TECH TRENDS & INSIGHTS Analysis of the Tech Sector in New York Q4 214 ANALYSIS MARCH 215 Highlights P.1 NY VC funding up 53% in 214 P.1 NY takes 15% of Internet VC funding nationally P.3 Late stage deal value up 56% P.4 NYC digital employment up 18% P.4 Media Buying and Other Advertising Services employment up 153% in ten years Center for Economic Transformation
Venture Capital Highlights from Q4 214 QUARTER TO QUARTER New York saw 92 deals in Q4 214 for a total of $1. billion in funding, down from 122 deals and $1.4 billion in funding in Q3. New York broke $1 billion in VC funding in every quarter of 214. 1 The NY Metro region saw 17 deals and $1.15 billion in funding in Q4 214. Deals were down 13% from Q3, while total funding declined by 33%. 2 YEAR TO YEAR New York companies received $4.5 billion in funding on 422 deals in 214. New York s average deal value grew to $1.7M, a 44% increase from 213. Total funding in New York grew 53% in 214, compared to 81% growth in California and 37% growth in Massachusetts. VC deals grew 7% year-over-year, compared to 13% growth in California and 9% growth in Massachusetts. 3 The NY Metro region s total funding grew 59% to $5.2 billion in 214, while the number of deals increased 2% to 478. 4 Venture Capital Trends in New York, California, and Massachusetts VC Inestment (MIllions $) $3, $25, $2, $15, $1, $5, $ NY $ MA $ CA $ NY # MA # CA # 21 211 212 213 214 18 16 14 12 1 8 6 4 2 VC Deals (#) NOTABLE NYC DEALS (IN MILLIONS) IN Q4 214 WeWork $355. Harry s Razor Company $75. Rent the Runway $6. LiveAuctioneers $47.6 Return Path $35. Phreesia $3. Maiyet $25.5 NeueHouse $15.5 Bustle $15.5 Eyeview $15. Appboy $15. Orchard Platform $12. Namely $12. Nagare Membranes $1.5 Playdots $1. Cognical $1. ubeam $1. OLO $1. YieldMo $1. Source: CB Insights data Source: CB Insights Deal Search; includes all Lettered Series, Growth Equity, and Other Venture Capital Venture Capital Sector and Series Trends SECTOR TRENDS The Internet sector continued to attract the largest share of New York s VC investment, representing 63% of VC deals and 67% of VC funding in 214. New York garnered 16% of all Internet VC deals and 15% of Internet VC funding nationally. This represented two times the number of deals and three times the total funding received by Massachusetts Internet companies. Mobile & Telecommunications was the second largest sector for deals and funding, taking in 19% of VC deals and 9% of VC dollars in 214. Combined, Internet and Mobile & Telecommunications accounted for 82% of all VC deals and 76% of dollars invested in New York in 214, down from 85% of deals and 84% of dollars in 213. Nationally, New York City was ranked number two for deals in both Internet and Mobile, behind San Francisco. 641 internet companies in NYC as of January 3, 215 Source: NY Tech Meetup; Made in New York City March 215 1
NYC S TOP 2 VENTURE CAPITAL DEALS IN 214 Company Amount ($M) Quarter Product Type WeWork $355. Q4 Facilities Vice Media $25. Q3 Internet Software & Services WeWork $157. Q1 Facilities Flatiron Health $13. Q2 Internet Software & Services Oscar Health Insurance Co. $8. Q2 Internet Software & Services OnDeck Capital $77. Q1 Internet Software & Services Harry's Razor Company $75. Q4 ecommerce IEX Group $75. Q3 Internet Software & Services MediaMath $73.5 Q2 Internet Software & Services FanDuel $7. Q3 Internet Software & Services Harry's Razor Company $65. Q1 ecommerce Teacher Synergy $64.1 Q2 ecommerce Pond5 $61. Q3 ecommerce Data Driven Delivery Systems $6.8 Q3 Medical Facilities & Services Rent the Runway $6. Q4 ecommerce AppNexus $6. Q3 Internet Software & Services Birchbox $6. Q2 ecommerce Wheels Up Partners $55.7 Q1 Air Jet.com $55. Q3 Stealth Mode Bonobos $55. Q3 ecommerce Source: CB Insights Deal Search; includes all Lettered Series, Growth Equity, and Other Venture Capital New York Deal Volume by Sector, 214 New York Deal Value by Sector, 214 Internet 266 (63%) Internet $3,22 (67%) Mobile & Telecom 8 (19%) Mobile & Telecom $46 (9%) All Other 8 (2%) All Other $45 (1%) Healthcare 17 (4%) Financial $135 (3%) Software (non-internet/mobile) 17 (4%) Consumer Products & Services 8 (2%) Electronics 4 (1%) Financial 4 (1%) 5 1 15 2 25 3 Number of Deals Healthcare $135 (3%) Consumer Products & Services $9 (2%) Software (non-internet/mobile) $9 (2%) Electronics $ (%) $ $1, $2, $3, $4, VC Investment (Millions $) Source: CB Insights Other sectors include, but may not be limited to, Business Products and Services, Computer Hardware & Services, Energy & Utilities, Food and Beverages, Industrial, and Media (Traditional) 363 actively hiring internet companies as of January 3, 215 Source: NY Tech Meetup; Made in New York City March 215 2
