Philadelphia ranks among the 10 best cities for startups, and the funding freeze could be thawing
A recent study ranks Philadelphia as one of the best places in the U.S. for startups.
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Philadelphia ranks eighth among best startup cities with at least 1 million residents.
It tops the highest-ranked cities with a 66.2% startup survival rate.
Venture capital firms remain cautious but fundraising climate may gradually improve.
It's been a challenging past few years for founders looking to add fresh capital and investors, but Philadelphia startups should have some reason for optimism in 2026.
A recent study from CommercialCafe ranks the Philadelphia innovation ecosystem as one of the 10 best places to launch a startup among U.S. cities with at least 1 million residents. At No. 8, Philadelphia beat out the likes of Chicago (No. 9), Los Angeles (No. 10) and New York (No. 11).
Antonia Dean, a Philadelphia-based venture capital investor with Black Operator Ventures, said she's seen collaboration among Philadelphia's startup stakeholders grow since 2018 when she returned to her hometown for a leadership role with Comcast NBCUniversal LIFT Labs. In addition to market fundamentals like cost of business, Dean said the tight-knit culture can also set Philadelphia apart from other large cities.
"[There is] much more of an attitude and an energy around 'A win for anyone in Philadelphia is a win for everyone in Philadelphia,' which is an idea I really believe in as we start to grow our startup activity here," Dean said.
The CommercialCafe report takes into account the cost of doing business, networking opportunities, startup density, the volume of college-educated workers and startup survival rates.
Philadelphia has the highest new business survival rate of the top 10 cities at 66.2%, tied with second-ranked San Antonio, Texas. Its low costs for office and coworking space compared to other East Coast cities is another plus.
Phoenix tops the Best Cities for Startups list, followed by San Antonio, Dallas and Fort Worth in Texas. Jacksonville, Florida, rounds out the top five.
Dean pointed to the evolution of higher education's support for local startups as a pillar of the Philadelphia region's innovation growth in recent years. Initiatives like the University of Pennsylvania's recently announced $50 million fund for life sciences startups, Temple University's iNest incubator space, and Drexel University's Innovation Fund can plant the seeds for successful companies, she said.
"Universities like Penn, Temple and Drexel really focusing on how they can support the scientific research that's happening, being able to support those folks as they look to commercialize and see if they can build those things out into private companies, has been really great," Dean said.
Startups based in the Philadelphia area raised a total of $3.76 billion in 2025, according to data from PitchBook. That sum pales in comparison to the record $8.1 billion that startups in the region raised in 2021 and is below the $4.13 billion raised in 2024, PitchBook data shows.
While it's been challenging for startups at all stages to secure cash in the last few years, Dean said the difficult environment has helped founders "return to fundamentals" and focus on finding product-market fit and gaining traction in their respective industries.
She said not to expect a major shift in 2026 with venture capital firms still being cautious with their investments. Black Ops VC, for example, has stayed away from investments in firms it feels have too high of a valuation or haven't proved themselves in the market — and that's likely to continue this year, according to Dean.
"The folks that end up really rising to the top are the folks that nail those fundamentals early. ... The folks that solve the hard parts early are going to build more resilient companies," she said.
Though the floodgates of venture capital aren't expected to open in the months ahead, Dean said the icy fundraising climate could begin to subside.
"I think things will continue to soften a little bit out of what previously had been kind of a freeze where it had been incredibly hard to raise," she said. "I think things will continue to defrost, but I think that return to fundamentals is going to stay with us for a good long while."
Originally published the Philadelphia Business Journal