33 comments

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  jdrive

  2 months ago

  We actually have a tough time finding good venture partners to work with in the NY-area, which is vastly different than our investments on the west coast. This is symptomatic of a larger social context problem.... NY has yet to develop a critical mass connecting entrepreneurs, universities, vc's, angels, industry and government in a cohesive fashion. We all know it, we all talk about it. Many of us at RRE and those at other area vc shops are involved with ny-based org's trying to address some part of it, but so far with only partial success.
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  ceonyc

  2 months ago

  Either you're in another time zone, or you just got catapulted to
  hardest working VC ever. :)
  
  I'd love to see VCs get more involved with some of the grassrootsy tech
  groups like nextNY (www.nextNY.org). We have 1800+ up and coming
  members of the NYC tech/digital media scene. I'm actually going to be
  in your office next week on Thursday at 2... would love to talk more
  about this.
  
  Thanks for the comment!
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  jdrive

  2 months ago

  we never sleep!
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  ceonyc

  2 months ago

  One thing I was thinking (and I can say this... since I was a finance
  guy myself) is that perhaps one reason why there aren't more NYC VCs is
  that a lot of them half Finance roots and that's not necessarily the
  best skills set for doing venture. When you're evaluating completely
  new markets, sometimes the numbers prevent you from leaps of faith.
  Risk, in general, isn't exactly something that's supported here in the
  city, with some exceptions. I think it's no accident that a lot of the
  startups are getting angel funded by random hedge fund guys who are used
  to swinging for a few fences every now and then.
  
  You ran a company and James, Jr. is a tech guy... It's not often that
  someone goes from running a big Fortune 500 company and then goes to
  start a VC fund... and there aren't a lot of long term technologists
  here in the city either. No offense to bankers, but I think running
  something and building something are critical skill sets to
  understanding venture.
  
  Stuart gets a free pass on the banker knock because he taught himself to
  program. :)
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  ceonyc

  2 months ago

  Ah.. sorry... just realized I got confused between JDR 3 and 4.... My
  dad's got my name, too... you'd think I would have figured that stuff
  out by now.
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  jdrive

  2 months ago

  No worries. Thre are now several model #'s to contend with.
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  aweissman

  2 months ago

  I think Jim makes a great point - it's more the lack of community - or connections - between various parties to create an environment where the things you mention can occur. The money and frims are here; the environment is more fragmented and ad hoc than is required to create a richer community.
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  alan patricof

  2 months ago

  I think your comments are well taken. NYC at the moment ,and for the past two years at least, has been a hot bed of new company formation.If not incorporated here, at least essentially primarily located here. We could certainly use more early stage funds cocentrated in the City. One of issues which you don't deal with is, many of the funds you list or are not listed have certain practical size minimums which restrict their activity and, let's face it , a lot of young firms don't need that much initial or early stage capital to achieve proof of concept in todays world.
  Another issue is information technology is not the only area where the action is. Mobile applications and telecom in general are areas of activity as well in the city, not to mention biotech and cleantech which don't happen to be our area of focus.
  While it would always be good to have more capital available, I don't think there are many companies in NYC and vicinity who find they have to go across the country to find adequate capital. More capital in smaller bite sizes might,however, be a constructive addition to the capital base in the area.
  Finally, while I basically agree with your points, I do think you could see easily a dozen firms in less than 3 days in NYC just by taking the subway and saving all that fuel driving around the valley. And by the way the same goes for several times that number of interesting companies on the same subway lines.
  PS, for he record , at Greycroft , we have done 10 deals as well in the NYC vicinity in the past two years but I guess we're not that good at reporting.
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  ceonyc

  2 months ago

  Thanks for the comment Alan!
  
  No, def more more capital...but more capital in smaller chunks and earlier..and louder capital, too. When companies take a million from a hedge fund guy and his buddies, it makes NYC seem like a backwater, but when, not to brown nose, they take a million from an Alan, Fred, etc, it says a lot about the potential to build something big here.
  
