Brad Hargreaves | startup adventures in nyc

If you’re living in San Francisco and working in a hot Valley startup or tech company, you probably have a bit of a commute. If you’re living in NYC and working in a hot startup in the area, not so much. Unlike those in the Valley, most tech companies in New York are in the city itself.

For the entertainment and edification of my northeastern readers, I’ve created a map that superimposes Valley companies on New York and Connecticut, assuming identical driving times (from midtown Manhattan and downtown San Francisco, respectively) and distance from commuter rail (Caltrain and Metro North’s New Haven line, respectively).

To make this more explicit, here are exactly where our Silicon Valley darlings would find themselves:

Adobe: Noroton Heights, Connecticut

Sun Microsystems: north side of Stamford, Connecticut

Apple: North Mianus, Connecticut

Google: North Greenwich, Connecticut

YCombinator: Greenwich, Connecticut

Facebook: Greenwich, Connecticut

Electronic Arts: between Mamaroneck and Eastchester, New York

Oracle: between Mamaroneck and Eastchester, New York

Wikia: Pelham Manor, New York

YouTube: Soundview, Bronx, New York

Zynga: Harlem, Manhattan, New York

We’ve decided to open up Tipping Point Partners for office hours for any entrepreneurs / friends / ninjas who would like to come in and chat. Our conversation doesn’t have to be about companies, startups or tech. It can really be about whatever you feel like bringing up. Naturally, there will be beer.

Here’s the deets:

Beer and Office Hours with Tipping Point Partners
86 Chambers Street Suite 701
Every Thursday, 5:30 – 7 pm

See you there?

Editor’s Note: This post was created in collaboration with Chris Paik, who was invaluable in helping me crunch the numbers. He’s looking for an internship in venture capital, so if you like this post, get in touch with him via his blog.

Lots of you enjoyed my post a few weeks ago on buzz and fund size among NYC venture firms. But why not take it further? Why not use all the data in Crunchbase of financings of NYC companies over the past five years?

So that’s what we did. And we got data for 814 venture financings since March 2005 worth a total of $3.1 billion. We were careful to exclude angel and strategic investors, since data around those deals are poor and would make the results harder to parse.

To start, let’s look at all venture firms that have completed over 7 financings of NYC-based companies in the past 5 years. Here, you can see how they stack up based on number of deals done:

Keep in mind that there’s a long tail here — this chart represents 300 total financing events, only 37% of all the venture financings of NYC-based companies in Crunchbase. The rest of financings were done by other firms.

But this is just parsed by the number of financings — with no thought given to the size of the deals. Thus, let’s look at the (relative) deal size by the firms listed above when investing in NYC companies:

You’ll probably notice that there aren’t any labels on the Y-axis. In brief, I don’t trust the absolute data here. It’s often impossible to distinguish the relative contributions of investors in a syndicated deal. For example, if Union Square does a $1 MM seed deal, there isn’t any ambiguity there. But if the company’s next round is a $10 MM round syndicated among two growth capital firms and Union Square, there’s no way to really know how much each firm invested. However, it is probably safe to say that the growth capital firms do bigger deals than Union Square, since they first joined the syndicate at a later (bigger) round. Thus, the relative data is accurate, but the absolute numbers are highly questionable.

Since we selected these financings based on the zip code of the funded company’s headquarters, we can drill down a bit further and draw some really interesting conclusions. Specifically, where are funded companies? The following map looks at two factors: the number of financings in the zip code (the color of the dot) and the total amount of venture money invested in the zip code (the size of the dot):

There are certainly some surprising things here, at least to me. This entire map seems to be shifted a bit further north than I expected; are there really that many well-funded startups in Murray Hill? I also expected to see a bigger presence in TriBeCa.

There’s a lot of data here, and I’m sure there will be follow-up posts — especially as we dive into the data on the types of companies that are receiving this financing.

Red is work, Green is fun

I like data, especially when I find it in unexpected places. Our favorite urban bureaucracy the MTA has a wealth of data on subway and bus ridership just waiting to be parsed here. I suck at graphic design, but I’m just going to throw something out here in hope that it inspires someone with actual Adobe Fireworks skills.

