Maple

Maple is a vertically integrated food startup in NYC.  They launched in early/mid 2015 and recently expanded their coverage area to midtown , which is where my office is.

I really liked their packaging and quality of the food (the most important part).

The only issue I had was their delivery time, they had indicated 35 minutes but actually took 55 minutes.

I’ve tried the UberEats service multiple times but didn’t like the packaging of the food but their delivery times were typically less than 10 minutes, so super fast if you are in a time crunch.  It is a bit of a apples and oranges comparison as Maple makes the food and UberEats is just delivering (for now).

This is a massive market which is evolving quickly.  Looking forward to trying other services out, including Sprig, which hasn’t launched in NYC yet.


2016-01-11 13.09.04

5 years in NYC

I can’t believe it was five years ago that we moved to NYC!  (I don’t call it Silicon Alley or Big Apple)

Since moving here with my Wife (Kanya) and two dogs, we added two amazing children, Sophie is now four years old and Caleb is 18 months old. (Yes, I’m still reppin’ my Bay Area sports teams…this pic is from the Bronx Zoo)2015-09-27 17.36.42 copy

The startup scene has evolved dramatically.

An important KPI for an emerging startup community is the # of VC backed companies, ultimately you need to have exits though (but that is a function of time).

The # of VC backed companies that raised money in 2011 = 97

The # of VC backed companies that raised money in 2015 = 416… the is over a 4x increase!!!

On the exit front, there were zero $100M+ exits in 2011 and in 2015, there were three (Etsy IPO + Business Insider and Sunrise acquisitions).  In addition, there a lot of well established companies that are IPO ready and/or on the IPO track.

On the VC front, there were a handful of well established NYC HQ’d firms in 2011, Insight, Bessemer, Firstmark, RRE, USV, First Round, Greycroft, etc. Now there are 100+ firms who are actively writing checks,  and notably, there has been a massive amount of seed focused funds established in the past few years.

The SVB office, which was growing to 10 people when I moved here, is almost 50 people now.

We are still in early days for this startup community.   Over the next five years, we are going to get closer to the Bay Area in terms of investments and acquisitions (although I don’t expect NYC to be at the same scale, nor does it have to be a goal to be considered a success).

I am excited about several local initiatives that are going to propel the startup community.  One is Cornell Technion campus that is being built on Roosevelt Island.  It should be up and running at the end of next year, the goal is create a Stanford/MIT equivalent in NYC.  The second being CSNYC , whose “mission is to ensure that all of New York City’s 1.1 million public school students have access to a high-quality computer science education that puts them on pathway to college and career success”.  Lastly, we have many private organizations that are teaching people how to code, which will support the growing tech community.  Some of the programs include General Assembly, Flatiron School, Startup Institute, Codecademy, Coalition for Queens, etc.

 

I’m grateful to be part of this growing community, the future is bright!

2015: NYC En Fuego

The start of 2015 has been amazing in NYC, when you look at the velocity of VC funding activity.  I haven’t done a full analysis, but this is likely the most active month EVER in terms of big VC rounds being announced.  The impressive thing is the diversity in terms of sub-sectors being represented (some people still think this is a adtech & content town only).  I understand that VC financings is not the end game, but money does help in growing your company and getting to an exit.  Here is a list of $10M+ VC rounds that were announced in January 2015 (used CBInsights to get the data).

  1. Business Insider – $25M
  2. Datadog – $31M
  3. Giphy – $17M
  4. Mashable – $17M
  5. Earnest – $17M
  6. Button – $12M
  7. Persado – $21M
  8. Work Market – $20M
  9. Stack Exchange – $40M
  10. Taykey – $15M
  11. ClassPass – $40M
  12. Schweiger – $12M
  13. IRX Therapeutics – $32M
  14. Boxed – $25M
  15. Whistle – $28M
  16. Defense Mobile – $20M
  17. MongoDB – $80M
  18. Noom – $15M
  19. Reonomy – $13M

Thoughts on OnDeck Capital IPO

New York City based OnDeck Capital filed for their IPO.

This is how they describe themselves “OnDeck powers the growth of small business through lending and technology innovation”.

I’m excited about this upcoming IPO for several reasons.  First, this is going to be a positive event for the NYC tech scene, including several NYC based VCs who invested early and many of the employees (216 based in NYC per LinkedIn). Secondly, I’ve been in the financial services sector for over 15 years and haven’t seen many financial related IPOs, so that is nice to see and it is a trend.  Lastly, since the market downturn of 2008, majority of banks have lost their appetite to lend to small business, so this is a much needed product, which is one of the main drivers of their growth.

