Entrepreneurship

Venture firm Primary raises $200M with one focus: invest in New York

Read more at www.crainsnewyork.com

Selling institutional investors at that time on a New York tech-driven story was challenging, said Brad Svrluga, co-founder and general partner at Primary. But we saw the writing on the wall. 

That writing began with the financial crisis of 2008, which Svrluga said pushed bright young minds away from Wall Street and into technology startups. People began leaving the citys largest industries—health care, finance, insurance—to launch companies aimed at solving specific problems in those fields. 

New York is now entrenched behind Californias Bay Area as the top region for venture-capital investment. Last year technology-focused startups here raised $16.2 billion from investors, with record levels for investment in health-tech startups and firms making software for businesses. 

Primary hit big on early investments in Jet, the e-commerce site Walmart purchased in 2016 for $3.3 billion, and Mirror, the Peloton competitor bought last year by Lululemon for $500 million.

The firm invests across a range of technology sectors, with a preference for ideas that connect with the citys largest industries. That included a 2018 investment in Latch, the smart-lock company for apartment buildings. Primary bet Latch could grow through partnerships with the New Yorks large real estate companies. One of those partners, Tishman Speyer, is now set to take Latch public through a $1.05 billion SPAC deal.

Ryan Denehy, founder of Primary portfolio company Electric.ai, moved back to New York from San Francisco in 2015 to launch his IT automation startup—despite warnings that hed be better off staying out West, where venture capital and the tech industry were far better established. Primary invested in the firms seed round and then each successive funding deal afterward, including a $40 million deal closed yesterday. 

In the early days, the more access you have to local talent, partners, customers and other key resources is transformative, Denehy said. 

Svrluga said the firm can help guide its investment through proximity. “We are no more than a 20-minute subway or taxi ride from any of our portfolio companies,” he said.

That thought sounds dated in an era when business is conducted via videoconferences. Svrluga counters that many of the companies he works are embracing remote work but plan to retain a presence in the city. Long-term, he said, he thinks New York has an advantage over San Francisco because technology here can tap into a more diverse economy than in the Bay Area.

The ability to get down the street, take that potential client to lunch, that still wins for a sale standpoint,Svrluga said. We are decades away, if we ever get there, to the point that physical presence does not matter.

Read more at www.crainsnewyork.com

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