While playing with this data, I came up with one interesting metric in particular — something I call the “Fun Index,” which you can see below. It’s simply a comparison of ridership per subway station on weekdays versus weekends. Initially, the outcome seems obvious: stations that serve offices will be heavily trafficked during weekdays, with a substantial drop-off during weekends.

But what about other stations that don’t serve Midtown East or the Financial District? It may be reasonable to expect those stations’ traffic to be reasonably smooth, as residents use the subway to go to work on weekdays and to fun places on weekends. Since most people go to work every weekday but may not go out every weekend day, you’d expect a slight decrease in traffic on weekends. And that’s exactly what you see in stops in the UES, UWS, Chelsea, Murray Hill and other heavily-residential areas.

But if not to work, where are people going on weekends? Interestingly, two subway stops in Manhattan actually show an increase in traffic on Saturday over an average weekday: Canal Street JMZNQRW6 and Prince Street NRW. If you view this data across all subway stations, you can create a “Fun Index” of sorts that compares New Yorkers’ destinations during weekdays versus weekends. On weekdays, we go to Midtown and the Financial District. On weekends, we go to TriBeCa and SoHo. Those places are simply more fun.

Would love to see what others can do with the MTA’s data.

I’m just going to leave this here.

Venture Firms with a Strong NYC Presence, by Buzz*

Venture Firms with a Strong NYC Presence, by Size of Newest Fund

* Presence in Blogosphere as measured by TechMeme

There have been a lot of words flying around recently about why the NY startup scene is starting to get real traction and attention. Today, Stowe Boyd at True/Slant launched Hotbed, a new blog covering the NY tech scene. In his inaugural post, he claims that smart early-stage investors were the missing ingredient in the NYC startup world until this point. I’m sure David Rose is thrilled about that.

Later today, Matt Mireles, who has been making a bit of a name for himself recently, fired back with a claim that entrepreneurs are at the core of NYC’s tech renaissance and investors are just along for the ride.

The emergence of industries in particular cities is a complex problem that has been studied at length by economists and policy experts, of which I am neither. But it still seems like a massive oversimplification to claim that a certain group of people showed up one day and decided to make things happen. If that were the case, it absolutely begs the question of why it didn’t happen sooner. It’s all related — money follows companies and companies follow money, and I don’t believe that one really gets too far out of balance with the other on a local scale.

But that doesn’t mean the volume of investors (or entrepreneurs) doesn’t matter. In fact, a large startup network is particularly important for New York, a city with notoriously siloed industries. In the past, media guys didn’t talk to finance guys, tech wonks didn’t talk to policy wonks, creatives didn’t talk to quants, et cetera. If you showed up at a startup event, finding someone you knew was tough — and it was even tougher to find someone who had a broad base of connections and could introduce you to someone helpful.

This is distinct from the Bay Area, where the volume and density of people interested in startups created a very tight social network. If you were a, say, entrepreneur in New York from Conde Nast working on a startup in the fashion industry, it was tricky to meet the right people in the tech world. There were few “connectors”, since there were simply fewer people to connect — entrepreneurs, investors, executives, engineers, service providers and such. The connectors that did exist — for example, guys in NY Angels — were fairly inaccessible, as angel investors are wont to be.

Thus, the emergence of “smart early-stage investors” is important. But it’s important because they are bringing social capital to the table, not financial capital. First Round Capital could do zero deals in New York over the next 12 months and they would still have a major impact on the NY startup scene because they’re paying Charlie O’Donnell to hang out in the Ace Hotel Lobby and chat with any entrepreneur who walks up to him. Charlie and the rest of the emerging investor class in NYC are guys who can and will connect the finance guys to the media guys, the tech wonks to the policy wonks and the creatives to the quants. And that’s huge.

And let’s not forget the entrepreneurs. As I wrote a week or so ago, the Celebutante Entrepreneur is a dying breed in New York City. And that’s a great thing for entrepreneurs, as celebrities are (almost by definition) inaccessible. I couldn’t go to Julia Allison for advice about getting my startup incorporated, nor would I want to. But guys like Chris Dixon, O’Donnell and Mireles are easier to track down.

