NextView's Tim Devane analyzes the stage of seed-stage VC and tech startups in New York City. Topics include hot sectors like food logistics, consumer goods and services, media and publishing, talent, and trends in venture capital. Report includes original and curated research, quotes from top NYC founders, and more.
2. ABOUT US
2
high conviction, hands-on seed VC
Since our inception in 2010, we’ve invested in New York City. As of 2015, we’re proud to say we
also have a dedicated NYC office to better support the local tech ecosystem.
We believe entrepreneurs here deserve a focused partner at the earliest stage that offers one
great product: a high conviction, hands-on seed investment.
We like to lead, invest truly early, and are dedicated to advancing NYC as a major tech hub.
David Beisel
Jay Acunzo
Rob Go
Tim Devane
Lee Hower
|
3. ABOUT US
3
high conviction, hands-on seed VC
To date, we’ve invested in NYC-based companies such as:
David Beisel
Jay Acunzo
Rob Go
Tim Devane
Lee Hower
|
acq. MSFT acq. TWTR
acq. GRPN
STEALTH
4. ABOUT US
4
high conviction, hands-on seed VC
As the one responsible for carrying the NextView banner in New
York City every day, I thought I would share my analysis and
opinion about the state of seed venture in NYC out to our world.
Thanks for taking a look. – Tim (@tdevane)
David Beisel
Jay Acunzo
Rob Go
Tim Devane
Lee Hower
|
5. o New York City Sector Spotlights
+ Consumer Goods & Services
+ Food Logistics
+ Media & Publishing
+ FinTech
o New York City Talent
+ Staffing in NYC
+ "City-Tech Native” Founders
o New York City Funding Trends
+ Pre-Seed
+ NYC VC: General
+ NYC VC: Seed
5
TABLE OF CONTENTS
8. 8
When we launched, a lot of people bucketed us as
e-commerce…but we believe our brand can stand
for much more thAn that over a long period.
– Dave Gilboa, Co-Founder, Warby Parker
“
9. CONSUMER GOODS AND SERVICES: CURRENT TRENDS
9
Brand - Vertical Ownership
• Companies that intentionally build an attractive, relatable
brand from sourcing to development to fulfillment
• Helps build customer trust and loyalty
• Can represent more to customers then the specific
product or service offered
10. CONSUMER GOODS AND SERVICES: CURRENT TRENDS
10
Brand - Vertical Ownership
• Companies that intentionally build an attractive, relatable
brand from sourcing to development to fulfillment
• Helps build customer trust and loyalty
• Can represent more to customers then the specific
product or service offered.
Consumer Convenience
• Companies that provide consumers choice and save time
• Makes ease-of-use a prominent feature of the company
• Example models include on-demand services, mobile
commerce, home try-on, and flexible subscription
11. CONSUMER GOODS AND SERVICES: CURRENT TRENDS
11
Brand - Vertical Ownership
• Companies that intentionally build an attractive, relatable
brand from sourcing to development to fulfillment
• Helps build customer trust and loyalty
• Can represent more to customers then the specific
product or service offered.
