Welcome to the VC Roundup, where we’ll parse through venture capital news related to Philadelphia-based private equity firms and the companies they fund. Subscribe to the roundup as an email newsletter. If you have any VC-related news to pass along to us, please drop us a line.

MUST READS

DogVacay, which announced a $1 million seed round lead by First Round Capital in March, has Philly roots, it turns out. The Inquirer’s Jeff Gelles covers the story here.

Comcast Ventures managing director and head of funds Amy Banse has joined Adobe’s Board of Directors. [h/t PhillyTechNews]

MIGHT BE WORTH YOUR TIME

First Round Capital backed a $6.5 million Series A round for AxialMarket, an online hub for private financial transaction, Forbes reports. The firm has also continued to support ModCloth in the company’s latest $25 million round.

According to CityBizList, First Round has also backed a $1.5 million Series A round for elicit, a search company for private websites based in Chicago.

Edison Ventures has led a $7.5 million growth round for Vox Mobile, a managed mobility solutions suite.

GIVE A GLANCE

Well-known VC Fred Wilson of Union Square Ventures says that the firm invested in local search firm DuckDuckGo for “the Internet anarchists, people that hang out on Reddit and Hacker News.”

Good Company Ventures is profiled on a Forbes contributor site. [h/t PhillyTechNews]

Welcome to the VC Roundup, where we’ll parse through venture capital news related to Philadelphia-based private equity firms and the companies they fund. Subscribe to the roundup as an email newsletter. If you have any VC-related news to pass along to us, please drop us a line.

MUST READS

First Round Capital managing director Josh Kopelman officially announced that the firm closed on a new $135 million fund, First Round Capital IV. The fund is mostly the same as previous funds: the size, partners and strategy will stay consistent, building on previous rounds of success. The firm also announced that Kent Goldman and Phineas Barnes are new partners on the fund. TechCrunch notes the significance of the round in relation to early-stage investment. We first reported on the firm’s commitment to stay on target in February and on its SEC filings a month ago.

MIGHT BE WORTH YOUR TIME

Fort Washington-based Audience Partners, an advertising and directing marketing firm, has raised $750,000 according to an SEC filing.

Agilence, which helps retail companies analyze performance thru video monitoring of point-of-sale transactions, has raised $4.2 million in a private equity sale, according to an SEC filing. The company is based in Camden.

Adaptly, the Facebook ad campaign manager that grew out of DreamIt Ventures in 2010 and moved to New York, announced late last week a $10.5 million Series B round of investment. As of October, the company was reporting revenue of $10 million. The round was led by Valhalla Partners and is backed by Time Warner Investments and Vivi Nevo, AllThingsD reports.

GIVE A GLANCE

A history lesson and a great read from the Daily Pennsylvanian about successful entrepreneurs turned investors that stand by the UPenn entrepreneurship community. [h/t InnovationAmerica]

Serial entrepreneur Rick Rasansky spoke at cowering space Venturef0rth last week, noting that there “aren’t a lot of early stage investors in Philadelphia.”

Nearly 10 percent of angel investor groups are based in Philly, Baltimore and their environs, according to the Halo Report, which includes an analysis of mid-Atlantic angel investing released last week.

The report found that 8.9 percent of active angel investment groups are located in the mid-Atlantic, an area that included Pennsylvania, New Jersey, Delaware and Maryland. Behind California, the Southeast region, the Great Lakes region and New England, the mid-Atlantic was home to 6.8 percent of all angel investment in the country.

See the report here.

The report is the result of collaboration between the Angel Resource Institute (ARI), an angel investment research and education nonprofit, Silicon Valley Bank (SVB) and CB Insights, a National Science Foundation-backed data-as-a-service firm. The report presents data that has not been available to investors and entrepreneurs until now, according to a press release.

From the press release:

“The data is collected via survey and aggregation of public data using CB Insights innovative data analyses. The 2011 Halo Report data is based on 573 deals totaling $873.3 million dollars invested.”

