Fin tech, media, fashion, advertising and even digital health are all part of New York’s growing tech ecosystem which is seeing major financing deal and dollars growth as well as increased exits. In fact, deal activity has grown in each of the past four years and total funding to NY tech companies has hit $9.5 billion over the period from 2009 to 2013.
This analysis takes an in-depth look at the financing and exit landscape to tech companies in NY companies as well as the notable investors and companies within the NY tech startup ecosystem.
Notes:
- More than VC – Data in this report includes financings by angel investors, angel groups, mutual funds, hedge funds, venture capital, corporate and corporate venture investors. It is not just venture capital investors. Industries covered include mobile, internet, software, computer hardware and electronics (chips & semis).
- Almanac – If interested in more NY data, you may also want the previously issued New York Venture Capital Almanac, which includes data beyond the tech sector.
- Data coverage – Financing activity covered in this report covers 2009 through H1 2014.
Specifically we’ll cover:
- Financing trends by stage
- Financing trends by sector
- The most well-funded New York tech startups
- Investor league tables
- Exit activity
In 2013, investors deployed $3.18B across 700 deals involving New York tech companies. Both the deal and funding counts marked five year highs after the state saw a slight dip in funding in 2012. On a year-over-basis, the New York tech scene has seen 29% YoY deal growth and a staggering 64% YoY funding growth. Among the mega-financings to NY tech are MongoDB’s $150 million Series F deal in Q4 2013, beleaguered Fab.com’s $165 million Series D funding in Q2 2013, and Flatiron Health’s $130M Series B led by Google Ventures in Q2 2014. Flatiron highlights a growing NY digital health ecosystem.
The most recent quarter, Q2 2014, produced a five-year high in funding in a single quarter registering in at about $1.25 billion. The quarter with the most deals was Q3 2013 with 184 deals, although the total amount of funding only totaled $743 million. The recent spike in funding was bolstered by mega deals such as Flatiron Health’s $130 million Series B funding in May, Oscar Health Insurance’s $80 million Series A deal in May, and MediaMath’s $73.5 million Series C financing in June.
The takeaway from the graph below beyond the gyrations of any single quarter is NY’s steady ascent in terms of deal and financing activity. While NY was an early-stage haven almost exclusively a few years ago on the back of healthy seed & angel activity, NY has built a solid mid and late-stage pipeline of companies which has boosted not just deal counts but funding levels as well.
New York tech financing trends by stage
While mid-stage (Series B/C) investments took well over half of funding dollars five years ago, the distribution of funding has evened out in recent years, with Series A, B, C, and D all taking about one-fifth of funding dollars. Series D investments saw a jump in dollar share between 2012 and 2013, bolstered by deals such as the aforementioned Fab, Quirky’s $79 million round, and AppNexus’ $75 million financing.
Although mid-stage investments make up approximately half of New York tech’s funding in terms of dollar share, seed investments have taken the largest chunk of the region’s financings in terms of deal share by year since 2009 (not surprising). In fact, seed & angel fundings have seen a significant uptick in the last few years and now comprise about 50% of New York tech’s deal share. A sampling of seed fundings in 2013 include a $4.5 million investment iPad point of sale startup TouchBistro, Internet-enabled art startup Electric Objects, and marketing platform Nomi’s $3 million round.
New York tech financing trends by sector
The Internet sector consistently dominates the tech industry in terms of both dollar and deal share, but startups in the Mobile & Telecommunications sector have seen an increase in funding in the past few years. A few recent deals in the Mobile & Telecom space include Mobli’s $60 million funding by America Movil in Q4 2013, Foursquare’s $35 million Series D in Q4 2013, and ShopKeep POS’s $25 million Series C round in Q2 2014.
Although non-internet software has maintained a small fraction of New York’s deals, the sector has seen modest growth in terms of funding dollars, reaching almost 10% of dollar share in 2013.
Most Well-Funded Tech Startups in New York
Reflecting the Internet space’s importance in the New York tech VC scene, only one company (Foursquare) on the list of the most well-funded un-exited companies does not fall under that sector. Within Internet, eCommerce is by far the most-well funded sub-industry, taking four of the top 10 spots with Fab.com, Gilt Groupe, Quirky, and Bonobos. Fab.com took the number one spot with a total of $334 million in funding, $100 million more than runner-up Gilt Groupe. While not on the chart, ZocDoc is rumored to be raising a nine-figure round that would place it among the top 5 most well-funded companies in NY tech.
Top Investors
Six of the top 10 most active VC investors overall in the New York tech scene are headquartered in New York. The presence of New York-based investors is strongest at the early stage, in which seven of the 10 most active early-stage VC investors are based in New York. However, Silicon Valley investors take the lead in both mid-stage and late-stage rounds as you’ll see below. Given larger multi-stage funds are generally the provenance of the Valley, this is not entirely surprising.
New York-based seed stage VC fund Lerer Hippeau Ventures was the most active investor across all stages. The firm’s New York tech portfolio includes companies such as Jibe, Percolate, Chartbeat, Buzzfeed.
The most active corporate venture capital firm across all stages is Google Ventures, which has invested in companies such as mobile data platform mParticle and mobile advertising startup YieldMo. Google Ventures is closely followed by Intel Capital, which counts open-source database MongoDB, learning management system Schoology, and email marketing startup Movable Ink in its New York portfolio.
Below are the most active early-stage New York-based VC investors, which include Lerer Hippeau Ventures, RRE Ventures, Founder Collective, Great Oaks Venture Capital, Softbank Capital, Thrive Capital, and IA Ventures. While not included in the investor league tables, the most active angel investor groups in early-stage New York tech startups are Dave Tisch’s BoxGroup and the New York Angels.
At the mid-stage, Softbank Capital leads NY investors by unique company count since 2009, followed by Spark Capital and Makerbot investor RRE Ventures to round out the top 3. Note: Village Ventures listed below was among the most active since 2009 but the firm concluded making new investments in 2012.
Among the most active late-stage VC investors, DFJ Growth and Pitango tie for the most NY late-stage deals over the past five years. Only growth equity investor, Insight Venture Partners, is a New York-based firm.
In terms of exits, Spark Capital takes the number one spot on the list of VC investors with the most exits since 2009, closely followed by Lerer Hippeau Ventures. A few of Spark Capital’s exited NY companies include Tumblr, Group Commerce, Svpply, and Admeld.
Exit Activity
Despite growth in funding, the number of exits has declined marginally dropping about 7% between 2012 and 2013. Of these exits, the number of IPO’s of New York tech companies also remains low, comprising no more than 2% of exits in the past three years.
Although 2012 and 2013 only had three and two IPOs respectively, 2014 has already seen three public offerings of investor-backed New York tech companies: digital media company Everyday Health, eCommerce platform Borderfree, and data governance software company Varonis Systems. IPOs of tech companies have become more frequent this year so 2014 could shape up to be a big year for NY IPOs.
Google tops the list of active acquirers in New York tech since 2009, having acquired companies such as Next New Networks, Admeld, and RightsFlow. Runner-up Groupon has acquired startups such as Hyperpublic, Ditto.me, Pospitality, and Savored. Frequent acqui-hirers Yahoo and Facebook tie for third with AOL.
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