Top 10 Startups in NYC , Q1 2017 edition

“who are the best startups in NYC?”….I get this question a lot.

It is very hard to quantify an answer, usually is based on some anecdotes but rarely is it a data driven answer.  One way to quantify this is by utilizing information via Glassdoor  If a company is highly ranked on Glassdoor, it should indicate that the employees overall are happy campers.  If you have happy employees, there is a strong likelihood that customers are happy, which usually means $$$.   I have not researched whether or not, there is a strong correlation between happy employees and company success, but intuitively I think it makes sense, if you disagree, please let me know.

In any case, here are my top 10 startups in NYC, would love to get your thoughts.

In no particular order:

  • Seatgeek
  • Apprenda
  • CB Insights
  • Boxed
  • Datadog
  • Hightower (now VTS)
  • InVision
  • Kemp
  • Justworks
  • BounceExchange

These companies met ALL of the parameters below, again the data is from Glassdoor:

  • HQ’d in NYC
  • At least 20 reviews provided by current/previous employees
  • At least a score of 4.7 (out of 5)

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Summer Internship 2017

We (SVB) are seeking an amazing intern for the Summer of 2017.

The past interns that I’ve hired have gone to do some interesting things in the startup/venture community:

  • Kevin Carter, who subsequently joined SV Angel as an Associate and is now a Partner
  • Chaz Flexman, who subsequently joined SVB full-time, then worked for A16Z and now is VP of Strategic Relationship at PCH International
  • Thomas Knowles, who subsequently joined the SVB venture arm and is now a Partner at Gratitude Railroad (a VC fund in Utah)
  • Dimitris Kouvaros, who subsequently and recently became a Director at Newark Venture Partners (a new VC fund / Accelerator)
  • Lorel Sim, who was our most recent Intern this past Summer, she is currently a Sophomore at Stanford and will no doubt be doing interesting things in her career

Here are the characteristics that the candidate must possess:

  • PASSION for the startup community
  • Articulate (both in writing and presenting)
  • Takes initiative
  • Hard worker
  • Have an opinion (let me know which sector(s) you are excited about)

If this sounds like you and can clearly demonstrate the above characteristics, please fill this out:  google doc

A few key points to highlight:

  • This is a paid position (~$15 / hour)
  • Ideally, the candidate is currently a Freshman, Sophomore or Junior
  • Start date would be around June, flexible depending on your class schedule
  • Could be either full-time or part-time
  • Position is based in NYC
  • Ideally, the candidate lives in NYC, in case we would like to extend the internship beyond the summer
  • You get to work directly with me 🙂
  • All the work you will be doing is squarely focused on data/metrics regarding the startup/vc community.  A lot of ad hoc projects around venture funding/activity, sector analysis, portfolio reviews, assisting with blog posts, working with CRM, etc.
  • I will review applicants in Jan/Feb/March and make a decision in early April.

About SVB:

In short, we are the leading global commercial bank for entrepreneurs and investors.  A more detailed overview is provided below.

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VCs who back the best* startups in NYC

Recently went through the exercise of creating a list of the best* startups in NYC.  The companies ranged from seed funded startups to Pre-IPO companies (so, all are still private).  The process was partially data driven, partially based on word on street and partially based on my interactions with the founders of those companies.  It was really more subjective than anything else.  Ended up coming up with a list of ~60 startups.

Decided not to share the list, as it was really more of exercise to see if it was possible to narrow the list down to manageable number.   The good news is that there are so many exciting companies in NYC, that is was a very tough process to get it down to 60 startups.

One insight I thought would be interesting to share, is which VCs most frequently show up as backing these best* companies:

  • Box Group – 7 investments
  • First Round Capital – 7
  • Lerer Hippeau Ventures – 6
  • Thrive Capital – 6
  • Google Ventures – 5
  • Founder Collective – 5
  • Index Ventures – 5
  • Accel Partners – 4
  • Iconic Capital – 4
  • Union Square Ventures – 4
  • Wellington Management – 4
  • Institutional Venture Partners – 4
  • RRE Ventures – 4
  • New Enterprise Associates – 4
  • Battery Ventures – 4

There were many other VCs that showed up, but the list above reflects the firms that are most active in backing the best* startups.

Now, I think the early stage VCs deserve more credit than the later stage VCs, as the late stage folks have data/revenue to hang their hat on.  So, just take that into account when reviewing the list.

PS If you put together a list of your top 60 NYC startups, happy to meet up in person and debate the list over coffee.

*this list wasn’t produced by any scientific means, was mostly subjective and we will likely disagree on the outcome.  Please send the hate mail to Santa Claus, PO Box North Pole 🙂

 

 

 

NYC sub-sector trends in 2016

Many people ask what is happening in the NYC startup scene and they still assume it is mostly adtech, commerce and content.  That might have been true in the past, but it’s not what is happening now, at least based on anecdotes and what I’m seeing.  Decided to do use some data to determine if this accurate.  Used Pitchbook to this query:

  • Seed and Series A rounds
  • rounds done in 2016
  • NY HQ’d companies

 

Below is the dollars & percentage breakdown of sub-sector activity.

The surprising trend will likely be that SaaS is leading all the sub-sectors.  Second, the trend in healthcare, big data, AI/ML will be an eye-opener.   Overall, NYC is really balanced in terms of sub-sectors and isn’t overly dependent on one to drive future returns.

I would like to see more VR/AR related startups, given how much content companies and studios are based here.

