Fundraising, Hiring & Talent, Resources, Startup Stories

The State of NYC Seed: Startup Trends & VC Data [REPORT]

At NextView, we’ve never been higher on NYC tech. Today, we’re excited to launch the State of NYC Seed — a comprehensive report on the ecosystem, authored by our own Tim Devane.

Since joining NextView, we’ve talked often and excitedly about the New York startup ecosystem. With many seed investments locally already, everyone on the team has had a window into how entrepreneurship in the city has evolved over this current cycle.

In the eight years since the housing crisis, NYC tech has been active to say the least. The community has given birth to tremendous successes and lots of failures, participants have come and gone, round sizes have grown, hot sectors have cooled, reignited, and cooled again, and founders have come from every conceivable background to build here and seek talent, customers, and funding from an increasingly diverse field of investors. Not unlike Gotham itself, the tech ecosystem bobs and weaves to a nebulous beat.

As a further mimic of its host city, New York tech stands tall and stubborn, with a never-say-die presence through flush times and lean. But our conversations at NextView have always ended in excited chatter about the New York opportunity. And it was these conversations that I believe led to the team’s decision to add their own stubborn presence to stand up for seed-stage startups in NYC … me.

Here’s a long story short: We believe firmly that entrepreneurship and startups in New York are alive and well, and we’re here to support them as local seed investors. With conviction in this city, its entrepreneurs, and their ideas — and given that I’m carrying the NextView banner in New York City full-time — I thought I would put some of my analysis and opinion about the state of NYC seed out there to our world. Thanks for taking a look.

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The State of NYC Seed:

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Key Findings & Data:

Seed-Stage Overview:

  • $291M across 175 NYC seed deals in 2015 (deals under $4.5M in round size)
  • 24% of all VC deals in NYC in ’15 were seed

The Warby Parker Effect:

  • Since their 2011 seed round, there’s been a “Warby Parker” effect: brand- and convenience-first consumer startups getting funded at increasing rates in NYC
  • Since January 2014, $155M in seed dollars invested in such companies
  • Median round size of $2.1M for these companies

Food Logistics Startups Booming:

  • VC dollars invested in these companies increased 30x in the last 3 years, but landscape is now extremely crowded
  • “The New York market can be a trap for food and meal delivery startups as the population density can create outsized order and revenue growth that is difficult to replicate in additional cities as the company expands.”

Media & Publishing Spurred by M&A Players:

  • $326M invested into media/publishing startups in 2015
  • 4 year total = $923M
  • Buzzfeed, Vox, Vice acquired 14 startups and raised $1.5B in the last 4 years

FinTech Prominent but Dollars Narrowly Focused:

  • 2015 in NYC saw 96 total VC deals in fintech
  • 52% are in two subsectors alone (wealth management and lending)

 

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Tim Devane

Tim is the New York-based Principal at NextView Ventures. Tim wakes up everyday hoping to meet, work with and write about seed stage startups and the entrepreneurs behind them. Tim began his career at Betaworks, working in a variety of roles for the Betaworks’ seed fund and studio. From Betaworks, Tim joined Bitly as one of the first employees and became the Director of Business Development and Sales. After Bitly, Tim became COO of Epic Magazine and an EIR at Red Sea Ventures. A graduate of Wesleyan University where he majored in English – Creative Writing with a certificate in International Relations, Tim helped launch Digital Wes, an alumni-student organization that helps undergrads find jobs at startup. Tim’s first foray into entrepreneurship was starting an environmental non-profit in college called Birthright Earth. Tim was born in London, grew up in Washington D.C. and now lives in Brooklyn with his dog Calypso.

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  • Great analysis piece, Tim. I very much agree with you about City-Tech natives gaining an advantage from being an employee at a high growth company, then taking that knowledge into the company they found. Any cases where these founders go on to create more successful companies in spaces similar to their previous employer? Jonah Peretti, leaving his New Media R&D role at Eyebeam to start HuffPo and later BuzzFeed, comes to mind. Other key examples?

    • tdevane

      thanks Shaun appreciate the thoughts. I think this list is actually way longer then people realize and a compelling one to think about. Here are a few that come to mind for me: Andrew Kortina from original Bitly architect to Venmo founder, Mitch Jacobs from Comdata to founding OnDeck Capital, Alex Chung from ArtSpace to Giphy CEO, David Karp from UrbanBaby engineer to founding Tumblr. I believe many more to come as this period matures and more tremendous future founders peel off to do their thing.

      • To that point, it’ll be important to see less and less noncompete agreements in startup employment offers. For the founders I’ve worked with, many have kicked around an idea or side project while working at another startup. Not directly competing, but adjacent. As they grow into another success story for NYC tech, it’s interesting to think that one clause in an offer letter could have prevented that innovation from ever becoming a thing.

        • tdevane

          yeah I’d argue for more open non-competes. Not intentionally vague just more specific and nuanced. Founders should foster entrepreneurial ambition in their early teams and be supportive when individuals decide to start their own thing. Directly competitive could be locked-out for a period, but anything outside of that should be allowed and encouraged.