New York tech startups see jump in funding activity

Last year’s investments were up more than 75% from the $3.3 billion VCs put into young New York enterprise-technology firms in 2019, according to a report released Wednesday by enterprise-technology-focused venture-capital firm Work-Bench, which tracks the city’s startups. The number of New York enterprise-tech deals rose to 189 in 2020 from 114 in 2019, according to Work-Bench.

New York is home to 17 tech “unicorns," or startups valued at $1 billion or more, including UiPath Inc., a robotic-process-automation software maker valued at $10.2 billion, according to the Work-Bench report.

Work-Bench also tracks what it calls the “next guard," a group of about 25 up-and-coming New York companies that have raised more than $100 million and/or have a valuation between $500 million and $1 billion. Risk and security companies make up almost 40% of this group, AI and machine-learning companies about 20%, and HR tech companies around 15%.

Work-Bench itself has invested in more than 30 predominantly New York-based tech companies, including Cockroach Labs Inc., a database company, and FireHydrant Inc., which sells software that helps operations teams manage and respond to incidents such as website outages.

Corporate moves last year to build digital capabilities that support virtual operations, from intelligent automation to remote work, have been a boon for startups focused on solving technology problems for businesses.

“Digital transformation was certainly driving the spike last year," said Jonathan Lehr, Work-Bench’s general partner and one of the firm’s co-founders.

In New York, he said, there is more opportunity than ever for tech startups looking to help businesses with their digital-acceleration efforts. The city is the headquarters for many financial firms, health-care organizations and other early technology adopters. In addition, New York is home to technology veterans who have worked in those organizations, understand their needs and are now employed by the area’s startup companies.

“It’s just boomed into an amazing ecosystem," Mr. Lehr said.

Unqork Inc., a New York company that offers a no-code platform for building enterprise applications with drag-and-drop simplicity, in October raised $258 million in a Series C round that was led by investment firm BlackRock Inc.

In New York, said Gary Hoberman, Unqork’s chief executive and founder, a company gets strong quickly when it starts out and tests itself in a place that has tough, demanding clients in finance and health care, which are subject to strict legal and regulatory oversight. Those companies, he said, have high expectations.

“When you solve the most complex problems for the largest companies with the hardest regulations, everything else is easy. So if you could solve it in New York City, you could solve it anywhere," he said.

“It really does start with the talent pool and the people," said Ed Bush, vice president of finance at Dataiku Inc. The New York company, which offers a machine-learning platform for enterprise customers, raised $100 million in August in a Series D round led by investment firm Stripes.

The company was started in Paris and has an R&D center there, but when looking to establish headquarters in the U.S. it chose New York to tap the city’s IT talent.

In terms of U.S. tech funding in 2020, data firm PitchBook Data Inc. and the National Venture Capital Association, the industry’s main lobbying group, report that business-to-consumer and business-to-business technology VC funding hit $117.5 billion in 2020, up from $106.1 billion in 2019.

PitchBook and NVCA don’t break out B2C and B2B funding by region, but reported that New York saw 1,500 VC deals in 2020, which was second only to the San Francisco Bay Area, which had 2,503 deals

“New York is well positioned to keep growing," Mr. Lehr said.

This story has been published from a wire agency feed without modifications to the text.