While the Philadelphia region experienced less venture capital activity in 2025 than the year before, the region remains a nationally competitive fundraising hub.\u00a0<\/p>\n
Overall, Philadelphia continues to solidify its spot as a major market, making up 3.2% of deal activity in the country last year, compared to 2% a decade ago.<\/p>\n
Both deal count and deal value were down last year, bringing in $3.8 billion across 470 deals, according to the Philadelphia Alliance for Capital and Technology\u2019s (PACT)<\/a> annual Venture Report<\/a>, which came out this week.\u00a0<\/p>\n Nationally, however, venture funding appeared to rebound in 2025, mostly concentrated in AI deals. National deal volume reached $250 billion by Q3 last year, compared to $215 billion in 2024.\u00a0<\/p>\n Philly\u2019s startups are spread across sectors such as life sciences, healthcare and enterprise technology, which did not experience the same level of capital. AI-focused hubs such as Silicon Valley saw concentrated funding surges, according to the report.\u00a0<\/p>\n \u201cIn hubs that are heavy in deep tech, life sciences, etc., those deliver incredible value over time, but they are really struggling to raise money in such a capital-constrained environment,\u201d Shiloh Tillemann-Dick, research director at the National Venture Capital Association, said at PACT\u2019s first Venture Report Town Hall on Wednesday.\u00a0\u00a0<\/p>\n To PACT, Philadelphia reflects a more realistic view of the current venture capital market. Philadelphia\u2019s mix of sectors can still take advantage of AI while growing steadily, avoiding boom-and-bust swings<\/a>, and offering a potential model for other regions looking to build long-term success.<\/p>\n Philly is successfully combining its strength in healthcare with the AI momentum<\/a>. In 2025, 20.3% of all Philadelphia VC deal value came from healthcare AI companies compared with 6.1% in 2024.\u00a0<\/p>\n However, Philly\u2019s AI landscape is unique compared to Silicon Valley because while the deals are smaller, they are more focused on product-market fit, the report says.\u00a0<\/p>\n Tillemann-Dick said that in competitive markets, founders often need to make their pitch clearly demonstrate why their product matters. While some may have to give up more ownership than they\u2019d like, funding is still available for strong companies.<\/p>\n Overall, Philadelphia continues to solidify its spot as a major market, making up 3.2% of deal activity in the country last year, compared to 2% a decade ago, according to the report. The region also ranked as one of the top 10 VC markets globally<\/a> in 2025.\u00a0<\/p>\n More than just life sciences<\/p>\n Life sciences remains one of the region\u2019s strongest sectors, with healthcare making up 47.1% of Philadelphia\u2019s total VC deal value in 2025, the PACT report finds.\u00a0<\/p>\n However, biotech and pharma deal activity is down. In 2021, these industries were seeing $1.2 billion across 63 deals. Last year, biotech and pharma brought in $600 million across 32 deals.\u00a0\u00a0<\/p>\n This aligns with a broader trend in how the region\u2019s investors are trying to diversify, according to the report. The region is increasing its investment in \u201cnew tech,\u201d which refers to technologies like AI, advanced manufacturing, robotics and information technology.<\/p>\n AI and machine learning companies brought in $1.5 billion across 186 deals, a decade high for the sector in Philadelphia. Other \u201cnew tech\u201d companies raised $1.6 billion across 208 deals, bouncing back to fundraising highs from 2022<\/a>.<\/p>\n Companies in the new tech sector include Sojo Industries, which raised $40 million<\/a> last year, and FORT Robotics, which added almost $19 million to its Series B<\/a> last summer.\u00a0<\/p>\n Growth-stage money to keep companies here<\/p>\n While early-stage funding remains strong, growth-stage companies may benefit from additional local and regional investor connections to support scaling within Philadelphia, Kathie Jordan, managing director of the healthcare investment group at Ben Franklin Technology Partners, said in the report.\u00a0<\/p>\n If there is money available for later-stage companies that are looking to grow, raising a Series B or C, for example, they are more likely to stay in the region as they hit milestones, contributing to the region\u2019s VC activity.\u00a0<\/p>\n Creating more connections between investors and companies of all stages would also help to keep companies here, said Jonathan Beschen, managing director of the technology investment group at Ben Franklin Technology Partners.\u00a0<\/p>\n Outside capital flows through Philly<\/p>\n Philadelphia\u2019s VC activity relies on collaboration with investors from outside the region.\u00a0<\/p>\n Not including the Bay Area and New York, it\u2019s common for companies to bring in money from outside the region. That activity in Philly shows that the region has long-term growth potential, according to the report.\u00a0\u00a0<\/p>\n Nearly two-thirds of the money raised in the region last year included participation from Bay Area investors. A little more than one-third of that money was invested by New York VCs.<\/p>\n