To see a summary of the full findings from the Halo Report, check out the infographic below:

The fund has already invested $55 million in ten companies focused in four technology sectors, according to a press release. Some of the funding recipients include financial technology companies, Andera and Motionsoft, healthcare IT company PHX, interactive marketing and e-commerce companies, NetProspex, Lifebooker, Salsa and MediaBrix, as well as what Edison calls Enterprise 2.0 companies, Ontuitive, Call Copy and Kemp.

Edison, based in Lawrenceville, N.J., plans to apply the same funding strategy it has used with other funds, according to the press release.

From the press release:

“Edison makes initial investments of $5-$10 million in technology companies with a $5-$20 million revenue run rate. Edison invests up to $20 million for expansion, acquisitions and shareholder liquidity. Edison is normally the lead and first institutional investor in its portfolio companies.”

The Edison VII will likely invest in 25-30 companies over the course of three to four years, Edison Principal David Nevas told Technically Philly.

Limited Partners in the Edison VII include  Advantus, certain funds managed by BlackRock Private Equity Partners, New Mexico Employee Retirement Board, Neuberger Berman, Ohio Capital Fund, Orix, Permal Capital, Phoenix Life and Sentry Insurance, according to the press release. The fund also received an allocation of $2 million from the State of New Jersey, as MedCity News reported.

Introducing Angel Interviews, a series dedicated to debunking the assumption that entrepreneurs need to look outside of Philadelphia for angel and early stage investment. Every so often we’ll interview a local angel and ask him or her about investment criteria and how to get in contact. If you’re an angel investor that deals primarily with technology companies or you have any suggestions about how we can improve this series drop us a line.

Ehud Israel wasted no time admitting that he was new to angel investing.

The 43-year-old is one of the mentors at Drexel’s Baiada Center for Entrepreneurship, a business incubator that caters exclusively to the Drexel University community, and it was in that role that he decided to invest in one of the Center’s companies: Async Interview.

“There’s a gap in our support [at the Center] of the students in respect to funding, so I’ve been trying to fill that gap,” says Israel. “It just so happens that, as a mentor, I’m in the ground floor at these ideas.”

Now in an operational role at as Async’s CFO and CTO, Israel has also invested in one other company and is keeping his ears open for other deals, though he says he is not actively pursuing companies.

We ask Israel what he looks for in a company, how to get started as an angel investor and the reason for the misperceptions about Philadelphia’s angel community.

How did you get started with investing?

I became a mentor at the Baiada Center where once a week I work with the entrepreneurs there. I see lots of types of ideas and the stage that the entrepreneur is at. A lot of what we do is at the concept level. Sometimes it runs from a t-shirt company up to a level of what I call “investable” where you have some serious ideas that warrant being able to take it to an angel investor or venture capitalist to get some serious money.

I’m tapping into a vein not a lot of people are viewing

How do these companies come across your desk?
So far its been out of the Baiada Center. There’s a gap in our support of the students in respect to funding so I’ve been trying to fill that gap. It just so happens that as a mentor I’m in the ground floor at these ideas. Most of these students come to the Baiada Center before they go anywhere else. So if you are looking at this from a deal flow perspective, I’m tapping into a vein not a lot of people are viewing.

What’s your criteria for investment? You’ve said you’ve only had two investments thus far, but what are you looking for when you look at a company?

I think I’m open in respect to industry and concept, but I’ll only invest in what I understand. I wont do pharmaceutical or biotech or anything like that. My investments tend to be tech-oriented. My other deal is in material science.

We’ve heard local entrepreneurs say there are not enough investors in Philadelphia. Investors say there are not enough entrepreneurs. Where do you fall on that spectrum, being both?

I actually there’s enough of both. What is lacking is a mechanism to get the two side to know each other. I thought about joining angel investment clubs and I have a tangential relationship with a couple of clubs. My problem was finding a fit for myself. I decided not to align myself with anybody.

