NYC is the next Venture Capitol presentation 3 14

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5 MAR 2014 | PAGE1 New York Concrete jungle where dreams are made of There's nothin' you can't do Now you're in New York These streets will make you feel brand new Big lights will inspire you David Aronoff, General Partner Flybridge Capital Partners With Great Thanks to InSITE Fellows Patrick Chang, David Lerman, Zak Schwarzman

description

This is a presentation about the state of the tech startup ecosystem in NYC and Venture Capital funding.

Transcript of NYC is the next Venture Capitol presentation 3 14

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New York Concrete jungle where dreams are made of There's nothin' you can't do Now you're in New York These streets will make you feel brand new Big lights will inspire you

David Aronoff, General Partner

Flybridge Capital Partners

With Great Thanks to InSITE Fellows Patrick Chang, David Lerman, Zak Schwarzman

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•  NYC is on track to create $Billion tech companies •  Myths and Issues •  Let the data speak •  Keys to success rely on city’s secret weapons •  Conclusions

NYC Is the Next Venture Capitol

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•  Talent – “We need more people, particularly technical hires” •  Costs – “It’s just too expensive to build startups in NYC” •  Funding – “There are plenty of angel and early stage investors

in NYC, but later stage investment funds are hard to find” •  Exits – “New York City is short on massive tech stories” •  Sectors – “AdTech, FinTech, Fashion, Media & nothing else”

NYC Tech Myths and Issues

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Success Stories

Scaling Startups

Magnet for Talent

Ultimate Access

Vibrant Community

World Class Academia

Tech Giants Moving In

A Capitol For Capital

Poised to Create Massive Successes

•  1.2K+ Tech Startups10

•  375+ Tech Meetups11

² Total 320K Members12

² NYTM 35K Members13

•  80+ NY City Govt Programs14

•  45+ Co-Working spaces15

•  60+ Incubators/Accelerators16

•  110 Universities in Region17

² 14 of Top 100 Schools18

² 500K+ Students19

• Applied Sciences NYC20

• Academy for SW Eng /21

Bronx Academy for SW • CSNYC22

• Google: 3.2K+ FTEs23

• Amazon: 110K Ft2 24

• Facebook: 100K Ft2 • Yahoo: 270K Ft2

• Capacity = 4K-6K+ FTEs

•  Largest City Econ $583B25 •  #2/#3 in VC Funding26

•  $13.6B Raised Since 200627

•  #1 in VC $ invest growth28

• Admeld (Acq $400m) • Buddy Media (Acq $700m) •  Indeed.com (Acq $1b) • MakerBot (Acq $400m) • Shutterstock (IPO$2.3b) • Tumblr (Acq $1.1b)

•  262K+ Tech FTEs1

² 150K Highly-Skilled2

² 26K added since 20073

•  #1 Locale Top 5 Undergrad4

•  #1 Women Entrepreneurs5

•  #1 for H1-B Visas 20126

• Salaries/Rent Lower than SF/SV7

•  #1 City F500 HQs (45)8

• Traditional: Advertising, Fin Services, Fashion, Media, Info Svc, Design

• Tech: 8.6K+ Companies9

• MongoDB • AppNexus • OnDeck • Gilt • ZocDoc • Varonis

• Kickstarter • BetterCloud • Etsy • Shapeways • Outbrain •  tracx

•  27 of the BI Digital 100

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Startup Lifecycle

IPO

Initi

al In

vest

men

t

Follow On Investment & M&A

9.5 years29

Dead Pool

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Funding On Track

SOURCE: Thomson Reuters, CrunchBase30

Looking at VC financings over the past decade, by round and dollars, this generation of tech startups began in late 2005, early 2006.

# per Round Category

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Funding On Track

SOURCE: Thomson Reuters31

Looking at VC financings over the past decade, by round and dollars, this generation of tech startups began in late 2005, early 2006.

SOURCE: Thomson Reuters, CrunchBase31

$ per Round Category

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Funding On Track

SOURCE: Thomson Reuters31

Looking at VC financings over the past decade, by round and dollars, this generation of tech startups began in late 2005, early 2006.

