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10% of NYC Area Venture Capitalist Investment Has Gone to NYC Startups in First Half of 2009




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In our Q2 2009 venture capital funding recap, we noted the top cities receiving venture investing in the quarter were Seattle and New York City.  We subsequently took a look at the NYC venture investor landscape after looking into the ChubbyBrain database and counted 47 active venture firms in the NYC area.  We primarily looked at firms headquartered in the city or tri-state area but also looked at those with a significant presence through a satellite office in the area.

These firms were active investors in the first half of the year offering funding for emerging companies with over $2 billion.  But somewhat surprisingly, the data reveals 90% of the investment dollars flowing from venture firms with a presence in the NYC area goes to startups/companies outside of NYC.

Conventional wisdom is that venture capital investing is a local game.  Although many reasons account for this, at least one of the primary reasons is that venture investors can best help portfolio companies who are in close proximity to where they are based.  The data for active NYC area venture firms, however, paints a different picture as the graphs below illustrate.

The first graph shows the investment trend by NYC area venture firms over the first 6 months of 2009.  As is evident, NYC area venture firms are active participants in the investment community doing many deals and investing a significant amount of money in the first half of 2009.

nyc-venture-capital-investment-in-2009-1

But the active investment picture changes when we look at where area VCs are actually investing.  As the graph below illustrates, the states seeing the most money from NYC area VCs are perennial powerhouses California and NY.

nyc-venture-capital-investment-in-2009-2

Of course when we look at what the types of NYC areas getting funding, we see internet and technology firms garnering the lion’s share of funding.

nyc-venture-capital-investment-in-2009-4

With notable efforts by the New York city government to encourage entrepreneurship and startups (see NYU Poly Incubator at 160 Varick or Mayor Bloomberg visits ChubbyBrain) as well as innovative efforts by venture capital firms to encourage the NYC startup scene (see the First Growth Venture Network as an example), we’ll continue to track the flow of investment funding by NY area venture firms to see if NYC area startups take a larger slice of the NY area venture funding pie going forward.

We’d be interested in hearing your thoughts as to why you think NYC area startups are not garnering more of NY venture investor dollars at present?  And what do you think can be done to materially change these numbers?  We look forward to your ideas and insights.  If any questions or comments, please leave a comment or email us at team(at)chubbybrain.com.

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