VC INVADES NYC
Big investors plowing $3B into city’s startups
Venture capitalists are flocking to the Big Apple, and they are bringing big cash with them.
“Total venture capital investment in New York City during Q2 2018 rose dramatically from last year, up 28 percent to $2.97 billion,” a New York City Economic Development Corp. report found.
More often found wooing the latest Silicon Valley tech whiz, venture capitalists are scouring the city looking for promising investments, pouring billions into the economy.
Artificial intelligence, cryptocurrency and wedding planning venture firms topped the VC wish list, according to numbers from the NYCEDC.
The agency said these latest numbers were “the second-highest total in the city’s history,” topped only by the third quarter of 2017, which saw more than $3 billion in funding.
“NYC is creating the infrastructure to grow industries of the future,” says Ryan Birchmeier, an agency spokesman. “This work is focused on ecosystem building that will attract new venture capital investment, grow startups, increase international expansions and create good-paying jobs for New Yorkers.”
The leader in this venture capital surge was Dataminr, an artificial intelligence platform, with a new $392 million investment. The company provides alert services for emergency situations.
Others getting big funding were R3, a cryptocurrency application and Zola, a wedding planning service, each of which recorded deals of over $100 million.
In late June, Dataminr closed a growth financing round, raising $392 million from investors. The company’s valuation with this most recent round is $1.6 billion, up from the $680 million valuation of its 2015 round.
Investors in this round included Morgan Stanley’s Tactical Value Fund, Valor Equity Partners, MSD Capital, Declaration Partners, Moore Strategic Ventures, Vulcan Capital, and the Pritzker Family business interests advised by The Pritzker Organization and DNS Capital.
Ted Bailey, Dataminr founder and CEO, said venture capital and tech companies are doing well here because “there is a robust network of early-stage companies, spanning multiple vibrant industries.”
Nick Beim, an initial Datamir investor, says VC tech companies prosper here because “the city has strong tech talent pools, including university data science labs and a lot of financial quants,” otherwise known as the mathematics geniuses behind Wall Street black box algorithmic trading.
To ensure that VC and tech continue to prosper, he says the city should create incentives for “large technology companies to build engineering offices.” Beim, also a partner in the VC firm Venrock, ar- gues for improving local schools’ STEM (science, technology, engineering and math) education, too.
NYCEDC officials said providing an infrastructure for techs is the best way to attract them. One attraction, they say, is robust security — newly highlighted by the upcoming launch of the city’s Global Cyber Center.