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PHILADELPHIA, PA

Innovation That Matters 2016

We are at the dawn of an extraordinary technological revolution and it is transforming every part of the U.S. economy. Innovation That Matters examines and ranks 25 cities’ readiness to capitalize on the inevitable shift to a digital economy.

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Philadelphia is emerging as a force in the field of smart city entrepreneurship

Philadelphia is underperforming in its education and energy startup sectors, but health tech is the clear bright spot of the ecosystem. Strong established clusters in education and energy have not translated into strong startup clusters yet, but health —the largest of the four sectors—is staying competitive.

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15% of Philadelphia’s incoming residents have skills in tech

While Philadelphia startups are not attracting top-tier tech talent like the Bay Area and Seattle, the city ranks, somewhat surprisingly, ahead of New York, LA, and DC. Although a strong base of next wave sector skills can be found in Philly, the overall talent pool in the city is not as robust as that of many of its competitors.

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  1. Philadelphia’s established sector specializations and favorable demographic trends will make it strong if it can capitalize on them.
    Much of the city’s strong performance in the Index was due to its established education (3rd), energy (2nd) and health (2nd) clusters, as well as a spike in young, educated residents (10th). The real test will be how the city takes advantage of these assets to build its next generation of startups.
  2. Startup-focused professional service firms, investors and universities are all strengths of the local ecosystem, but corporate and institutional engagement remains low.
    The region ranked 2nd, 5th, and 6th in the first three indicators, but 18th and 22nd in the latter two. This suggests that work remains to bridge the gap between Philadelphia’s startup community and its established economic anchors.
  3. The city is underperforming in its Ed Tech and Energy Tech startup sectors, but Health Tech is the clear bright spot of the ecosystem.
    Strong established clusters in education (3rd) and energy (2nd) have not translated into strong startup clusters (20th and 16th). By contrast, its established cluster in health is ranked 3rd, and 6th for startups. The city is also emerging as a force in the field of smart city entrepreneurship (9th).
  4. Talent challenges are holding Philadelphia back.
    A relatively stagnant population base (22nd) and middling levels of educational attainment (16th) suggest that the talent pool in the city is not as robust as that of its competitors. But a strong base of civic sector skills (1st), particularly in health, suggests a major opportunity. Finding ways to grow the talent base and use existing skills will be pivotal for future success.
  5. High quality of life is an important factor driving the region’s success, but lack of openness to new ideas and a difficult regulatory environment are a burden for entrepreneurs.
    Philadelphia ranked 8th in the first category, but 19th and 16th in the latter two. Finding creative ways to shift these cultural barriers could help stimulate new business activity.
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