Senior Vice President
New York Market Manager
City National Technology Group
The Big Apple surged back to second place in U.S. regional venture capital rankings last quarter, boosted by hefty additional financing rounds for some of the city's best-known startups.
New York companies attracted $1.93 billion in VC money in the second quarter, up 56 percent from a year earlier and second only to Silicon Valley's $9.3 billion total, according to data firm CB Insights. The Boston area ranked third, at $1.17 billion.
As in Silicon Valley, some of the biggest deals in New York last quarter were for companies increasingly recognizable to many consumers and small businesses. The largest New York deal, for example, was a $434 million Series E funding for WeWork, a 5-year-old company that provides shared office space and related services for entrepreneurs. The firm now has locations in 12 U.S. cities, including Los Angeles.
Also in New York's top 10: a $100 million Series D financing for eyeglass designer and retailer Warby Parker, and a $135 million Series D infusion for Blue Apron, one of several new membership food services that deliver pre-portioned ingredients for home cooking.
With VC firms willing to keep injecting capital into their favored startups, many of the companies see no need to have an initial public stock offering in their near-term plans, notes Robin Gill, senior vice president for City National’s Technology Group in New York.
Some of the startups already have succeeded beyond what their investors expected, Gill said. "The interesting thing is that some firms have gotten to these levels this quickly," he said.
VC investors continue to hunt for entrepreneurs who want to disrupt large industries, and they're finding plenty in New York, Gill said. "The common thread is that these startups are looking for inefficient markets to make more efficient," he said.
One new entry in New York's ranks of disrupters is mattress company Casper, founded just a year ago. Via the Internet, Casper sells what it touts as the "just right" mattress, eliminating the in-store shopping experience — which it believes many people view as drudgery. The company got $55 million in a Series B funding round led by Institutional Venture Partners that included some well-known celebrities.
Meanwhile, another one of New York's biggest VC deals last quarter was a tech niche play: littleBits Electronics, a 4-year-old company that seeks to empower novice tech inventors. The firm sells DIY hardware kits that, among other things, enable home tinkerers to turn "dumb" appliances into "smart" ones. VC investors handed the company $44 million in Series B funding.
EQUITY FINANCINGS FOR NEW YORK CITY VENTURE-BACKED COMPANIES
|2 Q 2015||1 Q 2015||4 Q 2014||3 Q 2014||2 Q 2014||2014 Total|
|Number of Financing Deals||108||81||99||129||114||440|
|Amount Invested ($MM)||$1926.44||$1304.5||$988.4||$1310.4||$1230.6||$4503.3|
TOP 10 DEALS IN NEW YORK CITY
|COMPANY NAME||DESCRIPTION||CITY||ROUND TYPE||RAISED ($MM)||INVESTORS|
|WeWork||Coworking space provider||New York||Series E||$433.9||Benchmark Capital, Goldman Sachs, JPMorgan Chase & Co., T. Rowe Price, Wellington Management, Fidelity Investments, Harvard Management Company|
|Oscar Health Insurance Co.||Next-generation health insurance provider||New York||Series B||$145||Founders Fund, Goldman Sachs, Wellington Management, Horizon Ventures|
|Blue Apron||Subscription pre-portioned food ingredients service for easy meal preparation||Brooklyn||Series D||$135||Bessemer Venture Partners, First Round Capital, Stripes Group, Fidelity Investments|
|Warby Parker||Online prescription glasses discount retailer||New York||Series D||$100||Tiger Global Management, T. Rowe Price, General Catalyst Partners, Wellington Management|
|SeatGeek||Event ticket search site and aggregator||New York||Series C||$62||Accel Partners, Technology Crossover Ventures, Mousse Partners, Causeway Media Partners|
|Casper Sleep||Direct-to-consumer mattress and sleep technology||New York||Series B||$55||Norwest Venture Partners, New Enterprise Associates, Pritzker Group Venture Capital, SV Angel, Institutional Venture Partners, Lerer Hippeau Ventures, Scooter Braun, Leonardo DiCaprio, Vaizra Investments, Slow Ventures, Tobey Maguire, QueensBridge Venture Partners, Adam Levine|
|Refinery29||Woman-centric digital media company||New York||Series D||$50||First Round Capital, Hearst Ventures, Floodgate, Lerer Hippeau Ventures, Scripps Networks Interactive, WPP Digital, Lead Edge Capital|
|Namely||Cloud-based HR management platform||New York||Series C||$45||Sequoia Capital, True Ventures, Matrix Partners, Greenspring Associates, Lerer Hippeau Ventures|
|littleBits Electronics||Provides electronic building blocks that allow anyone to build, invent and prototype with electronics||New York||Series B||$44.2||Khosla Ventures, Foundry Group, True Ventures, Morgan Stanley, DFJ Growth Fund, VegasTech Fund, Grishin Robotics, Two Sigma Ventures, Wamda Capital|
|Percolate||Marketing management platform||New York||Series C||$40||Lightspeed Venture Partners, Sequoia Capital, First Round Capital, GGV Capital, Lerer Hippeau Ventures|
To read the reports for Los Angeles, Silicon Valley and Boston, click here.
|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, accounting or legal adviser.