Silicon Alley: Tech Start-Up Investing in New York City - Post 5
EisnerAmper partner John Pennett moderated a session on tech start-ups and investing in NYC. The session featured noted investors Alan Patricof, Co-Founder and Managing Director of Greycroft LLC and David Rose, CEO of Gust.
Highlights of the discussion included:
2016 & Upcoming Years
2016 was the slowest year in history for tech venture and there will not be significant change in the near term due to:
- Enormous amounts of money from private equity. Companies are being bought in early-stage, pre-public rounds. The private equity fund then ends up holding the investment much longer than they anticipated
- There have been longer term investments in the private market, which makes liquidity on funds in ventures impossible.
- A lot of CEOs of these young companies have grown in value so fast that raise concerns being public
- Nowadays, we have more options to raise capital in private markets rather than going public such as M&A deals, private equity and angel investors.
Increases in Entrepreneurship
One of the fastest growing programs in many universities focuses on ‘entrepreneurship.’ Our younger generation wants to be entrepreneurs, angel investors and venture capitalists. John raised questions about where the entrepreneurs are coming from; is it realistic to think they are going to have sustainable and fundable companies; and what do they need to be successful? Mr. Patricof and Mr. Rose agreed that we are undergoing an entrepreneurial wave in our country. More people have the ability to become an angel investor and they are more sophisticated than years ago. They are not just investors, but experienced in the fields in which they invest. In addition, they believe that there are important elements to their success: education, role models and experiences from other start-ups. Many universities, including Columbia, NYU and Cornell, are building facilities and labs to provide more resources for these entrepreneurs. In addition to universities, there are companies such as WeWork which provides space and resources in different cities in the U.S. and internationally for start-ups and early stage businesses to assist them in growing their business. Lastly, our speakers agreed these young companies need more funding and guidance from venture capital and angel investors to take care of them in order to be successful.
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