But you’re only looking at two dimensions: investors and entrepreneurs. I’d add “unaffiliated angel investor” to that. I’ve found that there’s a dearth of resources to the unaffiliated angel investor to be part of the greater community. From my perspective it’s not a lack of anything, it’s a lack of coordination.

You said there’s a problem connecting, Is there a good way for someone reading this to connect to you?

The Baiada Center is really made for Drexel students, so you wont be able to get any connection that way. I’m not actively promoting myself so you have to stumble across me. I’m not actively looking for deals so maybe I’m part of the problem I’m articulating as I’m getting enough of play out of Drexel. I’m not sitting here saying, “I want to invest in 20 companies.”

Angel Interviews will occasionally profile an angel investor that primarily operates in the Philadelphia region. If you’re an angel investor and would like to be profiled, reach out.

Investing in start-ups is the business of venture capitalists, some of whom have come up with a new formula for profits. It goes roughly like this: Give a few V.C.’s access to the technology deals. Let them raise some capital and invest it shrewdly. The V.C.’s become rich. And if the deals are done correctly, the schools share handsomely in the riches. As an incidental but significant benefit, it’s at least possible that venture capitalists, working with universities, could help create manufacturing jobs in the United States.

Last year I was on Sand Hill Road in Silicon Valley meeting with one of the most prominent venture capital firms in the country.

We were talking about a company, Factual (disclosure my firm is an investor), which was founded by one of LA’s most talented Internet entrepreneurs, Gil Elbaz, who as co-founder of Applied Semantics (purchased by pre-IPO Google for $102 million and now Google AdSense) is responsible for a large portion of the Internet’s monetization.

The VC partner, somebody I greatly respect said, “Yeah, we like Gil and what they’re doing. I’m just not sure you can build a great technology firm outside of Bay Area.”

via Can You Really Build a Great Tech Firm Outside Silicon Valley? | Both Sides of the Table.

Rob McCord, your Pennsylvania state treasurer, wants you to have empathy for him.

Just about the highest ranking Democrat in state politics has an easy laugh and a friendly manner. But, he says, if you’re going to describe him, you ought to start first with his entrepreneurship, and entrepreneurs ought to stick together.

Since 1994, McCord, 51, served as a senior executive at Safeguard Scientifics and founded the Eastern Technology Fund. He co-founded Pennsylvania Early Stage Partners and, from 1996 to 2007, he led the Eastern Technology Council [Official bio here].

He’s a venture capitalist in background, a Harvard kid and a Wharton grad by education and now he’s in his first term safeguarding $120 billion in public funds. In that role, McCord is offering the office up to his base –  whom he describes as “job-creating, technology-orientated entrepreneurs”– for advising, investing and as a potential client.

If nothing else, he thinks the Philadelphia technology community ought to know who he is. If only because he grew up on the Main Line, invested in tech businesses here and, well, because when it comes to statewide representation, Philadelphia could use a friend.

Fortunately, McCord is swearing by the position for now, despite prognostications to the contrary that suggest he is a sure bet to run for governor.

“I love being treasurer. People who watch me will know, it looks a lot more fun to be treasurer than in Congress, which was another option,” McCord told Technically Philly. “I plan to run for reelection [in 2012], and I do not take it for granted. So I’m obsessively focused on the treasurer’s office.”

In between calls on his Blackberry, McCord met with Technically Philly in a crowded Cosi in Bryn Mawr to talk his background, how he could have a big impact if only he had a billion dollars and illiquid assets.

As always, edited for length and clarity

Not a lot of VC guys end up in office, why does your past fit the job?

My background in finance has proven acutely and extremely valuable in this position. No one from the Wharton School has held statewide office, I believe, let alone state treasurer. Nobody who gets in arguments about asset allocation has ever run for state treasurer. There have been bond underwriters, but not someone who talks about illiquid assets and entrepreneur-spurring assets. I have spent a lot of time in that area, so I thought with my venture capital background, I was able to really delve into these other issues that interested me.

