New England VCs bit
into Big Apple media
November 16, 2007
Masshightech.bizjournals.com
by Christopher Calnan
A growing demand for digital media is
fueling investment in
New York media companies by
New England venture capitalists.
More and more early-stage media
startups are forming in
New York, an investment playground dominated by the world's
largest private equity firms that don't focus on early-stage
investments. In the past year,
New England VCs have seen that capital gap and pounced.
New England VC investments in
New York media startups through October already matched those
in all of 2006.
For example, Williamstown-based
Village Ventures opened a New York office in 2005 and now reports
that eight of its 12 media portfolio companies are based in, or do
most of their business in,
New York City.
And Waltham 's Kodiak Venture
Partners, whose firm has some New York-based general partners, has
made five investments in
New York media companies during the last 18 months. Those
deals include a $6 million Series A investment in
New York City-based iAmplify LLC announced in May.
At Cambridge 's Masthead Venture
Partners, six of the firm's 19 portfolio companies are
New York media companies, including ScanBuy Inc., ExpoTV and
Genesis Networks Inc.
And last month,
Boston's Spark Capital invested in
New York's Tumblr Inc. In August, it invested in KickApps
Corp., and in March, it led an investment in Next New Networks.
While investments have fluctuated
wildly, eight
New York media deals reached a total value of $38.4 million
last year, up from two deals worth a combined $5.7 million in 2005.
So far this year, local VCs have completed eight deals totaling
$22.2 million, according to Dow Jones VentureOne.
Masthead, founded in 2002, started
targeting media deals in 2003 because they represented high growth,
said general partner Brian Owen.
"Where are the deals? The deals are
in
New York," Owen said.
AOL LLC acquired Masthead portfolio
company Tacoda Inc. for a reported $275 million in July.
In 2005, Kodiak enlisted New
York-based Chip Meakem as a general partner. In May, Kodiak led a $6
million Series A round in iAmplify LLC, a
New York City digital media publisher. Meakem, who has been
investing in media companies since 1996, said he's seen more
New England and West Coast VC firms vying for
New York deals.
The surging deal flow is being fueled
by entrepreneurs from traditional media developing not only new
media, but "next media," or future innovations, said Nick MacShane,
managing director of Progress Partners Inc., a
Boston investment bank.
In October, Progress raised a $5
million Series A round of capital for Worktopia Inc., a New
York-based website operator that markets meeting spaces.
Earlier this month, the newly
launched Waltham VC firm Dace Ventures LP disclosed that digital
media would be one of its target areas. One of its three partners,
Doug Chertok, is the CEO of Modstream Inc., a New York-based retail
advertising company.
"So much is continuing to change in
the way people consume media," said MacShane. "Big media companies
are still struggling with how to connect with consumers."
|
