Venture Capital Firms in NYC

By | January 16, 2013

Venture Capital Firms in NYC

Venture Capital Firms in NYC
Image by 401kcalculator.org

When starting your business in NYC, the issue of funding your startup is a critical concern. New York City is expensive and no matter the industry you are in, the competition to keep good talent, market your business to your target audience and develop the necessary infrastructure to run your business, is going to result in a considerable cost.

New York City offers a great opportunity to competitive entrepreneurs in the form of the numerous venture capital firms and angel investors operating in the city. The venture capitalists in the area have funded numerous successful companies ranging from social media giants to healthcare companies. Although receiving venture capital funding is an incredibly competitive process, there are more venture capitalists in New York City than in many other international cities, making NYC a desirable location to launch your concepts into the U.S. market.

Is Venture Capitalist Funding for You?

To be clear, venture capital funding simply is not for everyone.

If you are just moving to New York City or just launching your innovative idea, you are most likely not at the stage to approach venture capitalists. For most startups, it is important to start self-funded; you don’t want to give up shares at such an early stage, and many venture capitalists will not take the time to consider your business case due to the fierce competition offering more experience and  proven business plans.

Certain venture capitalist funds are more competitive than others. Giants such as Union Square Ventures or Venrock (both introduced below) are only going to consider the most innovative and low-risk investments with proven, successful leaders and teams behind them.  No matter the capital fund, expect to prepare your best business case and make sure your business plan is clear. The competition will be working just as hard to prepare their business cases to receive that same funding.

 

New York’s Venture Capitalists

 

There are a number of notable venture capitalist funds in New York, but some have success stories that make them the most desirable funds to approach.  They also vary as to which stage of funding they involve themselves in. Some funds are only interested in companies seeking seed funding to get off the ground. Others are focused on funding companies that are already on the track to success but need additional funding to get there.

If you’re looking for serious funding at the later stages of your business, you’re going to want to look to one of the larger funds in the city.

Union Square Ventures
One of the most notable venture capital firms NYC has to offer is Union Square Ventures, the powerhouse venture capital fund responsible for funding tech giants Twitter, Tumblr, Meet Up, online retailer Etsy, and gaming giant Zynga. The venture capital fund operates out of New York’s “Silicon Alley” and is surrounded by tech startups looking to earn their funding.   Union Square Ventures invests multiple stages of venture capital funding, but do note that they will be extremely competitive and selective with their funding.

Venrock
One of the funds still working with money from New York’s famous Rockefeller family is Venrock. This fund has an incredibly diverse portfolio of companies focused in technology, energy, and healthcare. They tend to invest in younger capital enterprises; Venrock was behind the funding for both Apple Computers and Intel. Venrock has invested in well over a hundred companies in the past 43 years and continues to keep a varied portfolio..

RRE
Another notable fund is RRE which was founded in 1994 and has since invested over a billion dollars into over 100 companies. Their portfolio is relatively diverse, covering environmental, consumer media, mobile, and financial companies. They invest at a range of funding phases, from seed investments under a million dollars to multimillion-dollar investments in already profiting companies.

Seed-Stage Investors

Seed stage investors - photo by 401kcalculator.orgOther funds primarily focus on seed-stage investments, meaning they work with founders and startups that are in their first years of operation. Many of these funds are also looking to build a community and have much smaller investment capabilities than the larger funds.

Lerer Ventures
One seed-stage fund is the father-son combination offered by Ken and Ben Lerer at Lerer Ventures.  These two are the minds behind Huffington Post and Thrillist, two of the largest new media companies in the last five years. The fund has investment by some of the biggest investors in New York City and totals $33 million in seed-stage funding.

Founders Collective
Another smaller fund is Founders Collective, a  team focused on startups at the seed level. They have a very approachable demeanor – suggesting that companies approaching them should see it as peer-to-peer advising more so than approaching a venture capital fund. Their fund is relatively small - $50 million – but has helped fund companies that have since been acquired by larger companies, such as about.me, and companies that have succeeded on their own accord, such as BuzzFeed.

First Round Capital
Another seed-level investment fund would be First Round Capital. This fund has an incredibly diverse portfolio including the popular website Stumble Upon, online retailer and eyewear company Warby Parker, and the company that changed the way small businesses conduct credit card transactions, Square. They aim to create a community among the startups they invest in so the startups can educate one-another. First Round hopes to find entrepreneurs that can “bend reality” and create positive change in the future.

 

Approaching Venture Capitalists

 

If you’re not familiar with how to approach venture capital funds, there are a few organizations out there to help you find the track to success.

One of the best organizations to help you prepare and present your business case to a capital fund is NYCSeed. NYCSeed works with a variety of entrepreneurs and startups at the seed level to guide them from idea-level to product launch. A number of organizations work together to make NYCSeed a reality.  They will not only educate your startup but also connect you with the people you need to know to help you get the funding you need.

Some of the members of NYCSeed also operate independently and offer assistance for entrepreneurs.  The New York City Economic Development Corporation, is always looking to help entrepreneurs as they are focused on driving growth in the economy of all five boroughs of New York City. ITAC, or Industrial + Technology Assistance Corporation, is a nonprofit consultancy and training organization focused on helping industrial or technology companies succeed in the New York City Area. Both organizations could be helpful in preparing your case for venture capital funding.

Another approach to attract the attention of competitive funds is attending events such as Ultra Light Start Up or NYC Beta. Both of which are events that feature chosen startups that are on the track to success and are looking for possible investors.  The events give startups the chance to pitch their ideas to a community of designers, investors, founders, and other professionals. Note that most of these events have specific requirements for each startup and, like finding funding, claiming a spot can be a competitive process.

There are quite a few other venture capitalists operating in New York City, but the six mentioned above are notable examples of the type of venture capitalism present in the NYC area. Do not limit yourself to these funds as others do exist. Be sure to do some research to find others which might be right for your business.  If you want to succeed in NYC, come prepared with enough funding to get off the ground – then concern yourself with the necessary steps to get in front of the investors that can help your start up realize its growth goals.