Consumer Convenience
• Companies that provide consumers choice and save time
• Makes ease-of-use a prominent feature of the company
• Example models include on-demand services, mobile
commerce, home try-on, and flexible subscription
Since 2011, there’s been a Warby Parker effect in NYC à
12. CONSUMER GOODS: WARBY PARKER EFFECT
combined seed funding raised by the following startups:
2011
Warby Parker
Prescription Eyeglasses
$1.5M raised
13. CONSUMER GOODS: WARBY PARKER EFFECT
2011 Harry’s
Shaving
Handy
Home Care Services
Alex & Ani
Everyday Jewelry
BarkBox
Subscription
Pet Products
Warby Parker
Prescription Eyeglasses
$1.5M raised
$10.2M raised
2012
combined seed funding raised by the following startups:
14. CONSUMER GOODS: WARBY PARKER EFFECT
2011
Oscar
Insurance
Boxed
Home Goods
Zady
Retail Fashion
Fly Cleaners
On-Demand Laundry
Nice Laundry
Everyday Basics
Bombfell
Subscription Garments
Grand Street
Artisanal Electronics
Boll & Branch
Bedding Linens
Harry’s
Shaving
Handy
Home Care Services
Alex & Ani
Everyday Jewelry
BarkBox
Subscription
Pet Products
Warby Parker
Prescription Eyeglasses
$1.5M raised
$10.2M raised
$47.5M raised
2012
2013
combined seed funding raised by the following startups:
15. CONSUMER GOODS: WARBY PARKER EFFECT
2011
Oscar
Insurance
Boxed
Home Goods
Zady
Retail Fashion
Fly Cleaners
On-Demand Laundry
Nice Laundry
Everyday Basics
Bombfell
Subscription Garments
Grand Street
Artisanal Electronics
Boll & Branch
Bedding Linens
Harry’s
Shaving
Handy
Home Care Services
Alex & Ani
Everyday Jewelry
BarkBox
Subscription
Pet Products
Warby Parker
Prescription Eyeglasses
$1.5M raised
$10.2M raised
$47.5M raised
$79.5M raised
2012
2013
2014
combined seed funding raised by the following startups:
Casper
Mattresses
Spring
mCommerce
Jet
Home & Personal Goods
Greats
Shoes
Perch
Workspace Furniture
Hickies
Shoelaces
Viyet
Luxury Furniture
Beauty Booked
Stylist Booking
Kaufman Mercantile
Luxury Personal Items
Dagne Dover
Hand Bags
Parcel
On-Demand Delivery Service
19. $155M
…SINCE JANUARY 2014
19
$2.1M
median round size:
4
avg. team size:
in seed capital invested in brand-first,
convenience-first, consumer goods &
services startups founded in NYC.
20. $155M
…SINCE JANUARY 2014
20
$2.1M
median round size:
4
avg. team size:
2015 EXPLOSION…
in seed capital invested in brand-first,
convenience-first, consumer goods &
services startups founded in NYC.
21. CONSUMER GOODS & SERVICES: SUMMARY
New Yorkers have come to expect everything on-demand:
New York is the destination for many major consumer brands:
4.4 million Uber pickups per month, $150 million spent annually on laundry delivery
J.Crew, Rocawear, Revlon, Barnes & Noble, Calvin Klein, Estee Lauder, Macy’s, Modell’s
21
*Source: NPD Group Market Research; Publically Available Data
THE NYC MARKET TODAY
22. CONSUMER GOODS & SERVICES: SUMMARY
22
THE NYC MARKET TOMORROW
• How many meaningful brands do consumers have the
space for in their day-to-day?
• How many services have scalable unit economics to
support an on-demand model?
Continued seed investment in consumer daily goods and
services companies founded in New York City, pitched as
“Warby Parker for X.”
Outstanding questions include:
23. CONSUMER GOODS & SERVICES: SUMMARY
23
THE NYC MARKET TOMORROW
• How many meaningful brands do consumers have the
space for in their day-to-day?
• How many services have scalable unit economics to
support an on-demand model?
Continued seed investment in consumer daily goods and
services companies founded in New York City, pitched as
“Warby Parker for X.”
Outstanding questions include:
For a window into how NextView analyzes consumer, check out David Beisel’s
Where To Look For The Next Consumer Startup Unicorn
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.