  Speaking of which, who do you suggest I see here for Path 101 when I get back from my West Coast trip from 9/9 to 9/12? :) Pitch deck: www.path101.com/about
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  bijan

  2 months ago

  interesting post.
  
  i love nyc.
  
  we are going to do more in the city.
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  ceonyc

  2 months ago

  Any companies I know of? ;)
  
  Seriously, when is Spark NY opening?
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  RandyCastleman

  2 months ago

  Great post. My firm, Court Square Ventures, tries to do its part, even though we're based in (well, we sleep a few nights a week in) Virginia. Investments include TRAFFIQ, MarketMaker Interactive, Pipeline Trading Systems, College Sports TV (acquired by CBS), and now Bug Labs with -- you guessed it -- USV and Spark. With a focus on enabling tech for media & telecom, NYC is a target rich environment for us. Also, with 2 of the founding partners having built pre-VC careers in NY, we feel comfortable in town and have no doubts about the depth of talent. I look at NY opportunities regularly and am in the city nearly every other week. Guess I need to go to the Shake Shack...
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  ceonyc

  2 months ago

  Hey Randy!
  
  Thanks for your comment. Conveniently enough, the Shake Shack is right
  across from Path 101's office! You should let us know the next time
  you're up here. charlie at path101 dot com
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  jasonoliver

  2 months ago

  great post charlie. completely agree that there needs to be more of a sense of community among venture investors in nyc, and there definitely needs to be more participation in the grassroots/local tech scene here in nyc by investors. also, there's beginning to be a shift in focus from investing mainly in enterprise software or infrastructure/hardware companies to investing in media & internet companies that will shape the nyc VC scene in the coming months/years. as a VC, there is no other city i would rather be working in right now than nyc, and am proud to be part of the growth and development of the venture culture/scene here in the city.
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  ceonyc

  2 months ago

  It's awesome that you participate and have that attitude... and we both
  talked about the fact that I've met/spoken to a bunch of
  Firstmark/Pequot jr. folks... but bring on the partners, too!! :)
  
  Hope to see them all on 9/16!
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  kortina

  2 months ago

  "That money builds a company, not a community." -- spot on.
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  ceonyc

  2 months ago

  Of course, don't get me wrong... We'll take that money for Path
  101... I think I've done enough community building to take some
  community-less cash. ;)
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  fredwilson

  2 months ago

  i have mixed feelings on this issue. i think we do have a critical mass of investors and entrepreneurs and there is a good venture ecosystem in NYC. but i think NYC is just different than the bay area. here, the tech startup economy is just one of many economies. in the bay area, it is THE economy. so creating community is a bit harder in NYC. I don't see entrepreneurs and VCs at my kid's school, the weekend sports events, and the local lunch spots nearly as much as what happens in the bay area. it's changing though. i see rich caccapolo and roger ehrenberg at the weekend kid's sports games pretty much every week. that wasn't the case three years ago.
  
  i think time and patience will change some of this. and some of it will never change and that's why i prefer to live in NYC.
  
  btw - we've done 18 early stage deals in NYC since late 2004. as Alan said, reporting our activity is not a priority. though we do talk about our investments on our blog, we don't yet have a way to search our blog posts by location. i'll ask outside.in to fix that!
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  ceonyc

  2 months ago

  It would be interesting to see who you do those deals with... the
  breakdown between other angels, other firms, and where those firms are.
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  fredwilson

  2 months ago

  I think we've disclosed all of that on our blog but we've not had any reason
  to compile it
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  jdrive

  2 months ago

  Agree with Fred on this one.... The NY area - thankfully -- is home to many industries, most notably fin svs, media, adv, telecom, fashion, publishing.... too many to list. SV is home to the semiconductor, biotech, and much that is derivative of those two. Thus the intense start-up focus there versus here. The good news is, this is where many of the customers are, and I am happy to make the trade-off of having a tougher time in recruiting talent (it is getting easier), finding qualified co-investors, etc., in favor of being closer to the customers.
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  ceonyc

  2 months ago

  Its exactly that mix of industries that I think makes for for even bigger potential here.... I just think a slightly more noticable startup scene (like more prominent VC bloggers talking about the NY area), would shake loose a lot of innovative, creative talent from other places. I've always been "entrepreneurial" but I probably never would have started a company had I not fell into my job investing in VCs and then working at one--and I grew up here. I knew nothing of the potential to start something beforehand...was mostly focused on Wall st. That's why I teach on the side...to tell local kids they don't have to work for someone else or work at a big F500 company.
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  Jschwa

  2 months ago

  There is a lot of early stage money in NY other than Venture Capital firms. This is the space that Angel Investors play in, and it's on the rise. Not only do these investors have money, they have the community and network that you are talking about. I just checked Angel and VC firms in the New York on Angelsoft.net's Group Finder and there are 20 that you didn't mention. That doesn't include the NJ, CT, and Philly.
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  ceonyc

  2 months ago

  Tree falls in the forest...
  
