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Our Q4 Venture Capital Activity Report will be out soon, but we wanted to give you a preview of at least one trend that caught our eye – specifically, the ascent over the last five quarters of NY in venture capital dollars and deals and the relative lack of chutzpah evidenced by Massachusetts on the same measures.
Massachusetts still retains its title as the #2 destination for venture capital deals and dollars and as the graphs below illustrate, it is also a significantly more diverse place for venture dollars and deals than NY in terms of the sectors and industries receiving capital. BUT, the NY and Massachusetts five-quarter trend does show that NY is starting to credibly close the gap between itself and it’s northern brother, Massachusetts and that both states’ funding and deal trends are traveling in different directions. (To see a comparison of NY vs. Mass in aggregate tech VC deals and funding, go here)
Before we go on, it’s also worth noting that the debate about total venture dollars and deals misses the mark as it doesn’t recognize the heterogeneity of venture capital markets. The reality as the data below will show is that NY does not hold a candle to Massachusetts in healthcare venture capital with Massachusetts having 146 deals over the last five quarters while NY had a meager 24. Healthcare venture capital investments which are more capital intensive also may mean that Massachusetts will retain its place as the #2 spot for total VC dollars for quite a while. But on technology and especially internet investments, NY seems to already have supplanted Massachusetts as #2 behind Silicon Valley. Over the last five quarters, NY has seen 165 internet companies get funded while Massachusetts has had 113.
We know that this New York vs. Massachusetts topic evokes strong tribal feelings on both sides of the debate so we hope you’ll leave your thoughts in the comments or on your own blogs as we’re eager to see where you believe the trend is going as well as what may be causing this trend in both markets.
And now to the data…
Below is Massachusett’s five quarter trend which given it’s exposure to capital intensive sectors like healthcare tends to be choppy on venture capital dollars, but nevertheless, the dollar trend is not climbing. Generously, it’s nearly flat to in reality, slightly down. And this is occurring against the backdrop of an overall VC market which has rebounded somewhat in 2010 vs the abysmal levels of 2009.
Contrast this with NY which has been showing an increase in deals and dollars over the last five quarters.
Next, let’s look at stage of investment breakdowns between the two states. Here, we’ll start with NY where as is reported in the media regularly, the state has become a hotbed for seed and Series A (generally early stage) activity with 50-60% of deals in this bucket.
Want to see companies who received funding in NY and Mass? (Directions are at the bottom of this post)
Massachusetts by way of comparison has 35-45% of its investments in the early stage (seed and Series A)
And now to the sector coverage. Here we see the balance of Massachusetts which has exposure to a variety of sectors on a number of deals basis with the top sectors, healthcare and internet, generally comprising 60-70% of total deals.
New York on the other hand as we’ve highlighted in the past is less diversified with 60-70% of deals being in internet and its related cousin mobile investments.
We will continue to track the companies and investors doing deals in both markets to see what the data suggests over time. We look forward to hearing your thoughts.
If you’d like to see the companies who received funding in NY and Mass over the last five quarters?
- Login to CB Insights here (or sign up for free here) and goto the “Deal Search” tab
- On Deal Search, select all the round/series of investment you want to see (Series A, B, C, etc)
- Select the period (October 2009 to December 2010)
- Specify New York and hit submit
Four easy steps and you’ll get a list of the companies receiving funding in NY over that time period. Do the same for Massachusetts and you’ll get those companies as well.