Some highlights:

  • They have choose the NYSE and will be traded under the symbol ONDK
  • Company started in 2007
  • Major investors are RRE (15.4%), IVP (14.4%), Village Ventures (10.8%), SAP Ventures (10.1%), First Round Capital (6.5%), Google Ventures (6.3%), and Tiger (6%)
  • Top line revenue has grown over 2.5x over the last year.  $107.6M (2014) vs $42M (2013).  Both figures are for 9 months.
  • They are at a $143.4M annual revenue run rate
  • Net loss has shrunk in the last year, which is great news considering revenue has grown over 2.5x.  $14.4M (2014) vs $18.8M (2013).   Both figures are for 9 months.
  • While sales/marketing expense has gone up, it is going up at a slower rate of 1.6x compared to revenue which has grown at 2.5x:  $21.8M (2014) vs $13.6M (2013).  Both figures are for 9 months.
  • Loans originated: $788.3M (2014) vs $290.9M (2013).  Both figures are for 9 months.
  • They are originating more loans (both number and dollars) directly vs indirectly.  43% (2014) vs 19.4% (2012).  This is % of total dollar volume loans.
  • 15+ day delinquency ratio has gone down from 8.9% (2012) to 5.4% (2014).

List of NYC equity based accelerators

NYC accelerators:

So AngelPad (a SF based accelerator) just announced at the #premoney conference that they are expanding to NYC.  There are now 15 equity based accelerators in NYC.

  1. @angelpad
  2. @techstars
  3. @DreamitVentures
  4. @ERoundtable
  5. @bphealth
  6. @SeedStart
  7. @NYeHealth
  8. @FinTechLab
  9. @WIMAccelerator
  10. @startuphealth
  11. @EdTechAccel
  12. @SocraticLabs
  13. @founding
  14. @FinTechNY
  15. @RGAaccelerator

NYC = Customers = $

If you are SELLING a product/service, there isn’t a better place than New York.

Largest density of Fortune 500 companies is New York City.

In Manhattan alone, there are 42 Fortune 500 companies, see pic. (all of those are within 5 miles of each other)

In addition, there is a high concentration of universities, K-12 schools, hospitals, physicians, financial services firms, real estate related firms, construction projects, local retailers and there are 8.3M people.

If you can’t find customers in NYC, you won’t have a better chance in any other region.

Startups, no excuses of why you can’t close a lot of business in this town.

fortune 500 NYC

Tech Education in NYC

If you have been following the activity in NYC, you have a sense of the grassroots movement of fixing the problem of the lack of tech talent in the city but also globally.

The NYC community continues to impress me on how it has taken challenges head on and does its best to address them.  Similar to other active startup communities, there is a lack of quality engineering talent in NYC.

The following NYC based organizations are DOING something to fix this problem, many of them are focused globally, not just NYC.

General Assembly – a global network of campuses for technology, business and design.

Girls Who Code – a new organization working to educate, inspire and equip 13- to 17-year-old girls with the skills and resources to pursue opportunities in technology and engineering.

Codecademy – the easiest way to learn to code. It’s interactive, fun, and you can do it with your friends.

Flatiron School – school for passionate people who want to love what they do.  Students learn how to build awesome things with code.

SkillShare – a community marketplace for classes

Turing Fellows – matches top computer science students with outstanding summer internships at leading NYC Startups

hackNY – aims to federate the next generation of hackers for the New York innovation economy

Cornell / Technion Campus – educate the next generation of leaders who will advance technology, generate cutting-edge research that addresses critical issues

Academy For Software Education – a high school that provides innovative software engineering and computer science skills and knowledge

Enstitute – 2 year apprenticeship program for people who want to get into the startup sector

Startup Institue – an eight week program to train and place professionals in the startup sector

I genuinely believe that within the next five years, NYC can leapfrog both the Bay Area and Boston when it comes to having the best software engineers.

Instagram vs Indeed

I had a brief twitter chat with two active people in the NYC tech ecosystem, but wanted to further clarify my perspective in a blog post.

As a prelude, this post is not a reflection as to which company is better or which specific community is better but an example of how two separate exits can have a distinct impact on their respective tech communities.

Both Instagram and Indeed ($1.1B) were amazing exits for the Founders and early investors. That being said, the Indeed exit is much better for a tech ecosystem than the Instagram exit. Here are a few reasons why.

