New York City grabbed the No. 2 spot in venture capital funding in the second quarter, trailing only Silicon Valley as the leading destination for venture dollars.
The Big Apple’s broad appeal to VC firms showed up in the array of industries behind the quarter’s biggest deals – health care, insurance, e-commerce, social media, money management and household services.
“It’s a sign of the diverse business ecosystem being built here,” said Robin Gill, senior vice president for City National’s Technology Group in New York.
In all, New York City companies saw a massive $1.12 billion flow in from VC firms in the second quarter, up 88% from $598 million in the same quarter of 2013, according to data firm CB Insights. The number of companies funded reached 104 in the latest quarter, up 27%.
New York’s VC funding total in the second quarter edged Boston’s $1.03 billon, pushing it to third place in the national tally. Silicon Valley remained far ahead in the No. 1 spot, with nearly $8 billion in VC funding in the period.
The biggest New York venture transaction in the quarter was a $130-million Series B infusion for Flatiron Health in a deal led by Google Ventures. Flatiron, founded in 2012, has developed a cloud-based data platform for sharing cancer treatment information. The firm’s goal is to break down what is now largely “siloed” information on cancer, improving treatment prospects for patients and benefiting health-care providers.
Another health-related business took the second spot on the Q2 New York VC funding list: Oscar Health Insurance, which got $80 million in first-round capital from a group including General Catalyst Partners and Stanley Druckenmiller. Launched last year to compete as an Affordable Care Act provider in New York State, Oscar says it wants to revolutionize health insurance with a consumer-friendly approach.
But the ability of startups to consistently deliver what they promise isn’t a given. Businesses that are complex — such as insurance — are, by definition, hard to master. At the other end of the spectrum, “If a business isn’t very hard, you’ll have a lot of copycats,” Gill notes.
Indeed, in some budding industries, the question of how many competitors are too many remains to be answered. Two venture-backed New York firms now are going head-to-head in a twist on the food delivery business. Brooklyn-based Blue Apron got a $50-million Series C capital investment in the quarter, ranking it the fifth-largest New York venture deal in the period. The firm designs meals and ships all of the ingredients and instructions to subscribers for them to prepare themselves. Blue Apron was founded in 2012. So, too, was its cross-town rival, Plated Inc. Both now deliver to most of the U.S.
EQUITY FINANCINGS FOR NEW YORK CITY VENTURE-BACKED COMPANIES*
|2 Q 2014||1 Q 2014||4 Q 2013||3 Q 2013||2 Q 2013|
|Number of Financing Deals||104||93||96||92||82|
|Amount Invested ($MM)||$1121.3||$837.9||$876.4||$635.9||$597.9|
TOP 10 DEALS IN NEW YORK CITY
|COMPANY NAME||DESCRIPTION||CITY||ROUND TYPE||RAISED ($MM)||INVESTORS|
|Flatiron Health||Developer of the OncologyCloud health care technology platform||New York||Series B||$130||Google Ventures, First Round Capital, Undisclosed Angel Investors, LabCorp|
|Oscar Health Insurance Co.||Health insurance provider||New York||Series A||$80||Founders Fund, Khosla Ventures, General Catalyst Partners, Thrive Capital, Formation 8, Breyer Capital, Stanley Druckenmiller|
|Birchbox||Discovery commerce platform||New York||Series B||$60||Accel Partners, First Round Capital, Viking Global Investors, Consigliere Brand Capital, Aspect Ventures|
|Yext||Develops PowerListings, a system for businesses to manage their listings across multiple sites||New York||Series F||$50||Insight Venture Partners|
|Blue Apron||Grocery delivery subscription service built around cooking experiences||Brooklyn||Series C||$50||Bessemer Venture Partners, First Round Capital, Stripes Group|
|Sprinklr||Social media management system provider for large enterprises||New York||Series D||$40||Battery Ventures, Intel Capital, Iconiq Capital|
|Squarespace||Develops tools for simplified web and mobile development||New York||Growth Equity||$40||General Atlantic|
|Mission Product Holdings||Athletic performance-enhancing products for training and competition||New York||Growth Equity||$35||Summit Partners|
|Betterment||Goal-based online investment advisor and platform||New York||Series C||$32||Menlo Ventures, Bessemer Venture Partners, Globespan Capital Partners, Anthemis Group, Citi Ventures, Northwestern Mutual Capital|
|Handybook||Online platform to find, schedule and pay for household services||New York||Series B||$30||Highland Capital Partners, General Catalyst Partners, Revolution LLC|
*Quarterly tallies consist of equity rounds completed in the quarter and in which a venture capital or corporate venture firm participated in the round.
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