I have… a good background to be in a chief investment officer role. …I just think it’s valuable for entrepreneurs to be represented by entrepreneurs and be asking the question ‘when we put this money to work, how much will come back in job creating, innovation-spurring endeavors in Pennsylvania?’

Rob McCord is sworn in as the new Pennsylvania State Treasurer during a ceremony held in the North Office Building. JOE HERMITT, The Patriot-News

Where is Philadelphia in this scheme of entrepreneurship compared nationally?

I’m a glass half full guy. Pennsylvania is doing very well, not perfect, but very well.

Most regions in the country couldn’t just add water — give them a certain amount of money — and have jobs follow. Philadelphia is one of those regions.

Pittsburgh, Allegheny County, is another. Very few people in the southeast known what is happening in that southwest portion. It takes more work there, but it’s real… I look at it region by region, and Pennsylvania has a uniquely high number of those regions that can offer wealth from entrepreneurial-ism.

So just add water?

Yes…if you had another billion dollars, if you said to entrepreneurs that we will back your company but you have to be located in the Greater Philadelphia region… there are few entrepreneurs who would say ‘no way, I can’t make that work.’

When you look at our operating costs when compared to Silicon Valley or San Francisco or Manhattan or Boston or even Austin, TX, we’re right up there with the rest of them [in terms of being a competitive place to be].

The Research Triangle in North Carolina and Philadelphia are two of the country’s best lower cost centers of entrepreneurship.

…I would say San Fran, Boston and Austin are ahead of us in the sexy for young people factor, and that means we should put more work into reminding people what a great place it is to live here. But when you look at your overall cost of doing business as a young, only modestly funded entrepreneur living in say Center City or Old City Philadelphia to the same pay living in Manhattan, it is just hugely different.

The lifestyle in Philadelphia is much greater than what you might say is Greater Connecticut, but you simply have more money washing around Greater Connecticut because you have people saying I want to be within 45 minutes of the doorstep of my portfolio CEO. The increase supply of capital makes the difference… [but don't think Philadelphia isn't competitive in a national way.]

…So, yes, if you gave me a billion dollars in venture capital in this area, I could make it one or two, but of course if you gave me the first five draft picks, I could improve the Eagles, so it’s harder than that. …In the end, we need to continue to sell Philly as this great region that it is but also be growing the entrepreneurial community that we need with the help of the schools to support it.

To some extent Ben Franklin Technology Partners is meant to invest in only locally-based companies, but is it realistic to think others would do the same?

[In my venture career], we certainly set up soft goals for how much investment and success we hoped to have in the local region. If you look at groups like Penn State alumns, Carnegie Mellion alumns, fans of Greater Philadelphia and if more private groups could increase their soft goals [around Philly-specific funding], that could start something.

Some career fiduciary bureaucrats are resistant because they don’t want to reduce possible earnings. So it’s about early funds. I would love to see nonprofis like foundations be involved where we run an experiment, we invest in a for-profit-way but the profit goes back in a foundation. [The foundation network] only invests in locally-based companies, and if they can prove the profitability and sustainability of the experiment, they open it up beyond Greater Philadelphia… It’s about understanding the value of various, strong local hubs of investment and entrepreneurship.

What is your role in making any of that happen?

In the treasurer’s office, people reach out, and we try to put them in touch with appropriate investors. Right now, our coffers are dry, like lots of governments….

They should continue to come say to us that ‘we’re a growing company and venture eligible and can you introduce us.’ The odds of us getting you fresh funding is very low right now, but we sell this region. As I travel around the country with conferences and meetings, and I’ll say to private equity managers that you’re a fool if you ‘re looking at Greater New York but not Greater Philadelphia. A lot of big companies are looking at more rollups — complete acquisition — so a local company gets wrapped up into a national scale… we can help connect there.

