2024 NYC Summit Recap - A Playbook for Building Venture Communities

Last week, I joined Primary Venture Partners for their NYC Summit. What an amazing event catching up with many of my favorite co-investors and hearing the latest and greatest success stories from the NYC community. The growth and success of the NYC ecosystem is truly staggering when you take a fresh look at it, especially compared to 15 years ago when I was first investing and the start-up scene was more nascent.??

Benjamin Sun was generous to spend a little time with me, sharing some lessons and observations from the last 15 years of astronomical growth. It’s much easier to look back, in hindsight, at the drivers and inflection points in this amazing growth. But for Ben and Primary to have such foresight, and to execute on their vision to build the firm and track record over the last 10-15 years is incredibly impressive.??

At Grand Ventures , we spend most of our time in the top 25 MSAs outside of NYC and SF, and I focus my time on Fintech. So after seeing the phenomenal success at NYC Summit, I can’t help but reflect on:?

• Where can I find the next Ramp or, Better.com, related to Fintech, for example??
• For VCs, is there a formula that could predict the tipping point in other geographies??
• For economic development, is there a recipe to build a stronger economy??

These topics are well covered in other books and articles, so I’ll just share a few high level observations.?

1. People. It starts with people. Greater NYC is 20M strong, a multiple of even San Francisco. It ha also been a magnet for diverse talent for decades. So if people are the raw ingredient, NYC is nutrient rich. From the trained highly academic, to boot-strapped founders and software developers, NYC has a bit of everything. Equally importantly, it has experienced veterans and a steady stream of young talent, particularly those in AI, science, and other cutting- edge technologies.
2. Industry. Access to a diverse group of larger companies provides access to early customers, talent, and partners, as well as potential executive hires. NYC boasts a very large, diverse, and growing economy. Not every city outside of NYC will have the same diversity, and that’s OK, but multi-disciplinary teams and companies often times lead to more positive outcomes, and better outside-the-box thinking and problem solving.
3. Risk Takers. For a long time, top talent in NYC (and other areas) gravitated towards investment banking, management consulting, and other professional services and product industries. The Great Recession of 2008 was a forcing mechanism for many people and industries. As the economy shrank, and jobs disappeared, many entrepreneurially minded individuals were provided a nudge to reconsider. If “necessity is the mother of invention”, this came in a large and sudden dose. In my home city of Grand Rapids, the tech ecosystem is years behind that of New York City; however, each year, more and more talented individuals are leaving traditional jobs to join tech companies and start new ones. As this trend continues, the local startup communities, Grand Rapids or others, strengthens.
4. Success Stories. Taking “risks” is much more palatable, when you are surrounded by success stories, case studies, and examples of how it works. Founders learn from advisors, can recruit star employees from other companies, and there is a compounding effect on the entire community.
5. Financial Capital. Of course, most of these unicorns required venture and growth capital. Markets in my experience are very efficient and capital will typically either follow (or precede) lucrative investments. In this case, the NYC venture community blossomed to support, and continues to benefit from the surge in startups and unicorns. As unicorns begin to exit or IPO, it is also a massive wealth generation event for founders and early employees. If memory holds, when Duo was acquired by Cisco for $2.3B, it created 85 new millionaires, most in Ann Arbor, Michigan. Many of these former employees then started to make angel investments and went on to form new companies. Duo alumni went on to fund or start, dozens of companies in Ann Arbor alone. One big unicorn exit, in an emerging region, can be a catalyst for 100x the activity that preceded it.?

Success= People*Industry*Risk Takers*Success Stories*Financial Capital

Each factor multiples by the other, suggesting a compound effect.?

2+2+2+2+2 = 10 whereas 2*2*2*2*2= 32

As an example, what does this look like in NYC? According to Pitchbook, the number of Seed stage funding rounds has grown over the last 15 years, but surprisingly it’s actually somewhat linear, and mostly in line with San Francisco. (Not what I expected) From 2012 to 2023, the number of seed financings more than doubled, as representation of “new companies”.?

In the same time frame, the amount of funding to NYC tech companies has grown significantly faster, from ~$1B annually in 2010 timeframe peaking at over $50B in 2021 and ~$20B since then. Over 20x growth!

What does success look like in a tech ecosystem like New York? According to Tech:NYC 2023 Annual Report…

New York hosts over 25k tech enabled startups, 369k tech jobs, representing (drum roll)....$647B in market value (from 132 startup valuations + exits).?

Takeaways:

1. Huge congratulations to the founders, employees, and venture capitalists in New York City!?
2. For other founders, cities, and communities, your story will be unique but can follow that of NYC. Change does not happen overnight; It starts small and compounds over time. You will probably feel “escape velocity” before those from a distance observe it.?
3. If this^ is happening in your backyard, we’d love to come visit and lend a hand! Grand Ventures is on the road. North to South and East to West. Whether it’s your first startup, or your tenth, we’re here to help!?

Note: Thanks Jacqueline Lensing for helping with the data in Pitchbook and from other great articles, reference or linked above!