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.

The content of Venture Capital Report is compiled from data and sources believed to be reliable, but is not guaranteed as to accuracy or completeness. Opinions expressed are those of the authors or the interviewees and are not necessarily the opinions of City National Bank, member FDIC. This publication is intended to be a source of general information regarding subject matters of interest to our clients. The effectiveness of the advice or suggestions presented, if any, will depend on the reader's situation and are for the reader to determine. If investments are discussed, the discussion should not be considered or relied upon as specific investment advice directed to the reader's specific investment objectives, nor should any discussion of specific securities be taken as a solicitation or recommendation for any reader to buy or sell such securities. City National Bank (and its clients or associated persons) may at times have positions in securities and investments discussed from time to time in this publication and may make additional purchases or sales inconsistent with the discussion. City National Bank, as a matter of policy, does not give tax, accounting, regulatory or legal advice. Rules and regulations in the areas of law, tax and accounting are subject to change and open to varying interpretations. The reader is encouraged to consult his or her own tax and legal adviser.

 

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