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25. FOOD LOGISTICS: SHIFTING ONLINE
25
Total Meal Orders in the U.S. by Phone vs. Online
2010 2011 2012 2013 2014 2015
Telephone Internet
33%
67% 61%
44% 47%22%
78%
27%
73%
39%
56% 53%
Source: NDP Group Market Research; Trends and Analysis
26. 26
21.7Mworkday lunches every
week in Manhattan alone
Source: U.S. Census Data, NYC.gov Population Reports and Analysis
FOOD LOGISTICS: NYC A TANTALIZING MARKET
27. 27
21.7Mworkday lunches every
week in Manhattan alone
NYC residents report not
regularly cooking at home
Source: U.S. Census Data, NYC.gov Population Reports and Analysis
4.7M
FOOD LOGISTICS: NYC A TANTALIZING MARKET
28. 28
21.7M
5.8 meals per week
workday lunches every
week in Manhattan alone
NYC residents report not
regularly cooking at home
per resident not prepared at home across all boroughs
Source: U.S. Census Data, NYC.gov Population Reports and Analysis
4.7M
FOOD LOGISTICS: NYC A TANTALIZING MARKET
29. 29
We thought the unique value proposition
(in food) was to build a business
entirely around delivery.
- Caleb Merkl, Co-Founder, Maple
“
30. 2013 2014 2015
Capital ($M) Deals
FOOD LOGISTICS: VC INVESTMENT IN NYC
30
$86
24
$21
$483
From 2013 to 2015, annual venture capital investment in meal and food
delivery startups over the same period has increased 30x.
8
Source: NextView Ventures Internal Analysis, Source Data: Mattermark, Crunchbase
13
31. FOOD LOGISTICS: NYC STARTUP LANDSCAPE
31
Delivery Logistics
Homer Logistics
BringMeThat
Restaurant Delivery
Arcade
FoodToEat
CityLunch Club
Stadium
Push For Pizza
FoodToEat
FoodieforAll
BentoBox
Grocer – Speciality
Aloha
OurHarvest
Mouth Foods
Try The World
Mercato
FreshNation
Delivery Only
Maple
Morsel
Kettlebell Kitchen
Portable Chef
Home Cooked
Homemade
Umi
Cookunity
EatInChef
The Oliver Weston
Meal Kits
Blue Apron
Plated
Freshly
HelloFresh
HungryRoot
Sakara Life
GreenBlender
32. FOOD LOGISTICS: SUMMARY
32
The New York market can be a trap for food and meal delivery startups as
the population density can create outsized order and revenue growth that
is difficult to replicate in additional cities as the company expands.
33. FOOD LOGISTICS: SUMMARY
Areas of opportunity for improving the model are:
+ Streamlining the local delivery network
+ Nuanced logistics management software
+ Visual discovery products & marketing (photo + video)
+ Mobile demand generation
33
The New York market can be a trap for food and meal delivery startups as
the population density can create outsized order and revenue growth that
is difficult to replicate in additional cities as the company expands.
34. FOOD LOGISTICS: SUMMARY
Areas of opportunity for improving the model are:
+ Streamlining the local delivery network
+ Nuanced logistics management software
+ Visual discovery products & marketing (photo + video)
+ Mobile demand generation
34
The New York market can be a trap for food and meal delivery startups as
the population density can create outsized order and revenue growth that
is difficult to replicate in additional cities as the company expands.
Food logistics is as much a hustler’s market as any and is therefore
particularly apt for entrepreneurs with operational execution and
customer acquisition advantages or superpowers within a founding team.
36. 36
As far as our ability to build an audience, New
York is truly the most creative city in the
world. I don’t think there’s another city that
could make Tumblr what it is.
- David Karp, Founder, Tumblr
“
37. MEDIA & PUBLISHING: CONSISTENT NYC FUNDING
37
4-Year Total:
$923M
Source: NextView Internal Analysis; Data Source: Mattermark; Graph excluding single rounds above $50M and all-Ad Tech Companies
Annual VC investment in early-stage media startups based in NYC
$126M
$195M
$326M
$274M
2012
2013
2014
2015
48. MEDIA & PUBLISHING: ECOSYSTEM THAT NURTURES
48
NYC is the home of the media industry and has created a startup-friendly ecosystem,
with media-focused incubators, investors, and studios present. The larger players
have also exhibited a consistent appetite for acquiring young media startups.