  If no one knows about them, like I said, they're building companies, but
  not really building communities.
  
  Are these groups actively doing deals?
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  Jschwa

  2 months ago

  Yes, many of these groups are very active in doing deals. The point is, an Angel Group IS a community. It is 40-100 people with very diffrent experience and personal networks that meet regularly and do deals. The community is in house. VCs have to reach outside their office to create that community, which may make it more transparent, but that doesn't mean a strong community doesn't exist.
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  Ray

  2 months ago

  It's all relative, Charlie -- my town, DC is another 3db down. Or maybe we just lag in time. Our recent Launchbox (DC version of YCombinator) was a watershed, and daresay the startups were more compelling than YC's latest batch. (Makes you wonder why a NY company -- MyGameMug -- came down to Launchbox for funding!?) Me, I'll be spending more time in NYC.
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  ceonyc

  2 months ago

  Just curious....does YC, Launchbox, et al. help build companies that would have otherwise not been able to go anywhere? Sometimes I feel like, over the life of your company, you need so many sales and deals and to be able to convince people to believe in you that, for a company meant to be a success, they would have found money somewhere, somehow anyway.
  
  The educational component and mentoring prob can't be replaced....but I wonder if it has to tie to an investment.
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  tom summit

  2 months ago

  Hi Charlie,
  
  yes it is hard to beat the PayPal, Google mafias. Here in Boston we have a similar problem which I blogged about http://blog.bos.genotrope.com/2008/05/02/boston... .
  I have also commented about the fact that some of the largest Boston VCs don't invest much in Boston.
  
  Maybe someday you will have the Etsy, Indeed mafia and we will have the Tripadvisor, Vistaprint mafia to fill in the gaps.
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  FundingPost

  2 months ago

  There are a few that you are missing, for instance: Crossbar Capital isnt even listed here, they have invested in a few co's in NYC like cloudsmith, payoneer, reimage.
  
  As for meeting VCs in NYC, there are events out there that bring Entrepreneurs and VCs together in the same room. Here is my event on Sept 16 : http://www.FundingPost.com/breakfast/reg1.asp?e...
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  ceonyc

  2 months ago

  Great that they're doing deals, but they only have a portfolio of
  4--easy to miss that... Why aren't they out there marketing more?
  And while I respect the fact that you're building a business, $75 for an
  event for a bootstrapped entrepreneur is a lot of cash to shell out.
  There are a lot of "meet investors" opportunities that sound similar to
  inexperienced entrepreneurs.
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  Kylie Sachs

  2 months ago

  Hey Charlie - obviously very behind in catching up on blog posts...could that be part of the problem?? This is a great post. VC is beginning to sound like an East Coast/West Coast hip hop battle (but our cars aren't as cool).
  
  Ascend has done I think 6 deals in the last few years, and a several more if you go back further.
  
  ironically, I am on a plane coming back from LA as we speak. Time to start looking even harder in our own backyard.
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  mdangear

  2 months ago

  The problem with VCs is not how many they are but what type of investments they are looking for. Typically VCs will tell you that they look at 1000 businesses to select 100 for due diligence, then invest in 10 with the hope that at least 1 makes it really big.
  With this type of process you only serve a very small chunk of entrepreneurs, and you certainly leave out many who have very viable businesses, just not the VC-fundable type.
  If I may blow my own horn here this is why I decided to start the Entrepreneur Commons (http://www.entrepreneurcommons.org). I am hoping we can establish a blueprint that can be reproduced or adapted in the many places where is it needed. What is true in NY and Dallas is also true in Austin, San Francisco, Paris, Madrid and Berlin to only mention people I have talked to.
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  David Lemoine

  2 months ago

  Helpful. Thanks
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