helped hundreds of entrepreneurs start incredible companies – entrepreneurs who collectively contributed towards the creation of over 500 new jobs and raised tens of millions of investment dollars, adding immensely to our local economy. Therefore, it’s with a heavy heart that I write to tell you that Seed Philly’s incubator at 1650 Arch Street, will be closing at the end of this month.

Our building recently sold. The new owner notified us that they are exercising their right to terminate our lease. We are not alone. The remaining 10 tenants left over from Good Company Group’s incubator that occupied the space next to Seed Philly have also lost their lease. Thankfully, a number of companies across town have offered temporary space for any Seed Philly tenants in need of a home while they search for a new location, and we’re working with each tenant to help in the transition.

Our struggle toward building a stronger ecosystem is a larger problem than Seed Philly closing.  Seed Philly has been part of the solution by connecting our distributed community; however, real stickiness only comes from a larger group effort. It’s time to take the Philadelphia startup community to the next level – one that unifies all of the great things happening in the region to make our community competitive on a national level. Our ecosystem has the tools necessary to be competitive – abundant talent, people willing to be thought leaders, active and passionate entrepreneurs and technologists, individual and corporate wealth, etc… Unfortunately, we haven’t been able to cement the bonds that connect each of these pieces together, and our lack of a unified critical mass has rendered the Philadelphia region a difficult place to start a company.  I’m confident that, with the right catalyst, we can come together and make Philly a leader on a national scale.

As for Seed Philly, my hope is to keep our non-profit entity alive, to serve as the gateway to our tech startup and innovation community, and the glue that binds our components together. What exactly Seed Philly will transform into is still up in the air, and we welcome community feedback. Once we determine the final path, we will launch a fundraising campaign, and ask for your support.

While you think about suggestions for our future transformation, below you will find some background on our past few years and an assessment of where Seed Philly and the startup community stands today.

Thank you to all of the many volunteers and donors who helped along the way, and thank you for your continued support.

Brad Denenberg
Founder/CEO, Seed Philly

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