The startup social network density has reached a tipping point in New York City. And that’s all that matters.

Entrepreneurship in New York City is evolving. Everyone is talking about it — at meetups, at conferences, at drinks with friends. While there’s a lot of (warranted) concern about the venture community as a whole, there is a feeling in New York of inevitability; when the dust clears, the City will no longer be playing second fiddle to Boston and Silicon Valley in the world of tech entrepreneurship. Having a NY office is the new hot thing for any east coast VC, and tech startups are increasingly looking at New York as a better place to set up shop for the long term. One could easily claim that NYC owns the hottest VC (Union Square Ventures) and the hottest tech company to launch in the past year (foursquare).

But there’s one symptom of the coming of age of the NY startup scene that people haven’t really been talking about. I was having a conversation with a friend at Gawker Media the other day, haranguing her about Gawker’s lack of coverage of the web celebrities that it lent such weight to just a year or two ago. The Julia Allisons, Jakob Lodwicks and David Karps of the world. Where are they? Yeah, I know, Gawker has been clawing its way into the mainstream; to do that, is has to cover mainstream celebrities rather than NY media darlings. But at the same time, no one has taken Gawker’s place. Even The Awl shies away from the kind of webutante-centric coverage that Gawker became known for.

Most may write this off as a simple shift in new media’s focus — or haven’t even noticed. But I think it is extremely relevant and symptomatic of deeper trends in New York. After all, bloggers write about the topics that get pageviews.

In other words, it is indicative of bigger things. It means that the NY startup scene is maturing. It means that we are focusing less on the media-crowned personalities driving “the tech scene” in New York City and (hopefully) more on the awesome things that tech startups are creating. It’s a democratization; It means that tech in NYC is coming out of media’s shadow. It means that Richard Blakeley’s Webutante Ball last summer wasn’t the debut of the NY web celebrity but its timely demise.

Two years ago, there were essentially no high-profile tech events in the city that weren’t dominated by “new media” (and even quite a few old media) brands and individuals. New media became synonymous with New York Tech. Even the well-known New York Tech Meetup was throwing events at IAC, in the belly of the media beast. Now there are too many tech events to count, headlined by the burgeoning Hackers and Founders — an event that came out of the Valley’s YCombinator and a refreshing alternative to NY Tech Meetup’s cliquish lecture class. New York Tech is growing up.

Of course, you still have celebrity entrepreneurs in California. But their coverage has been focused on — or at least cognizant of — what they’ve accomplished professionally. Even on Valleywag during its heyday. And I can’t really name any big California celebrity entrepreneurs without reasonably sized companies to their names. A year ago, the same could hardly be said about the NY scene.

Still, personalities are important, and it will be interesting to see which (if any) individuals emerge into the roles of successful celebrity entrepreneurs you find on the west coast. Some of the old guard, such as Karp (if you can possibly call a 23 year-old a member of the “old guard”), are good entrepreneurs in their own right. And I can see at least a few investors who are rising to take more prominent and vocal positions in the NY tech scene.

Then again, it is quite possible that I’m suffering from some sort of observer bias, as I’m reasonably integrated into the startup scene. What do people think?

Since my days back at the Yale Entrepreneurial Institute, I’ve always made a strong argument for providing lots of cheap space to entrepreneurs as an economic development initiative. Over the next month, my friend and colleague Matthew Brimer will be creating a space for NYC startups and innovators. My own NY Gaming Meetup is partnering with him to make this happen.

I don’t pretend to be an expert on available space in the city. I spent my last nine months with PickTeams in Sunshine Suites and found it to be an underwhelming experience. While it certainly fit our budget, it wasn’t the true collaborative space that is ideal for starting new companies. Instead, we were surrounded by insurance salesmen, stock brokers and independent dev shops. Not that there’s anything wrong with that — it just isn’t terribly helpful for a new tech or media company, and we would have been much more at ease if Sunshine had simply thrown all of its venture fundable startups into one big room.

If you’re interested in getting in on the space, email me.