49. MEDIA & PUBLISHING: ECOSYSTEM THAT NURTURES
49
$285M invested Since ‘13 Continued Support
From Betaworks
NYTimes R&D Lab Comcast’s Venture Arm
9 Acquisitions since ‘12
8 Acquisitions since ‘12
7 Acquisition since ‘13
FOSTERING NEW INNOVATION APPETITES FOR ACQUISITION
5 Acquisitions since ‘14
NYC is the home of the media industry and has created a startup-friendly ecosystem,
with media-focused incubators, investors, and studios present. The larger players
have also exhibited a consistent appetite for acquiring young media startups.
50. MEDIA & PUBLISHING: ANTICIPATING MORE M&A
50
Newly established media giants in NYC represent a field of tech-forward, high-growth
organizations with significant capital for acquisitions as they continue to seek
mainstream audience saturation and increased engagement stats
51. MEDIA & PUBLISHING: ANTICIPATING MORE M&A
51
14 acquisitions and
$1.5B Raised since ‘11
Newly established media giants in NYC represent a field of tech-forward, high-growth
organizations with significant capital for acquisitions as they continue to seek
mainstream audience saturation and increased engagement stats
53. 53
There are hundreds of startups with a lot
of brains and money working on various
alternatives to traditional banking.
- Jamie Dimon, CEO, JP Morgan
“
56. FINTECH: THE CITY EMBRACES BITCOIN
56
October
2015
January
2014
July
2014
June
2015
57. FINTECH: THE CITY EMBRACES BITCOIN
57
October
2015
January
2014
July
2014
June
2015
The Bitcoin Center NYC opens on Wall Street as
a crypto-currency education, advocacy, and
community development organization
58. FINTECH: THE CITY EMBRACES BITCOIN
58
October
2015
January
2014
July
2014
June
2015
The NYC Taxi and Limousine
Commission adopts Bitcoin payment
for yellow cab rides
59. FINTECH: THE CITY EMBRACES BITCOIN
59
October
2015
January
2014
July
2014
June
2015
New York becomes first state to issue
comprehensive rules and guidelines
for regulating digital currency firms
60. FINTECH: THE CITY EMBRACES BITCOIN
60
October
2015
January
2014
July
2014
June
2015
Barry Silbert launches the Digital
Currency Group in New York to invest in
Bitcoin and blockchain startups
61. FINTECH: THE CITY EMBRACES BITCOIN
61
Recently Seed-Funded NYC Bitcoin Startups:
October
2015
January
2014
July
2014
June
2015
62. FINTECH: CONTINUED UNBUNDLING OF THE BANK
62
A map of the NYC FinTech startups building for a specific financial service
(the majority of which are traditionally provided by a bank)
63. FINTECH: CONTINUED UNBUNDLING OF THE BANK
63
Graphic via letstalkpayments.com, 12.15.15
A map of the NYC FinTech startups building for a specific financial service
(the majority of which are traditionally provided by a bank)
65. 65
1. Will mainstream consumers begin to trust the startup robo-bank and
algorithm more than human wealth managers and bank tellers?
2. Will the financial establishment in New York incubate and foster startup
innovators within their industry … or view them competitively and push back?
3. Will the transparency and performance of new consumer finance products
and services outweigh the convenience of the all-in-one retail banking
incumbent?
4. How does the decrease of human-powered exchange and asset trading
contribute to an overall contraction in the financial services industry?
PLENTY OF QUESTIONS REMAIN
FINTECH: SUMMARY
66. 66
1. Will mainstream consumers begin to trust the startup robo-bank and
algorithm more than human wealth managers and bank tellers?
2. Will the financial establishment in New York incubate and foster startup
innovators within their industry … or view them competitively and push back?
3. Will the transparency and performance of new consumer finance products
and services outweigh the convenience of the all-in-one retail banking
incumbent?
4. How does the decrease of human-powered exchange and asset trading
contribute to an overall contraction in the financial services industry?