What are you thoughts on this?  What are we going to see more of in 2017?

Industry Vertical Capital Invested (in M) Percentage
SaaS $313.77 17.7%
E-Commerce $286.55 16.1%
Mobile $272.14 15.3%
FinTech $250.60 14.1%
HealthTech $135.28 7.6%
Big Data $100.43 5.7%
Artificial Intelligence & Machine Learning $72.75 4.1%
Marketing Tech $51.14 2.9%
Internet of Things $43.84 2.5%
Lifestyles of Health and Sustainability $36.84 2.1%
AdTech $33.19 1.9%
Manufacturing $30.75 1.7%
EdTech $22.08 1.2%
Cybersecurity $21.60 1.2%
Life Sciences $21.20 1.2%
Wearables & Quantified Self $20.75 1.2%
Virtual Reality $17.41 1.0%
Robotics and Drones $14.92 0.8%
3D Printing $10.05 0.6%
AudioTech $9.75 0.5%
Nano-technology $6.70 0.4%
CleanTech $3.00 0.2%
$1,774.74 100.0%

3x DPI ?

The goal of most Venture Capital funds is to drive a minimum of 3x the capital invested to their Limited Partners.  The terminology that is used and most important to dig into is DPI (Distributed to Paid In).

From time to time, you will meet some audacious General Partners, who will claim they can drive 5x DPI.

Most VC funds have a 10 years life span, meaning the 3x DPI goal should be achieved within this time frame.

Lets look at the publicly available data on Pitchbook.  I pulled up all VC funds that were in the 2006 vintage (meaning the fund started investing that year, so we are at the 10 year mark now).  Pitchbook had return data on 27 funds.  I realize that Pitchbook doesn’t have access to return data of all 2006 vintage funds, but for this exercise and to make my point, 27 is a decent sample size, considering there are 322 funds that are a 2006 vintage per Pitchbook.

Of the 27 funds:

  • NONE have a 3X DPI
  • ONE fund has 2x+ DPI (1 / 27 = 3.7%).
  • TEN funds have a 1x+ DPI (10 / 27 = 37%)
  • 17 funds has less than a 1x DPI (17/27 = 63%)

This post isn’t meant to discourage VCs or LPs, but do want to highlight that this is a very hard business to be successful at.  With so many new VC firms being formed and many  new LPs rushing into the VC industry, it is important to reiterate the point.

I’m not sure on the history of why 3X became the default return target by LPs, as opposed to 2.5X or 2X (will do some research on this).  I realize that LPs are looking for a 20%+ IRR, which is how they get to 3x DPI goal, but it is fair to say that they have misplaced expectations.  VCs are in the business of investing in outliers and therefore LPs are looking for the same, but based on this data and other available data, if you are generating 2x+ DPI, you are an outlier.

Below is the dataset that I am referencing:

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We are hiring in NYC

Silicon Valley Bank is continuing to hire in NYC.  The office has rapidly grown with the startup community and we are excited about the opportunities ahead.

My group is hiring and am looking to spread the word to find a candidate for this unique position.

We are looking for a senior professional who will work closely with emerging managers (if you don’t know this term, probably not a great fit for the role).  

The role is focused on helping emerging managers with how they go to market, how they think through their fundraising process and connecting them to our network, which will improve their odds of success in this difficult industry, where 3x+ DPI is expected by LPs.  This role is not an investment position (in startups or funds) but one where you enable great investors and earn the role to be their trusted adviser.

This person HAS to be passionate about venture capital, founders, startups, limited partners and technology.  In addition to having the passion, this professional needs to have contacts in the industry, ideally with existing emerging managers and/or LPs who invest in their funds.

This role is based out of our NYC office at Bryant Park.

This professional has to have the flexibility to have detailed conversations with the four groups posted below.

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If this sounds like you, please email me at sgoldman at svb dot com

Thank You

Looking for Mentors in NYC

As you may know, I’m involved with a non-profit called BUILD.  I was a mentor when I used to live in the Bay Area and it was a very rewarding experience during my four years with them.  In addition, I joined the NYC board of BUILD in January, to help them launch here.

The mission of the organization: Through entrepreneurship-based, experiential learning, BUILD ignites the potential of youth in under-resourced communities and equips them for high school, college and career success.

Some of the students who are enrolled in BUILD have no aspirations to attend college, we want to change that.  If it wasn’t for the students’ involvement in BUILD, they might not have graduated from high school.  As a mentor, you have the ability to positively impact the path that these students are on.

BUILD was founded in 1999 and it is finally launching in NYC, having proved out their programming/model in the Bay Area, Boston and in D.C.

This upcoming October ’16, 500 local high school Freshman will be enrolling in the BUILD program.

We need 100 mentors to support these 500 students.  As of now, we have 50 mentors committed and need another 50.

There is a significant time commitment by the mentors:

  1. Program goes the entire school year, October ’16 to May ’17
  2. One hour per week (some weeks off due to holidays/vacation breaks)
  3. Sessions are in the afternoon at the students’ schools (locations are in Bronx, Manhattan, Brooklyn)

Who are out Mentors?  They are professionals who are dedicated to serving the students and have the flexibility in their work schedule to spend time with them once a week.  Mentors are providing guidance from a business/life perspective, you don’t need to have a technical or startup background to participate.

If you want to get more information about become a mentor, visit the mentor site or if you feel you are ready to apply to be a mentor, email Miranda Bellizia at mbellizia@build.org .

Thank you for reading this far.