Senior Vice President
New York Market Manager
City National Technology Group
The wide diversity of New York City's business start-ups was on display in the third quarter, even as venture funding totals slipped from the previous quarter's heady pace.
The top 10 venture financing deals in the Big Apple last quarter included companies in music streaming, health care, higher education, real estate and private aviation, among others.
All told, VC firms invested $1.61 billion in New York City companies in the third quarter, up 23% from the third quarter of 2014, according to data firm CB Insights. The latest quarter's total was down 17% from $1.93 billion in the second quarter, which was the largest sum invested in the city's businesses since the current VC funding boom began.
The number of companies financed also fell last quarter, to 93, from 129 a year earlier and 108 in the second quarter. Still, New York ranked second only to Silicon Valley in the number of deals and third behind Silicon Valley and Boston in dollars invested.
Archrivals in sports, New York and Boston also have become archrivals in the booming business of sports fantasy leagues, with New York the base of FanDuel and Boston the home of DraftKings. Last quarter, both companies ended up at the top of their towns' lists of biggest VC funding deals: FanDuel took in $275 million in Series E financing, while DraftKings got $300 million in Series D money.
Fantasy sports leagues, which attract millions of fans with the possibility of winning cash prizes based on the performance of rosters of pro players they pick, have been unregulated because they technically aren't considered gambling. But the industry now is under heightened scrutiny, including an inquiry by New York State's attorney general into possible misuse of private data by the sites' employees.
Unlike in Boston, where health care companies tend to dominate in venture funding, New York's list of start-ups has been highly diverse. "New York continues to attract entrepreneurs in a wide range of industries," said Robin Gill, senior vice president for City National’s Technology Group in New York. "No single area dominates, and that's one of this economy's strengths."
The second-biggest New York funding deal last quarter was a $130 million Series B infusion for ZocDoc. The eight-year-old firm allows consumers to see participating doctors’ open appointment times and book online. It also provides doctor reviews and other services.
Wheels Up, a membership-based jet service, got $115 million in Series A funding. The company was launched a year ago to offer private aviation to people looking for a less expensive option than existing services.
Other big deals included $100 million in Series D financing for Saavn, the world's largest streaming service for Indian music, and $50 million in Series C capital for Compass, a data-driven, online real estate brokerage founded in New York two years ago and now expanding nationwide.
EQUITY FINANCINGS FOR NEW YORK CITY VENTURE-BACKED COMPANIES
|3 Q 2015||2 Q 2015||1 Q 2015||4 Q 2014||3 Q 2014|
|Number of Financing Deals||93||108||81||99||129|
|Amount Invested ($MM)||$1613.3||$1926.44||$1304.5||$988.4||$1310.4|
TOP 10 DEALS IN NEW YORK CITY
|COMPANY NAME||DESCRIPTION||CITY||ROUND TYPE||RAISED ($MM)||INVESTORS|
|FanDuel||Daily fantasy sports platform||New York||Series E||$275||Time Warner Investments, Pentech Ventures, NBCUniversal, Kohlberg Kravis Roberts & Co, Bullpen Capital, Comcast Ventures, Piton Capital, Shamrock Capital Advisors, Google Capital|
|ZocDoc||Web-based tool for finding and booking a doctor or dentist||New York||Series D||$130||Founders Fund, Atomico, Baillie Gifford & Co.|
|Wheels Up Partners||Membership-based private aviation services||New York||Series A||$115||New Enterprise Associates, T. Rowe Price, Fidelity Investments|
|Saavn||Streaming music service||New York||Series C||$100||Tiger Global Management, Mousse Partners, Liberty Media, Bertelsmann India Investments, Steadview Capital|
|DigitalOcean||Cloud infrastructure provider||New York||Series B||$83||Andreessen Horowitz, Access Industries|
|Ovid Therapeutics||Biopharmaceutical company focused on brain disease||New York||Series B||$75||Tekla Capital Management, Redmile Group, Fidelity Investments, Jennison Associates, Sanofi-Genzyme BioVentures, Cowen Private Investments, Sphera Funds, Cormorant Asset Management, DoubleLine Equity Healthcare Fund|
|General Assembly||Institution for continuing education||New York||Series D||$70||Maveron, Western Technology Investment, Wellington Management, Advance Publications, Institutional Venture Partners, Learn Capital, Rethink Education|
|Compass||Technology-driven real estate platform||New York||Series C||$50||Founders Fund, .406 Ventures, Marc Benioff, Advance Publications, Institutional Venture Partners, Thrive Capital, Kenneth Chenault|
|InVision||Prototyping and workflow platform for designers||New York||Series C||$45||Accel Partners, FirstMark Capital, Tiger Global Management|
|NewsCred||Content marketing platform for brands||New York||Series D||$42||Mayfield Fund, InterWest Partners, FirstMark Capital, FTV Capital|
|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.|