PLENTY OF QUESTIONS REMAIN
FINTECH: SUMMARY
NextView tends towards deep analysis of FinTech. For an example, check out
Lee Hower’s long-term view of Square, published just ahead of their recent IPO.
.
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.
.
.
69. STARTUP TALENT: NYC BY THE NUMBERS
3.1 Millionof the city’s residents have an
undergraduate college degree
69
Source: U.S. Small Business Administration, U.S. Census Bureau, U.S. Bureau of Labor Statistics
70. STARTUP TALENT: NYC BY THE NUMBERS
3.1 Millionof the city’s residents have an
undergraduate college degree
70
Source: U.S. Small Business Administration, U.S. Census Bureau, U.S. Bureau of Labor Statistics
190,000small business employers –
second-most of any U.S. city
71. STARTUP TALENT: NYC BY THE NUMBERS
3.1 Millionof the city’s residents have an
undergraduate college degree
71
Source: U.S. Small Business Administration, U.S. Census Bureau, U.S. Bureau of Labor Statistics
300,000engineering, programming and
mathematics jobs
190,000small business employers –
second-most of any U.S. city
72. STARTUP TALENT: NYC BY THE NUMBERS
3.1 Millionof the city’s residents have an
undergraduate college degree
72
Source: U.S. Small Business Administration, U.S. Census Bureau, U.S. Bureau of Labor Statistics
3.6 Millionresidents are 30 years old or younger
300,000engineering, programming and
mathematics jobs
190,000small business employers –
second-most of any U.S. city
73. STARTUP TALENT: NYC’S SURPLUS
73
Graduate and undergraduate schools at universities and colleges
as well as vocational design and technical programs based in New
York City produce local engineering and product talent every year.
They include:
74. STARTUP TALENT: NYC’S SURPLUS
74
NYC is also the epicenter of many industries with countless tech-
savvy employees currently working for legacy companies. This
presents seed companies with a perpetual pool of future hires as
operators and executives, as well as advisors.
These industries include:
FINANCE MEDIA FASHION
ADVERTISING CONSULTINGSPORTS
INSURANCEREAL ESTATE
LAW TELECOM
75. STARTUP TALENT: NYC’S SURPLUS
75
NYC is also the epicenter of many industries with countless tech-
savvy employees currently working for legacy companies. This
presents seed companies with a perpetual pool of future hires as
operators and executives, as well as advisors.
These industries include:
This dynamic is particularly helpful during a growth
period for a startup that now needs to scale the team.
FINANCE MEDIA FASHION
ADVERTISING CONSULTINGSPORTS
INSURANCEREAL ESTATE
LAW TELECOM
76. STARTUP TALENT: CITY-TECH NATIVE FOUNDERS
76
City-Tech Natives: First-time founders who came up in the NYC ecosystem.
Also contributing to a strong and growing ecosystem:
77. STARTUP TALENT: CITY-TECH NATIVE FOUNDERS
77
Also contributing to a strong and growing ecosystem:
+ Knows the playbook for entrepreneurial success from being
early employee at high growth startup(s)
+ Years of patience and discipline in absorbing experience and
knowledge now unleashed as he/she founds NewCo
+ Often has a chip on his/her shoulder and something to prove
City-Tech Natives: First-time founders who came up in the NYC ecosystem.
78. The high-growth companies of this current cycle in NYC –
Tumblr, Makerbot, Foursquare, Buzzfeed, MongoDB, Etsy, etc. –
Have created a critical mass of talented hackers and designers.
We believe many of the great NYC companies in this next wave
will be founded by people who grew up in the first wave.
