Need funding for a new Web-based company? Michael Levinson is all ears. In 2007 Levinson, now 50, with partners Steven Welch (33) and David Bookspan (52), launched DreamIt Ventures, a startup “accelerator” in Philadelphia that aims to help entrepreneurs get out of their garages. Those who make the cut receive up to $25,000 in cash; three months of office space; $75,000 worth of legal, accounting and p.r. help; weekly access to a roster of 20 seasoned entrepreneurs; and a crack at wooing professional investors. In exchange DreamIt takes a 6% equity stake in the venture. In some cases DreamIt plays matchmaker, too–pairing entrepreneurs with business strategists and software developers looking to sign on with a young firm.
“We’ve brought in companies that have little more than an idea on a napkin,” says Levinson. “But in three months they can prove a market need and adjust their business model.”
With capital for new businesses stubbornly hard to find, a handful of accelerators have sprung up to fill the void. DreamIt’s model is a public-private partnership. A third of its $750,000 budget comes from the Pennsylvania Department of Community & Economic Development and the University City Science Center, a nonprofit that promotes entrepreneurship and donates DreamIt’s 4,600-square-foot office. Levinson and crew pony up the rest. The hope: to create more jobs in Philadelphia, a city with 18 universities but too few startups. “DreamIt won’t take us to another level of net worth,” says Levinson, who, like his partners, doesn’t draw a salary. “We want to establish the region as a tech hub outside of Silicon Valley.”
A lawyer and self-taught computer geek, Levinson spent 13 years building a technology consulting firm before selling it for $50 million-plus. Welch, a mechanical engineer, sold his company, which made disposable bags used in drug development, for $14 million. Bookspan, another lawyer, pocketed $36 million when he sold MarketSpan, an aggregator of court docket information and research. DreamIt’s newest hire, Kerry Rupp, recently launched Holiday Golightly, which organizes high-end vacations for women.
In three years the crew has combed through 800 applications looking for promising companies that don’t need millions in startup capital and that stand a chance of making measurable progress in just three months. Progress is relative. None of the 34 outfits in DreamIt’s stable has turned a profit, and 9 have shut their doors; as for creating jobs, only 8 of the survivors are based in Philadelphia. Some, though, have gone on to raise real money: Scvngr, designer of real-world scavenger hunts orchestrated via mobile phones, raised $4 million in its latest funding round in January.
This summer’s crop of 14 startups includes GiveLoop, which makes software that facilitates online donations to charities and political groups. Numote built an iPhone app that lets people see what their friends are watching on TV. All will present to a group of professional investors in mid-August. “These are opportunities your everyday startup doesn’t get,” says Robert Falcone, 24, cofounder of Campus Sponsorship, which allows students to raise money from big companies by completing online puzzles or watching videos sponsored by those companies. “We have everything we need at our fingertips at all times.”