SOURCE: Thomson Reuters, CrunchBase32

Investment Size

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Startup Growth Outpaces Competitors

SOURCE: The Atlantic, Martin Prosperity Institute33

1159

112

71

Silicon Valley

Seattle

Chicago

LA/San Diego 87 Austin

105 Philadelphia

117 DC Metro

408

Boston

NYC

379

335

Total Number of VC Investments 2012

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Great Exits / Massive Winners on Track

IPO

SOURCE: Thomson Reuters

Financings $13.6B+ Raised

Since 200634

IPO

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Great Exits / Massive Winners on Track

IPO

SOURCE: Thomson Reuters

IPO

Scaling Startups Dozens of Startups

Surging Towards IPO

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Great Exits / Massive Winners on Track

IPO

M&A 554 Transactions

Since 200635

SOURCE: Thomson Reuters

IPO

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Great Exits / Massive Winners on Track

SOURCE: Thomson Reuters

IPO

IPOs 2013:

7 Completed, 1 Filed36

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Much More than New Media

AdTech

eCommerce

Fashion

FinTech

Enterprise 2.0

Analytics

EdTech

Hardware 2.0

Video/Photo

Health/Fitness

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•  NYC always welcomes newcomers – tech no different –  350+ tech meetups with more than 320K+ members –  NYTM is the pinnacle, with more than 35K members

•  Easy to see that community is core to NYC’s success •  But is there a way to analyze impact more quantitatively?

The NYC X Factor

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•  Endeavor is a global not-for-profit that catalyzes countries’ economic growth through high-impact entrepreneurship

•  To support their mission, Endeavor’s research group has mapped the startup genome around the globe, asking founders of tech startups key questions, including:

–  Who INSPIRED you to become an entrepreneur? –  Where were you EMPLOYED before becoming an entrepreneur? –  Who INVESTED in your company? –  Who MENTORED you as you built your company? –  Have you FOUNDED any additional companies?

•  They capture the results in diagrams that depict the DNA of communities and its multiplier effect.

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The Multiplier Effect

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The Multiplier Effect

•  Data gathering is expected to be complete by January •  So far 700+ companies connect to one another and preliminary data

is challenging conventional wisdom within sector… SOURCE: Endeavor Global

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•  DoubleClick employees founded more than 20 companies in NYC tech, and account for more than 30 CEOs in the city

•  From which universities do NYC Tech founders graduate? •  What is the longest chain of connections in NYC Tech? It’s 8

companies long in Buenos Aires. •  How many entrepreneurs have the most inspirational

community members inspired? •  Which are the most influential companies/organizations? •  How many “generations” until the tech ecosystem is

largely self-sustaining in terms of human resources?

Core Questions

SOURCE: Endeavor Global

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•  The NYC Tech community has catapulted to a leading entrepreneurial center in only 7 years

•  Massive M&A exits, established leaders across multiple sectors, combined with strong growing IPO pipeline position NYC well

•  No dispute that NYC has arrived if in 24-36 months: –  Talent: Multiplier effect continues to grow exponentially –  Funding: Remains consistently #2 or #3 for venture capital in US –  Exits: Cohort on runway yields 2-3 multi $B public companies

Conclusions

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1 Building a Digital City: The Growth and Impact of New York City’s Tech/Information Center, p. 2

20 Partnership for New York City, NYC Jobs Blueprint, p. 25

2 Partnership for NYC 21 Academy for Software Engineering Bronx Academy for Software Engineering

3 Building a Digital City: The Growth and Impact of New York City’s Tech/Information Center, p. 2

22 The Computer Science Education Foundation of New York City

4 LinkedIn Research 23 WNYC 5 Startup Ecosytem Report Part 1, p. 35 24 NYC Real Estate Broker's estimates 6 H1 Base 25 Partnership for New York City, NYC Jobs Blueprint, p. 13 7 Angel List Research 26 NYC TechCity, p. 8 8 Fortune 27 NY VC Almanac, p. 7 9 NYEDC, p 4 Economic Research and Analysis, Tech Trends

August 2013

28 The Atlantic / Martin Prosperity Institute

10 NYC TechCity, p. 1 29 SEC Filing Analysis 11 Meetup.com Research 30 Thomson Reuters Analysis – See slide 19 12 Meetup.com Research 31 Thomson Reuters Analysis – See slide 19 13 NY Tech Meetup Research 32 Thomson Reuters Analysis – See slide 20 14 Promoting Entrepreneurship in NYC, NYEDC p2 33 The Atlantic / Martin Prosperity Institute Updated with 2012 Data from ??? 15 Mark Birch Research 34 NY VC Almanac, p. 7 16 Mark Birch Research 35 <Thomson Analysis> - Add rationale 17 AON / Partnership for New York, p. 11 36 Yahoo Finance: Shutterstock, Tremor Video; SEC Filing: Varonis 18 US News & World Report 19 AON / Partnership for New York, p. 11

Footnotes / Links

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•  The following taxonomy was used for industry data filtering for financing activity 2006 – present, slide 6 & 7

•  Additionally, a 40 mile radius around NYC was used for inclusion of company data

Industry Taxonomy : Financings

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•  The following taxonomy was used for industry data filtering for M&A activity 2006 – present, on slide 8

•  Additionally, a 40 mile radius around NYC was used for inclusion of company data

Industry Taxonomy : M&A