There’s nothing like a big, more than half-billion-dollar exit to boost a startup ecosystem. In the last 15 months, the Philadelphia’ region’s seen three. “That’s a big deal for any market,” said Dean Miller, CEO and president of the Philadelphia Alliance for Capital and Technologies. The latest is J.P. Morgan’s more than $500 million acquisition of Center City health care payment tech firm InstaMed. The deal comes about three months after Swiss pharma giant Roche said it agreed to buy Spark Therapeutics for $4.8 billion, and a little over a year after Paris-based Capgemini scooped up Wayne’s LiquidHub for about $500 million. “[The InstaMed deal] is the third that is at the scale, which is huge,” Miller said. While InstaMed declined to discuss its equity-backed investors and their returns in the wake of the deal, past media reports listed regionally-based Osage Partners, NJTC Venture Fund, Ben Franklin Technology Partners and Midas Capital, the personal investment fund for First Round Capital’s Josh Kopelman, as investors. Prolific, state-backed seed fund Ben Franklin Technology Partners of Southeastern Pennsylvania (BFTP) poured a total of $500,000 in InstaMed over the years, its CEO RoseAnn B. Rosenthal said. She declined to disclose BFTP’s return, but said the deal will deliver a return to the region. “It causes talent and investments elsewhere to take another look at Philadelphia,” she said. “I think it also sends a message to local investors that if they haven’t been engaged, maybe they should think about that again.” InstaMed’s growth in the region shows a successful tech company can be built and sold sustainably, Miller said, and done in a way that’s not a quick flip with ephemeral local impact. “Most would take the easy way out, because it’s exhausting. Entrepreneurship is really hard. [CEO Bill Marvin] built a really strong foundation of a company, and then he obviously proceeded to scale that and found a really good buyer,” Miller said. “In the process, he created a lot of wealth for the team, for his investors, which is always a good thing.” Ecosystems thrive most when that wealth is poured back into a region, whether through executives’ moving on to lead new companies, writing angel checks or sharing their expertise as a mentor in the community. Dell’s purchase of Boomi in 2010, for example, not only created Dell Boomi, which has grown to employ 300 people at its Chesterbrook headquarters, its founder Rick Nucci has since founded knowledge management platform Guru and raised $38 million to scale it. Serial tech exec Bob Moul, CEO of Boomi at the time of the deal, went on to lead and scale startup Cloudamize to its exit in 2017 and is now focused on boosting tech education in Philadelphia’s schools. InstaMed plans to stay in Philadelphia as part of the deal and said no staff reductions are expected. While Miller said he doesn’t know for a fact InstaMed will follow in the steps of a Dell Boomi or Capgemini and continue to grow in the region, he expects it to follow a similar path. “That’s my hope for InstaMed,” he said. “[Marvin] is an incredible guy who is very sincere in his efforts and desire to give back, and I couldn’t be happier for him.” InstaMed’s growth can be tied to the rise in health savings accounts and high-deductible plans that mean consumers are paying significantly more out of their own pockets for health care. Despite reform efforts, those payments will likely only increase in coming years, said Robert Field, a professor of health management and policy at Drexel University. That’s why companies like J.P. Morgan are looking at firms like InstaMed, he said. - Philadelphia Business Journal
It's the third $500 million-plus exit in the region over the past 15 months.