By Robin Gill
Senior Vice President
New York Market Manager
City National Technology Group
New York City companies took in $903 million in venture capital funds in the fourth quarter, a steep drop from the summer quarter but enough to claim the No. 3 spot nationally, behind Silicon Valley and Boston.
As usual, the nation's largest city benefited from its wide diversity of startup businesses, with the top 10 deals including companies in e-commerce, biotechnology, finance, fitness and education.
But as in other major markets, New York saw fewer firms receive funding than in the summer quarter or a year earlier. A total of 103 companies in the region attracted VC dollars last quarter, down from 107 in the third quarter and 115 a year earlier, according to data firm CB Insights.
A lack of very large deals cut the total dollar invested last quarter from a massive $1.7 billion in the third quarter.
The sharp plunge in public stock markets so far in 2016 could cause VC firms to turn warier about investing aggressively in startups, making it more likely that 2015 was the high-water mark for venture funding in the near term.
Still, "New York continues to be a hotbed for the kind of new business ideas that lure VC investors," said Robin Gill, senior vice president for City National’s Technology Group in New York. Of the city's top-10 VC deals last quarter, six were early-stage financings, meaning Series A or B fundings.
New York's single-biggest VC deal was a $95 million Series C infusion for Vroom, a two-year-old firm that says its goal is to "make the used-car salesman obsolete." The company buys, reconditions and sells used cars online, and delivers cars to buyers' doors for a seven-day trial. Its competition includes CarMax and thousands of other dealers nationwide.
In a relative rarity for New York, a biotechnology company made the city's list of top 10 VC deals in the quarter: Kallyope, a Columbia University-linked startup, got $44 million in initial financing. The firm aims to boost understanding of the "gut-brain axis" -- how cells in human guts interact with the brain. Some studies suggest gut microbes are involved in controlling pain and mood.
In the finance field, TruMid Financial raised $27 million in Series B funding. The 18-month-old company operates a new electronic trading venue for corporate bonds, including junk securities, on a platform hosted by Amazon's huge web services business. TruMid's VC investors include PayPal co-founder Peter Thiel and global investor George Soros.
Two education-related companies made New York's top-10 list. Knewton took in $42.3 million in Series F financing. The seven-year-old company has developed an online "adaptive learning" platform that allows schools and other users to personalize education for students.
Schoology, founded in 2009, is in the same genre: The firm, which received $32 million in Series D funding last quarter, is a developer of technology-based learning management systems that connect teachers, students and content. One of its newest clients: the Los Angeles Unified School District.
EQUITY FINANCINGS FOR NEW YORK CITY VENTURE-BACKED COMPANIES
|4 Q 2015||3 Q 2015||2 Q 2015||1 Q 2015||4 Q 2014|
|Number of Financing Deals||103||107||127||94||115|
|Amount Invested ($MM)||$902.6||$1701.9||$1989.1||$1351.4||$1028.2|
TOP 10 DEALS IN NEW YORK CITY
|COMPANY NAME||DESCRIPTION||CITY||ROUND TYPE||RAISED ($MM)||INVESTORS|
|Vroom||Online car marketplace||New York||Series C||$95||Allen & Company, Catterton Partners, General Catalyst Partners, T. Rowe Price|
|Handy||Online platform for scheduling household services||New York||Series C - II||$50||Fidelity Investments, General Catalyst Partners, Highland Capital Partners, Revolution LLC, TPG Growth|
Biotech company focused on the gut-brain axis
|New York||Series A||$44||Alexandria Real Estate Equities, Illumina, Lux Capital, Polaris Partners, The Column Group|
|Knewton||Personalized online learning content||New York||Series F||$42.25||Accel Partners, Atomico, Bessemer Venture Partners, FirstMark Capital|
|Schoology||Online learning and classroom management platform||New York||Series D||$32||FirstMark Capital, Great Road Holdings, Intel Capital, JMI Equity|
|ClassPass||Membership program for fitness classes across multiple gyms and studios||New York||Series B-II||$30||Google Ventures|
|TruMid Financial||E-trading marketplace for corporate bonds and CDS||New York||Series B||$27||Peter Thiel, Shumway Capital, Soros Fund Management|
|Bluecore||Email marketing solutions for ecommerce firms||New York||Series B||$21||Felicis Ventures, FirstMark Capital, Georgian Partners|
|CLEAR||Prototyping and workflow platform for designers||New York||Series A||$20||Bill Miller, Jeffery Boyd, Legg Mason, Robert Mylod Jr., Sterling VC, T. Rowe Price|
|Kinnek||B2B online platform for small businesses to get customized quotes from suppliers||New York||Series B||$20||AngelPad, Benjamin Ling, Matrix Partners, Naval Ravikant, Sierra Ventures, Thrive Capital, Version One Ventures|
|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.|