Trailing U.S. startup leaders, Philly region begins to catch up

The Delaware Valley’s startup sector is growing, but still lags far behind heavyweights Silicon Valley and New York in overall activity.

The Philadelphia-Camden-Wilmington area came in 31st out of 40 metropolitan regions nationally, according to a new report from the Kauffman Foundation. The Kansas City-based group measures the rate of entrepreneurship across all sectors of economy, not just technology.

Austin, Texas, took the top spot, followed by Miami and Silicon Valley.

Arnobio Morelix, a research analyst with Kauffman, says it isn’t fair to compare Philadelphia against those regions … at least, not yet.

“You know, when we look at Silicon Valley, it is an area that has been developing since World War II, so we really need to keep that in mind when looking at emerging startup communities,” he said.

And the rate of new business growth in the region is on the upswing, Morelix said. “I think this a really good sign to see that these indicators are improving for Philly metro.”

But not everyone agrees with the relatively low placement on Kauffman’s index.

“The same way that colleges are ranked, and vacation spots are ranked, I think that ranking sometimes is really arbitrary,” says Yuval Yarden, who serves in leadership positions with the group Philly Startup Leaders. “It is hard to judge something like a startup community because there is so much that goes into it.”

The region doesn’t always do a good job of promoting itself, she said, and it could use more venture capital — but has a lot to offer entrepreneurs.

“Rent is low, cost of living is much lower, and the community generally gets really excited over things that in San Francisco or New York would be a drop in the bucket,Yarden said. “So there is amazing support here.”

Kauffman also publishes state-by-state rankings using the same metrics. Montana, Wyoming and North Dakota take the top three spots, in large part because of the local oil boom. Delaware placed 19th, while New Jersey and Pennsylvania were 36th and 48th, respectively.