- Nick Chirls, Partner, Notation Capital
“
78
79. STARTUP TALENT: CITY-TECH’S NEXT WAVE
79
Poncho
Kuan Huang
(Hatch Labs)
Zola
Shan-Lyn Ma
(Chloe & Isabel, Gilt Groupe)
Electric Objects
Jake Levine
(Digg, Ladders)
Andrew Lister
(Foursquare)
Dasher
Mike Rothman
(Thrillist)
Fatherly
Abacus
Ted Power
(Foursquare)
Squad
Adam Liebman
(SinglePlatform)
Matt Hackett
(Tumblr)
beme
Brian Tobal
(Thinkful, Boundless)
Hickory
Vianney Brandicourt
(Spotify, Foursquare)
Nestie
Dan Reich
(Lotame, BuddyMedia)
Troops
Scott Britton
(SinglePlatform)
Jen Rubio
(Warby Parker)
Steph Korey
(Warby Parker)
Josh Goldstein
(Bondsy)
Underdog
Chris Muir
(Hyperpublic)
Away
(An obviously non-exhaustive list.)
82. 82
A pre-seed is an early round of financing
designed to help a company achieve
certain intermediate milestones prior to
the magic combination of strong product
market fit and meaningful traction.
- Rob Go, Partner, NextView
“
PRE-SEED: MAKING SENSE OF THE TREND
84. PRE-SEED: IN CONTEXT
84
Inception Product-Market Fit Scalable Growth
SEED
SERIES A
PRE-SEED
WHAT ARE PRE-SEEDS AND WHY DO THEY EXIST?
We believe this is a crucial topic to understand as a founder.
To help, here are two deeper dives into pre-seeds:
HOW NEXTVIEW APPROACHES PRE-SEED DEALS
85. 85
2014 2015
The pre-seed phenomenon is pronounced in a New York ecosystem with
comparatively fewer funding sources and less available capital. With traditional seed
rounds decreasing as early financings begin to inflate and resemble Series A rounds,
smaller funds and micro-VCs look to pre-seed rounds for early ownership.
Percent Change in # of VC Deals by Stage in NYC
+ 41%
- 37%
+ 10%
PRE-SEED: THE FLATTENING OF SEED IN NEW YORK
Pre-Seed
Institutional
Seed
Series A
or later
86. 86
PRE-SEED: SUMMARY
Entrepreneurs need
smaller financing
rounds ahead of an
initial product launch
Those early-stage investors
who get priced out of
instiutional seed or Series A
rounds need to invest
earlier for ownership
Pre-Seed
Increase
in NYC
91. NYC: SEED 2015
91*Seed representing rounds <$4.5M; **NextView Ventures portfolio company | Source: NextView Ventures Internal Analysis; Mattermark; Crunchbase; Angelist
175 SEED-STAGE DEALS*
$291 MILLION IN CAPITAL
92. NYC: SEED 2015
92*Seed representing rounds <$4.5M; **NextView Ventures portfolio company | Source: NextView Ventures Internal Analysis; Mattermark; Crunchbase; Angelist
175 SEED-STAGE DEALS*
$291 MILLION IN CAPITAL
NOTABLE SERIES A ROUNDS (POST-SEED)
Managed By Q: $15M
Pager: $14M
x.ai: $9.2M
Paintzen**: $7.2M
TalkSpace: $9.5M
Artivest: $15M Button: $12M
Reserve: $15M
93. NYC: SEED 2015
93*Seed representing rounds <$4.5M; **NextView Ventures portfolio company | Source: NextView Ventures Internal Analysis; Mattermark; Crunchbase; Angelist
175 SEED-STAGE DEALS*
$291 MILLION IN CAPITAL
NOTABLE SERIES A ROUNDS (POST-SEED)
3%
97%
SEED AS % OF CAPITAL
24%
76%
SEED AS % OF DEALS
Managed By Q: $15M
Pager: $14M
x.ai: $9.2M
Paintzen**: $7.2M
TalkSpace: $9.5M
Artivest: $15M Button: $12M
Reserve: $15M
94. 94
IN THE END: BUILD IN NYC
New York. It was an adult portion. It was an adult dose.
So it took a couple of trips to get into it. You just go in the first
time and you get your ass kicked and you take off. As soon as it
heals up, you come back and you try it again. Eventually…
You fall right in love with it.
- Levon Helm
“
I NY
95. 95
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