SERIES TRENDS 66% of deals in 214 went to early-stage startups (Seed and Series A). Seed deals continued to grow as a percentage of all New York VC deals, garnering 4% of all deals in 214 compared to 34% in 213. Early-stage funding represented 26% of all 214 investment dollars, down from 27% in 213. Late-stage (Series B and later) deals accounted for a 34% share of total deals and 64% of total VC funding. Seed deal volume increased by 25% compared to 213 while late-stage deals decreased by 5%. Early-stage deal value increased 48% in 214, while late-stage deal value increased by 56%. New York Deal Volume by Series New York Deal Value by Series 213 214 213 214 18 $1,6 16 $1,4 Number of VC Deals 14 12 1 8 6 4 2 VC Investment (Million $) $1,2 $1, $8 $6 $4 $2 Seed Series A Series B Series C Series D Series E+ $ Seed Series A Series B Series C Series D Series E+ Source: CB Insights EXIT HIGHLIGHTS OnDeck Capital raised approximately $2 million from its Q4 IPO, valuing the company at an estimated $1.32B. 8 OnDeck s IPO represented the largest VC-backed tech exit ever in New York. Tumblr became the first New York company to achieve a billion dollar exit in 213 when it was acquired by Yahoo. New York ranked second in number of tech exits in 214 behind California and ahead of Massachusetts. Nationally, Google was the top acquirer of companies in both the Internet and Mobile & Telecom sectors. Notable Google acquisitions in 214 included Songza and Appurify. There were 2,886 tech exits nationally in 214, including 2,89 M&A deals and 79 IPOs. Tech exits increased by 58% compared to 213. 9 Internet and Mobile & Telecom took a 67% share of tech exits in the United States in 214. 1 WEWORK : NYC S TOP DEAL IN 214 WeWork s $355 million Series B deal in Q4 was the largest VC deal in New York in 214 and took the company s total 214 funding to $512 million. WeWork started as a small company with one 3, sq ft location. Led by co-founders Adam Neumann and Miguel McKelvey, the company now has 1.6 million sq ft leased in New York City. 5 The company s most recent funding round gave it a $5 billion valuation. Over 1, workers, or members, currently use one of WeWork s 13 New York City locations. 6 Looking ahead, the company plans to expand from 23 to 6 locations and will consider an initial public offering in the next three years. 7 ROBO-ADVISORS SEE CONTINUED GROWTH IN 214 214 saw the continued growth of companies offering automated wealth management and financial advice. Robo-advisors received $29M in funding, more than doubling the amount raised in 213. Betterment is a New York City-based automated investing service that manages over $1.4 billion in assets for more than 65, customers. Betterment charges.35% of the annual account balance for accounts less than $1,,.25% for accounts up to $1,, and.15% for accounts over $1,. Led by founder and CEO Jon Stein, the company partnered with Fidelity Investments in October 214, connecting Betterment to investment advisors interested in utilizing the automated service. 11 Betterment has raised $15 million in total funding and continues to introduce new services such as Tax Loss Harvesting. 12 LearnVest offers features such as a budgeting system, goal tracking, and access to a LearnVest financial planner. CEO Alexa Von Tobel founded LearnVest in 27, and the New York City-based company has since raised $69 million in total funding. Users can access a personalized financial plan for a $299 setup fee and $19 per month. Betterment, LearnVest, and other robo-advisors seek to broaden access to the financial investment and planning industry. According to Von Tobel, we re providing planning to a huge audience who s never had access to financial planners before. 13 March 215 3
HOT TECH JOBS FOR 215 Mashable and Glassdoor have identified the eight hottest tech jobs of 215 based on the percentage of employees who thought that business was improving. 14 1. Data Scientist 2. Java Developer 3. UX Designer 4. Android Developer 5. Scrum Master 6. Front End Developer 7. Quality Assurance Engineer 8. PHP Developer Robert Half Technology, a recruitment company, has identified the five tech jobs that will pay the most in 215. These include mobile app developer, data security analyst, network architect, big data engineer, and senior web developer. 