  1. Instagram had a total of 13 employees at the time of the exit. Per LinkedIn, Indeed has 553 employees. Indeed has created a lot more jobs.
  2. Indeed will continue to operate, grow their business and hire more people. Instagram was essentially a defensive acquisition by Facebook. I’m sure the Instagram team will continue to improve the product but I wonder how much larger the team is going to be and if they are going to be run somewhat independent than other teams at Facebook.
  3. Instagram was a no-revenue based startup with the focus on growing users and figuring out a monetization later. Indeed was built with the mind set of generating revenue in their early days and according to their investor, USV, Indeed didn’t need VC funding to grow their business. The Instagram exit propagates the idea that you can just build an application without a revenue model and become successful. Many entrepreneurs are trying to replicate an Instagram but sadly 99% will fail.
  4. Per Crunchbase, Instagram raised $57.5M, Indeed raised $5M. The Indeed acquisition provides a great example of how you can scale your business without raising a lot of money. The mindset of minimizing how much you raise is positive. VC funding is critical for many startups but raising too much money can have very negative consequences and I don’t want to see other entrepreneurs have the idea that raising a lot of money is some sort of badge of honor.
  5. To my earlier point, Indeed has a lot more employees, as a result, a lot of experienced employees will have the ability and money to start their own companies. My guess is that Indeed employees will create more startups than the Instagram employees.

As a last point that is not as relevant to which is better exit for a tech community, Indeed took nearly eight years to build, scale and sale their company.  Instagram was built,  scaled and sold in two years.  Startup Founders need to understand that building a valuable company takes a lot of time, like an Indeed and not an Instagram.

[View the story “Instagram vs Indeed” on Storify]

One Trick Pony

I continue to have conversations with people who are not based in NYC and they are always surprised to hear that the NYC startup scene has startups in various sub-sectors.  When people think of NYC startups, they typically think of AdTech or Digital Media or Commerce.  As you can see below, there are many sub-sectors that NYC startups are gravitating to.

The list is not meant to be comprehensive as there are at least 1000 startups in NYC, wanted to provide enough examples of companies in their respective sub-sectors.

AdTech:  Appnexus, Collective, DoubleVerify, Indeed, Yodle, Yext, AdSafe

Digital Media: Buzzfeed, Comixology, Everyday Health, Tumblr, Say Media, Aereo

Commerce: Birchbox, Bonobos, Etsy, Fab, Gilt, Warby Parker, Ideeli

EdTech: 2tor, General Assembly, SkillShare, Codecademy, Knewton, Mindsnacks, Flat World Knowledge, Socratic Labs (accelerator)

FinTech: Kickstarter, BillGuard, Zipmark, CB Insights, Learnvest, SecondMarket, OnDeck Capital, FinTech Innovation Labs (accelerator)

Infrastructure: 10gen, Nodejitsu, Appfirst, Neverware, Datadog

Enterprise: SailThru, Enterproid, Lua,  FiftyOne, Movable Ink, FieldLens, Group Commerce, NYC Seed Start (accelerator)

Big Data: Bit.ly, Yipit, Chartbeat

Social: Buddy Media, Offerpop, Crowdtwist, 33Across, Thumb, Foursquare

Hardware: Boxee, Shapeways, Makerbot, Quirky, LittleBits

Health/Wellness: Fitocracy, Zeel, ZocDoc, DailyFeats, Force Therapeutics, BluePrint Health (accelerator), New York Digital Health Accelerator

Energy: Anellotech, Radiator Labs, Enertiv, NYC ACRE (accelerator)

NYC Seed Syndicates

I wanted to understand who the most active seed investors are and which syndicates were the most prominent. For the purpose of this report, the search criteria were:

  • Startups based in NYC
  • First round of financing must have been between January 2010 and April 2012
  • Round size between $250K and $1.5M

The research yielded interesting results. The most active investors over the time period were SV Angel and Lerer Ventures, each with a total of 17 investments.  The other most active firms were RRE Ventures and Founder Collective with 15 while First Round Capital had 14.

The most active investment syndicate was SV Angel & Lerer Ventures with 9 co-investments. This is not a surprise as it was mentioned in May 2011, that the two firms would work together closely. Next was SV Angel & Founder Collective with a total of 7 co-investments followed by Lerer Ventures & Thrive Capital with 5.

When you see firms syndicating frequently, it could suggest that the firms know each other well and/or have similar investment themes; As an entrepreneur raising a seed round, knowing this information can be very helpful.

The two diagrams below help to illustrate the findings. The first is a venn diagram attempting to show some of the major investment connections while the second diagram gives a more complete view of the connections between the different firms. In each diagram, the total number of investments made by that firm is in parentheses next to their names.

All of data used for the diagrams below were from sources available to the public. The vast majority of the data was sourced from CB Insights (a NYC startup).  Some of the rounds of financing are not disclosed or file State documents, so these diagrams don’t represent 100% of all financings using the criteria mentioned above.

Thank you to our Intern, Jacob Laufer, for compiling the data and putting together the diagrams.