News on March 2 that NYC Seed had selected the first 2 of 10 technology start-ups to receive $200,000 brought some brightness to New York City’s business pages where bleak recession stories have become all too familiar.
NYC Seed, a partnership between Polytechnic Institute of NYU, the New York City Investment Fund, the New York State Foundation for Science, Technology and Innovation, and several other private and public organizations, received nearly 300 proposals from start-ups seeking investment from a $2 million fund Mayor Michael Bloomberg announced at the kickoff of June 2008’s Internet Week.
PlaceVine, a web-based service that connects brands and agencies to top product placement and sponsorship opportunities in film, television, and new media, is one of the chosen start-ups. The other is Path 101, a “Resume Genome Project" that mines information from a database of millions of resumes to help job-seekers discover new opportunities.
According to NYC Seed Managing Director Owen Davis, “A seed investment, combined with mentorship, can be the difference between success and failure for an entrepreneur with a great idea. We are greatly impressed with these two firms and are thrilled to be participating in their ultimate success.”
NYU-Poly President Jerry M. Hultin commented that “NYU-Poly is excited to see new ideas getting the support they need especially during this economic downturn.”
Below are highlights from this week’s coverage of NYC Seed’s announcement.
“NYC Seed Nurtures Homegrown Start-Ups,” The New York Times
New York City has always been a destination for actors, singers, models and musicians hoping to someday see their names in lights. Now, NYC Seed, an early-stage technology fund, wants to help transform the Big Apple into a thriving incubator for Internet start-ups.
“New York is highly underleveraged,” said Owen Davis, managing director of NYC Seed. “Start-up companies are a great way to do that.”
Mr. Davis hopes that by financing newborn local start-ups, the company can expand New York’s technical infrastructure and infuse it with some of the ebullient start-up spirit that resonates throughout Silicon Valley.
To that end, he’s brought together some of the crucial components that nurture the West Coast’s start-up community. For starters, he enlisted local government agencies and universities to contribute to the fund
… In addition, the company recruited notable venture capitalists and entrepreneurs for the company’s advisory board, including Drew Lipsher of Greycroft Venture Partners and Fred Wilson of Union Square Ventures, to help guide the budding companies through development.
“City seed fund finances two tech start-ups,” Crain’s New York
“Getting this layer of capital going is the tinder for everything else,” [Mr. Davis] said. “It’s the riskiest, but if you don’t do this, you don’t have the next layer.”
…Mr. Davis says the group is looking for companies that have some kind of technological advantage and “address a big market in a way that’s highly scalable.” Though NYC Seed’s purse is tiny when compared with the money available through private venture capital companies, a renewed focus on start-ups — and deterioration in professional venture funding — may make NYC Seed even more appealing to local entrepreneurs.
In the fourth quarter of 2008, venture capital investments dropped 33% nationally, as compared with the same quarter in 2007, according to a PricewaterhouseCoopers’ MoneyTree Report. In New York, the decline was 24%.
“NYC Seed Announces Their First Investments in Two City Start-Ups: PlaceVine and Path101,” The New York Observer
Both Path 101 and PlaceVine aren’t traditional “seed” companies — as in “two or three guys with an idea and a business prototype,” as PathVine co-founder Greg Neichin told The Observer. Both companies have been established for more than a year, received previous funding and were deep in the development stages before NYC Seed stepped in.
Charlie O’Donnell, Path 101’s co-founder and chief executive, told The Observer that the economic climate made venture capital companies and angel investors hesitant to fund new companies. Instead, they concentrated on making their current portfolio companies stronger. So NYC Seed was formed at just the right time for the mid-level city start-ups who needed that last bit of funding to get over a development hump.
Both companies went through a lengthy application process to receive NYC Seed funding. Mr. O’Donnell said presenting his company before NYC Seed’s investment board, including Mr. Davis, made his company better.
“I think what Owen brings to the table is he is a really, really focused on metrics, the business plan the revenue plan. You might have somebody who knows you really well, as a character, but really doesn’t know how to ask you the tough questions about your businesses. He’s extremely thorough, and kind of kicked ourselves in gear, to make us plan for things and look ahead.”
“NYC Seed backs Path 101, PlaceVine,” TheDeal.com
"There's a small number of punches on our card," explains Davis, who describes the selection process as rigorous. "We can only fund 10 companies at $200,000 each."
For PlaceVine, the backing from NYC Seed will "support our sales and marketing efforts as we expand PlaceVine to hundreds of brands, agencies and content creators across film, television and new media," says co-founder Adam Erlebacher.
Davis says one of the roles NYC Seed will play is helping startups prepare for an institutional round of funding.
Indeed, Path 101 CEO and co-founder Charlie O'Donnell views the NYC Seed funding as "kind of a bridge" to the $2 million to $3 million round he hopes to raise from venture capitalists later this year.
NYC Seed is a partnership between ITAC (www.itac.org), New York City Investment Fund (www.nycif.org), the New York State Foundation for Science, Technology and Innovation (NYSTAR-www.nystar.state.ny.us), New York City Economic Development Corporation (www.nycedc.com) and Polytechnic Institute of NYU.
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