The data shows that VC-backed seed investments in Massachusetts heavily include local investors. Does the same apply to the east coast’s other major VC hub, New York?
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According to the data, NY-based startups saw local investors participate in 62% of seed VC rounds over the past four years – lower than the 68% found in Mass. On the funding front, venture-backed seed investments in NY raised $190M across 130 deals in 2013, a multi-year high. On a year-over-year basis, 2013 saw 42% more seed VC dollars in NY but 5% fewer deals as average funding round size rose from $1.21M in 2012 to $1.74M in 2013, and median round size grew from $1M to $1.25M in 2013.
Internet & Mobile Capture 90% of Seed Deals
New York VC-backed seed investments were largely dominated by internet and mobile deals over the past 4 years, with 90% of all deals being within those two sectors. When digging into specific sub-industries, Social, Education & Training, and Apparel were the most prevalent with 20 or more deals each over the 4 year span.
500 Startups & Lerer Ventures Most Prolific
The 10 most prolific NY Seed VCs were mostly local, with just 2 VCs (SV Angel & 500 Startups) being based outside of NY. First Round Capital is HQ’d in Pennsylvania but does have a local presence. 500 Startups was the most prolific VC in seed rounds in NYC. They along with Lerer Ventures were the only VCs to make 50+ seed investments in NY over the past four years.
NY VCs Participate in 62% of Deals
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Of the 401 total deals over the past four years, NY-based VCs participated in 62% of seed rounds in NY, while Silicon Valley VCs didn’t lag much further behind, with a 48% participation rate. Massachusetts VCs participated in 19% of seed deals, while International VCs saw an 18% participation rate driven by investments from UK-based Index Ventures and Canada’s iNovia Capital. Pennsylvania rounded out the top 5, largely due to First Round Capital’s 25+ investments.
Note: The % don’t tally to 100% because a single round may have multiple investors who are based in multiple geographies.
While New York’s seed VC market is over 2x as large as Massachusetts, the rate of local participation is lower. Depending on your perspective, this may be read in two ways:
- NY investors are gun shy relative to Silicon Valley VCs and so NY companies have to look beyond local investors for investment
- NY is a hot market which draws in VCs from outside the region. This is a good thing for NY entrepreneurs.
What do you think? Leave us your thoughts in the comments.