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Saturday November 1, 2014

MITEF: The State of NY Venture Capital in 2013

Sam Hamada with panelists Warren Lee (Canaan Partners), Charlie O'Donnell (Brooklyn Bridge Ventures) and Habib Kairouz (Rho Capital Ventures) Photo: L. Keyson

Sam Hamadeh with panelists Warren Lee (Canaan Partners), Charlie O’Donnell (Brooklyn Bridge Ventures) and Habib Kairouz (Rho Capital Ventures) Photo: L. Keyson

By Lauren Keyson

MIT Enterprise Forum in NY held a tech and VC event in the spacious yet intimate Gramercy loft of Sam Hamadeh, founder of PrivCo and Vault.com Thursday evening. Panelists from the NY venture capital community discussed the current and future directions of tech. Their conclusion: venture capital is very strong  and NY is great place to start a company. But there is one caveat. According to panelist Habib Kairouz of Rho Capital Ventures, it will be a busy year for investors, but a tough one for early stage entrepreneurs. “A lot of companies got funded at a very early stage by angel and pre-series A rounds that are not trying to get the first institution round. I think the bar has gone up substantially for that person’s institution round.”

Charlie O’Donnell of Brooklyn Bridge Ventures sees a lot of investment in product at the individual company level. He says many first time founders who’ve been backed are relatively younger and don’t necessarily have industry experience. “If you kind of read the tea leaves and what’s being talked about, I think investors are finding that more focus on revenues and some kind of stability or predictability is where they’re looking. I like founders who have some expertise in their industry and have appropriate DNA for the kinds of problems they’re facing.”

He sees revenue as a ”trend” in 2013. “I hate to call it a trend, because that should be an integral part of the business, but I think there is more of an impetus to discover where the fire hose of revenue is. There’s the expectation that venture capital might not be as easy to find, although the numbers just came out on NY and were up 14% from a year ago. Whether that’s reality or perception I’m not sure.” He likes various types of companies that have not been announced: a political data platform, kid’s apps on tablets and collaborative writing tools for journalists. But there is one company that he can announce, Windowfarms. It’s an indoor food growing system attached to a social community. “So it’s literally these planters — 30,000 people on the website — sharing things like what kind of sunlight do you need and what are the best nutrients.”

Howard Morgan of First Round Capital said NY is a great place to do venture investing. “’We’ve seen Flybridge Capital coming into this market, Union Square Ventures, Lerer Ventures and First Round. There is now a very vibrant group that can do syndicate deals and bigger deals. We’re seeing companies like Fab.com, an e-commerce site for home goods and high style design, go from $0 to $100M in sales in 18 months and Gilt, a fashion site, is well over $500M in sales.”

He is seeing more companies every month in FinTech, mobile and media. He also likes healthcare information and advertising technology, particularly in social media and mobile. He noted that the advertising ecosystem is just really getting to mobile, and gave Say Media  and Uber Media as examples. “Both of these are trying to make sure the mobile experience and targeting is done well so that advertisers can get real benefits. On a web, it’s easy to open another browser window when you click on an ad, but when you’re on mobile, you’re usually focused on something; it’s not as easy to click away from what they were doing.”

Hamadeh likes information sharing sites, tools, and platforms. His company Vault is a career information website. His other company, PrivCo, is a Bloomberg-like terminal for privately held companies. “No one has really attacked this area,” he said. “We’re bringing accurate reliable financial data and a user friendly platform for financial professionals. It helps them to make investment, business and market research decisions on a private company financial data platform.”

Kairouz is seeing a lot in mobile and a lot of disruption in media, specifically in the TV space with on-demand software that targets both businesses and consumers. “We have a company called Get Glue which is a second screen social TV platform here in NY. In the consumer apps space we have a company called Dash Lane that stores passwords and has automated logins for all your credentials, websites and online automatic checkouts. No one can get a hold of these things because the password doesn’t sit with anybody except your brain.”