15 NYC Employment & Establishments: Media Buying and Other Advertising Services Employment 8 7 6 5 4 3 2 1 Annual Average Employment Establishments 23 24 25 26 27 28 29 21 211 212 213 3 25 2 15 1 5 Establishments Source: NYS Department of Labor, Quarterly Census of Employment and Wages (QCEW); NAICS codes 54183, 54187, 54189 TECH EMPLOYMENT TRENDS New York City s Q4 digital hiring increased by 3.5%, adding 1,52 jobs, while Boston s increased by 1.2%, adding 22 jobs. NYC s digital employment increased 18.4% in 214, compared to a 1.7% increase in Boston. New York City is home to 42 Internet and digital media companies with 1 or more employees, an 8.9% increase from 213 with 33 companies. 16 The companies with the largest Q4 headcount gains in New York City include Google, Amazon, Facebook, ZocDoc and LinkedIn. New York City s Media Buying & Other Advertising Services industry has grown over the last decade. Employment in the sector has increased by 152% since 23, while the number of establishments has increased by 13% in that time. TECH VENTURE CAPITAL FUNDING 17 New York closed 371 tech deals worth a total of $3.97 billion in 214. New York s tech VC deals increased by 5.3%, compared to 15.8% deal growth in Massachusetts and 15.4% growth in California. New York s tech VC funding increased by 53.7% in 214, compared to a 58.8% funding increase in Massachusetts and a 98.3% increase in California. Sources 1 CB Insights, The 214 U.S. Venture Capital Year in Review: Financing and Exit Analysis, January 215 2 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report, data from Thomson Reuters 3 CB Insights, The 214 U.S. Venture Capital Year in Review: Financing and Exit Analysis, January 215 4 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report, data from Thomson Reuters 5 The Wall Street Journal (http://www.wsj.com/articles/wework-now-a- 5-billion-real-estate-sartup-141869163) 6 Fortune (http://fortune.com/214/12/9/wework-funding/) 7 The Wall Street Journal (http://www.wsj.com/articles/wework-now-a- 5-billion-real-estate-sartup-141869163) 8 New York Times (http://dealbook.nytimes.com/214/12/17/ondeckcapital-an-online-lender-to-small-business-jumps-35-after-i-p-o/) 9 CB Insights, The 214 U.S. Venture Capital Year in Review: Financing and Exit Analysis, January 215 1 CB Insights, The 214 Global Tech Exits Report: A data-driven review of 214 s private tech company IPO and M&A activity, January 215 11 Betterment (https://www.betterment.com/resources/inside-betterment/product-news/betterment-has-teamed-up-with-fidelity-institutional-wealth-services/) 12 Francisco Partners (http://www.franciscopartners.com/news/betterment-raises-6m-in-growth-funding) 13 Business Insider (http://www.businessinsider.com/wall-street-shouldfear-28-year-old-alexa-von-tobel-212-9) 14 Mashable (http://mashable.com/214/12/3/hot-tech-jobs/) 15 Robert Half Technology (http://blog.rht.com/tech-jobs-will-pay-215/) 16 Cook Associates (http://www.cookassociates.com/mediacenter/press-releases/215-press-releases/bid/14795/boston-produces-weak-hiring-while-new-york-s-hiring-remains-strong-cook- Associates-Q4-Digital-Jobs-Index) 17 Tech includes CB Insights categories Internet, Mobile/Telecom, Software (non-internet/mobile) March 215 4
About NYCEDC The New York City Economic Development Corporation is the City s primary engine for economic development charged with leveraging the City s assets to drive growth, create jobs and improve quality of life. NYCEDC is an organization dedicated to New York City and its people. We use our expertise to develop, advise, manage and invest to strengthen businesses and help neighborhoods thrive. We make the city stronger. About NYCEDC Economic Research & Analysis The Economic Research and Analysis group from NYCEDC s Center for Economic Transformation conducts economic analysis of New York City projects, performs industry and economic research on topics affecting the city and tracks economic trends for the Mayor, policy-makers and the public as a whole. As part of its goal of providing up-to-date economic data, research and analysis to New Yorkers, it publishes a monthly New York City Economic Snapshot as well as the Trends & Insights series of publications covering such topics as Tech Venture Capital Investment, Borough & Local Economies, and Industry Economic Sectors. It also sponsors the Thinking Ahead series of events that brings together thought leaders and stakeholders to discuss and debate key issues shaping New York City's economic future. Economic Research & Analysis Group Michael Moynihan, PhD, Chief Economist & Senior Vice President Eileen Jones, Vice President Ivan Khilko, Senior Project Manager Kristina Pecorelli, Senior Project Manager Maureen Ballard, Project Manager Kyle Marks, Project Manager For more information, visit nycedc.com/nyceconomics Contact us at NYCeconomics@nycedc.com March 215 Tech Trends & Insights, authored by Kyle Marks Center for Economic Transformation