Series A firms in NYC

Recently, I had a conversation with a NYC based seed stage VC, who was lamenting that there aren’t enough NYC HQ’d VC firms who are leading Series A rounds for local startups.

Naturally, I asked the twitterverse a question on this topic, this was the response:

Series A firms

As you may know, the twitterverse can be wrong sometimes, so lets find some data. We did a query on Pitchbook with the following criteria:

  • NYC HQ’d firms
  • $100M+ fund that was raised in the past 3.5 years (typical deployment time frame)
  • Led investments in NYC HQ’d startups at Series A stage ($4M+ size rounds)
  • Excluded life science sector

The results provided us a total of 14 firms*:

  1. Bain Capital Ventures*
  2. Bessemer Venture Partners*
  3. Canaan Partners*
  4. Elephant Partners*
  5. FirstMark Capital
  6. General Catalyst*
  7. Greycroft Partners
  8. IA Ventures
  9. Lux Capital*
  10. RRE Ventures
  11. Thrive Capital
  12. Tribeca Ventures Partners
  13. Union Square Ventures
  14. Venrock Capital*

 

If you look at the number of Bay Area HQ’d VC firms, who are actively leading Series A investments in NYC HQ’d startups, that number is 20.

Ideally, you would have had more local Series A investors than non-local investors, so there seems to be room for a new Series A focused firm to set up shop in NYC.

*These firms have several offices across the US but have at least one investing Partner based in NYC.  Notably, only half of the firms listed have the entire partnership based in NYC.

Thanks to our summer Intern, Lorel Sim, for pulling up the data.

P.S. – if you believe your firm should be part of the fourteen firms listed, please provide data to support the assertion, email me at sgoldman @ svb.com

#BlackLivesMatter

I’ve been following (& supporting) the #BlackLivesMatter (or BLM) movement for some time.

The data around the number of civilians who are killed by police is very clear and is alarming.  The data around the disproportionate number of black people who are killed by police is very clear and is alarming (see chart below).  The topic shouldn’t be controversial or divisive, they are facts and we need to be in action if we want to see the numbers decline.

This post includes action items for people who are conscious of the issue of black people being killed by cops at disproportionate rate (see below) and you haven’t done anything about it but are thinking about getting involved.

  1. If you are on social media (Facebook and/or Twitter), share articles on what is occurring.  Many people are silent on this topic.  While this seems like a trivial thing, sharing news has a viral aspect to it and the more people read about what is happening, the larger the odds of someone new becoming conscious of this issue as well.
  2.  Donate money.  There is typically a crowd funding site running a campaign to raise money for the families of those who are killed by police.  Even $5 can go along way, when aggregated among thousands of other donors, it becomes a meaningful amount for the families that are impacted.
  3.  Attend a BLM rally that is happening in your city.  These rallies are typically spontaneous, the way I find about them is typically via twitter.   If you are on twitter, you need to follow some other conscious individuals in your community, the best way to do that is do an advance search on twitter, filtering by location and the #BlackLivesMatter hashtag.  I’ve participated in several rallies in NYC, they are peaceful and are welcoming of anyone who wants to participate.
  4. Get familiar with Campaign Zero .
  5. Vote for politicians who are also conscious of this issue and will implement some of the recommendations outlined by Campaign Zero.

If there are other action items that I should add, please let me know, as I’m still looking to do more on my end.

See this chart, I hope you are aware of it, if not, I hope it makes an impact on you.

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2016 Market Cooling

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As you may have heard, the venture market has cooled in 2016, in terms of dollars invested and number of investments (deals) that are being done by venture capitalists (VCs).

There are a number of reasons for why this has happened.  The main driver has been the macro environment- forces that VCs can’t control.  It is a combination of a slowdown in China, challenges with several European countries, Brazil, ISIS, volatility of oil prices, upcoming US election, etc.  This in turn has created “bears” in the public markets, which has resulted in almost no VC backed IPOs and a correction in the SaaS sector as a result of the significant LinkedIn ($LNKD) price drop in February 4, 2016.   The chain reaction of all of this has led to VCs becoming more cautious and spending additional time with their existing portfolio companies.

The data below was pulled via CBInsights.  We analyzed deals/dollars in the US for 2016.

The most significant point is the drop of deals in Q2 ’16 vs Q2 ’15, a whopping 28% delta. We wanted to be predictive on what the 2nd half of this year would look like and it is a bit bearish.  The figures in green are just guesses, so could be totally wrong here but wanted to be on the record on what I think will happen.  The reasons on why the 2nd half may turn out to have a great delta between 2015 vs 2016 is that the markets are still facing significant macro issues, with the newest being #brexit, which has created additional uncertainty that will likely trickle down to the venture ecosystem.

There is good and bad news on the prediction.  When you put the numbers of both 2015 and 2016 into context, they are really high compared to previous years, so a lot of deals and dollars are still being deployed, which is the good news.  The bad news from an entrepreneur’s perspective, is that raising money from VCs has gotten a lot more difficult.

Now, lets focus our attention on the dollars deployed by VCs, see second image.  Similar to deals, the numbers are down, although not as pronounced.  What we are seeing is that round sizes have gotten slightly larger on average, which can be mean a few things.  One it could mean that VCs are putting more money into their better companies (i.e. flight to quality) and/or the runways are being extended as the forecast of macro environment is uncertain.

Similar to the prediction of deals for the rest of the year, the numbers will likely be down, although not as significant.

Although the outlook is bearish, the reduced numbers in 2016 (vs 2015) is positive for the venture environment, as the market was over-heated and the correction was needed.

dealscapital invested

Thanks to our summer intern, Lorel Sim, for pulling this data.

Q3 and Q4 2016 data are only predictions (numbers in green).

Data was only for US based private tech (all sectors) companies.

 

Best Startups in NYC ?

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There is always a debate as to which startups are the best ones in NYC.

Looking at Glassdoor can be one resource to utilize to make an argument as to which ones are the best.  How employees feel about a company, can be a good indicator as to how a company might perform.

I took at look at which NYC HQ’d VC backed startups had the highest rankings.  In order to be considered for this list, the startup had to have at least 25 reviews, which I feel is a good enough sample size.

So, here are the top 5:

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Market Cooling of 2016

VC rounds and dollars are down approximately 1/3 vs the same time frame as last year (2015).

I utilized CB Insights to pull some data.

I wanted to see what has happened the last few months, post the public market correction that took place in February 2016.

First thing I wanted to look at was all VC rounds in the US between March 15th and May 15th of this year.

The query provided: 523 rounds of equity financing, totaling $7.12B.

Now, I wanted to compare to same time frame of last year.

The query provided: 778 rounds of equity financing, totaling $11.6B.

So, rounds are down 32.8% and funding amount is down 38.6%.

I wanted to drill down and just look at Seed and Series A rounds, again, only in the US, on those same dates, March 15th to May 15th of this year (2016).

The query provided 293 rounds of equity financing, totaling $1.46B.

Again, wanted to compare it to the same time frame of last year.

The query provided 465 rounds of equity financing, totaling $2.09B.

So, Seed/A rounds are down 37% rounds and funding amount is down 30%.

This cooling off period is actually a great thing.  The funding environment was too frothy the last few years and there was a lack of discipline on both the CEO and VC fronts.  Companies are now focusing on getting a handle of their burn and spending their money in a slight more conservative rate.

While things have cooled, the good news for Founders is that there is still A LOT of money available to them.  The majority of VCs have new/newer funds raised.