A sub item of that is that a lot of people are not ready for venture capital but don’t know it, so often we spend time educating people about that, and people want a sounding board on how to grow their companies, whether it’s angel or other moves, and we can help.

So other than reaching out, how should this community interact with you?

Offer empathy. [laughs]

…They should know that this is someone who has invested in companies like mine, who has grown companies like mine, who, to a certain extent, has worked at companies like mine, so at least I’m someone who empathizes with the cause. I’m a Democrat but a market-minded Democrat… so when an entrepreneur reaches out to me and tells me what legislation is hurting or helping them, I want to hear it and I listen, so know at least that there is representation in statewide office.

Big companies get a lot of representation because they buy it. … I tend to think job-creating, technology-orientated entrepreneurs and service providers who go out of their way to support them as my base. …So I want to help however I can….

We are something of a clearinghouse, so we can guide people to the services that their companies need. We have ginned up demand generally in the need for information technology support in Harrisburg.

Why is IT in government an important match?

There are two different directions: as cost reducer and quality of life improve and job creator.

As a cost reducer, when less money is used to get the same work done, you almost always need to call on technology, so we’ve been able to cut [treasury] payroll 16 percent while increasing productivity by 25 percent in our direct service areas.

How? What are specific examples?

In a number of ways… We improved decision rules in the Bureau of Unclaimed Property with on-going searches, some automated with various technologies, to look for people who reported [or when it has been found in government control.] Half of that unclaimed property doesn’t get collected. That’s a tax-free, limited effort to bring in revenue and reduce the cost of government. That’s since we we came into office… and just one example.

Similarly, we reduced the fees in our Vanguard [college savings] tuition account program… with increased tech both in Vanguard and in treasury with customer service and in simple maintenance… So look at pa529.com for details. We dramatically reduced fees, increased the amount collected in and reduced the cost of government through technology.

….We have to face that regardless of the exchange rate between China and us, uneducated labor will be less expensive outside our borders, so we have to create high value work. You do that with relationships and protectable technology advantages.

And that’s what I do best: relationships and protectable technology advantages.

Welcome to the VC Roundup, where we’ll parse through venture capital news related to Philadelphia-based private equity firms and the companies they fund. Subscribe to the roundup as an email newsletter. If you have any VC-related news to pass along to us, please drop us a line.

Since it’s a light news week. Let’s call these all “Might be worth your time:”

NJBiz has a story about the recent success of Edison Ventures and what it means to New Jersey entrepreneurs.

Not exactly venture capital, but an investment firm in Marlton has been accused of cheating its investors out of $40 milion through a complicated Ponzi scheme.  The Inquirer reports that Carr Miller Capital spent investor’s money on on luxury cars, vacations, and a suite at the New Jersey Devils’ arena.

Comcast Interactive Capital portfolio company Ortiva Wireless has received $8 million Series C investment from Intel. The company helps wireless providers monitor video traffic.

Welcome to the VC Roundup, where we’ll parse through venture capital news related to Philadelphia-based private equity firms and the companies they fund. Subscribe to the roundup as an email newsletter. If you have any VC-related news to pass along to us, please drop us a line.

DEFINITE READS

Remember when Safeguard Scientifics sold Clarient Technologies? It turns out that the company netted $144 million from the deal. According to the press release the deal gave Safeguard a debt-to-equity ratio of three-to-one. Safeguard also announced that it received a 3X return on its sale of Avid Pharmaceuticals.

Next time you hear someone complain about lack of capital in the Philadelphia region, tell them about Treventis Corp, a Canadian biotech company that established offices in Philadelphia “where it is hoping to have greater access to American venture capital.” The credit here, of course, goes to Cliff Lee.

MIGHT BE WORTH YOUR TIME

Who says the IPO is dead? Edison Ventures’ GAIN Capital has recently begun trading on the New York Stock Exchange. According to the press release, Edison still owns 13 percent of the company and the firm realized an 18X return on securities sold.