Jessica Peltz-Zatulove is a partner at MDC Ventures (formerly KBS Ventures), who says the colloboration in NYC is inspiring.
Liwen-Edison Fu: How is New York City, but also the state in general, doing compared with other US regions, for example, Boston and the Valley? How has New York’s ecosystem developed over the years and how has it affected your investment approach?
Jessica Peltz-Zatulove: NYC is a thriving tech community, and we are still getting started! Seeing the progression over the last decade has been incredible – there has been an explosion of new venture funds, particularly at the early stages, dozens of case studies of break-out unicorns born here, and more “mafia” spin-outs of employees from successful companies starting new businesses [when large companies’ early employees leave and create new, transformative ventures. In New York City, employees from mature firms including MongoDB, Etsy, Zocdoc, Foursquare and Tumblr are founding new startups].
The maturity has also led to an increased number of angels – both from entrepreneurs that have seen success, and other business people discovering venture as a new asset class to diversify their investments, which has also contributed to the amount of capital and mentorship going into the community.
The collaboration around is inspiring – you can feel the genuine desire for people to champion founders to help elevate the startup community to help people succeed. NYC is also a leading ecosystem for diversity and inclusion – we first started the women in VC community in 2015 with about a dozen women, today we have more than 400-plus women venture investors in the community. This has also translated to more female and minority led companies, reinforcing NYC’s culture as a powerful melting-pot force in the tech ecosystem.
LEF: What areas are hot, given that media, retail and finance are big industries undergoing digital disruption?
JPZ: New York is arguably the centre of the business world, which uniquely positions us to understand the nuances of various industries, customers, access a diverse pool of talent and recognise business models ripe for disruption. We are really excited in the developments around voice technology and how it will transform that way consumers transact. We believe there are dramatic implications to how people shop, search and discover products that will force brands to rethink the way they approach commerce in the coming years.
LEF: How does your CVC unit work with VCs, universities and the government?
JPZ: We are very collaborative with other institutional VCs and are often brought into investment rounds as the strategic investor. Founders understand the value of having a balanced investment syndicate – which typically includes a mix of institutional capital, where the team tends to have expertise around building and scaling businesses, while strategic VCs have domain expertise around the customer, can help with commercial agreements for revenue acceleration, category expertise and more.
Having multiple diverse perspectives around the table helps the company thrive, so we are always looking to co-invest alongside a traditional venture fund to round out the value investors can bring to the founders. We will also regularly help traditional VCs evaluation opportunities through our lens as a customer, offering insight on the viability of the problem, market and so on. To date we have not worked with universities and governments but are always open to finding new partners to collaborate with.
Scott Levine is a partner at Samsung’s Catalyst corporate venturing unit who highlights VC interest in new media
Liwen-Edison Fu: How is New York City, but also the state in general, doing compared with other US regions, for example, Boston and the Valley? How has New York’s ecosystem developed over the years and how has it affected your investment approach?
Scott Levine: Corporate venture capital in New York is growing: there were approximately three times the number of deals completed in 2018 than were being done 10 years earlier. That trend places the New York Metro Area second to the top-ranked San Francisco Bay Area. Will New York City catch up to the Valley? It is hard to say. But the Bay Area deal rate today is almost twice what it was a decade ago, and about twice that of New York now.
A decade ago, the Boston area’s deal rate was slightly above New York’s. But around 2010, that changed, and Boston has dropped significantly given the number of deals it closes annually is now about half that of the New York area.
Regarding New York State overall, the deal rate is on the way up, tracking the metro area. Like the metro area, its deal rate has increased to three times the number of deals it closed 10 years ago. (Keep in mind that the New York Metro Area includes Northern New Jersey and Philadelphia, so not all metro-area deals contribute to New York State statistics.)
LEF: How has New York’s ecosystem developed over the years and how has it affected your investment approach?
SL: Over the past 10 years, we have seen the development of a vibrant ecosystem of entrepreneurs, growth-equity investors, and Columbia University, New York University and Cornell Tech academics – all allowing for enormous growth in the venture business. There have also been some sizeable exits, in which founders have gone on to form new companies or have invested in other startups. Flatiron Health is just one that comes to mind.
LEF: What areas are hot, given media, retail and finance are big industries undergoing digital disruption?
SL: There are few VCs investing in traditional media anymore, but they are certainly interested in new media opportunities like e-sports and sports betting. Similarly, the traditional retail experience is giving way to direct-to-consumer retailing startups like Dollar Shave, Casper and Warby Parker. And finance is seeing inroads in their traditional territories from tech providers who pull the friction out of older ways of investing and insuring.
LEF: How does Samsung work with other VCs, universities and government?
SL: The Samsung Catalyst Fund joins other VC funds to invest in startups that are located in the United States, Europe and Israel. We also work with academics who help us better understanding cutting-edge technologies, such as quantum computing, while we, in turn, help them evaluate the business potential of their research.
