A look at the Big Apple’s venture capital landscape: how much money is invested in Web start-ups? Which funds and business angels are the most active?
Yahoo’s $1.1 billion takeover of Tumblr, a New York-based start-up, showed that New York investors know what they’re doing. Union Square Ventures and Spark Capital, which invested in Tumblr from the start with $13 million each, both pocketed a cool $192 million. The operation proved the city’s ability to give birth to success stories: if Silicon Valley attracts many entrepreneurs, moving to the opposite side can also be an excellent choice.
A study by CB Insights reveals that since 2009, more than $8 billion has been invested in New York-based start-ups, in 1,205 fundraisings. After Silicon Valley, New York is now the most important technology hub in the US. The New York venture capital landscape has flourished in recent years and the amounts invested have continued to grow: 103% increase since 2009. In 2012, the number of deals signed increased by 137%. 1.3 billion was invested in the first half of 2013. CB Insights even predicts that New York startups should raise $2.66 billion in 2013. Seed and early stage financing are the most frequent: they represented 65% of the funds raised in 2012, 56% in the first half of 2013. On the buyout side, the ecosystem is also in good shape: exits jumped 120% from 2010 to 2012. 53 buyouts of New York startups were recorded in 2012.
The Web is taking almost all the investment
Web startups are taking a large majority of these investments. In 2012, 67% of the funds invested were in the Internet sector. In the first half of 2013, the share climbed to 71%. Not to mention that start-ups in the mobile and telecommunications sector, counted separately, raked in 15% of the funds invested in 2012, and 13% of those in the first half of 2013.
The political will of New York Mayor Michael Bloomberg to support digital technology has undoubtedly played a role in reassuring investors about the strength of the ecosystem. In January 2011, he created a team specifically dedicated to digital, the NYC Digital Team, within his cabinet. Its mission: to make New York “the leading city in digital”. The mayor has also set up the “NYC Venture Fellow”, a one-year program designed to help entrepreneurs get started in New York. Not to mention one-off initiatives, such as the creation of the“We are made in New York” initiative, designed to support the digital industry through an advertising campaign and the promotion of over 900 start-ups based in the city and looking to recruit.
Top 5 most active investment funds in New York
1. Lerer Ventures: the fund has invested in BuzzFeed, Appsfire, Rap Genius…
Despite the 5,000 kilometers that separate them, the New York ecosystem is not so far from Silicon Valley. CB Insights notes that the most active investors in New York often have a strong link with their East Coast-based counterparts and frequently invest alongside them. For example, Lerer Ventures, a New York-based fund, has already invested more than 50 times alongside San Francisco-based SV Angel, and has also backed several start-ups selected by the Y-Combinator, a Californian accelerator.
Top 5 most active business angels in New York
1. Box Group (David Tisch) : he invested in Razor Comapny, among others.
2. New York Angels (seed and early stage, $25-50 million funds)
New York start-ups that have raised the most funds