Primary Venture Partners, a firm focused exclusively on investing in New York-area startups, has raised $150 million in its third fund for seed investments (its largest so far), as well as $50 million for the Select fund it uses to participate in later-stage rounds.
The firm’s portfolio includes New York success stories like Jet.com (acquired by Walmart for $3.3 bill million), Mirror (acquired by Lululemon for $500 million) and Latch (which is planning to go public via SPAC). And the firm has doubled down on its association with New York by publishing an NYC Founder Guide.
Still, the idea of limiting your investments to a specific geography might sound old-fashioned at a time when offices largely go unused, teams are increasingly distributed and some investors are loudly trumpeting new startup hubs. But General Partner Brad Svrluga (who founded the firm with General Partner Ben Sun) told me that the New York focus remains crucial for the firm — for example, in its work to help startups hire the best employees.
“When you think about [our three-person talent team], their charge is to understand, track and be connected to the top 10% of all talent in New York City,” Svrluga said. “That’s a big, ambitious challenge, but it’s also one that we’ve got a really good shot at doing in a relatively confined geography. If we were trying to simultaneously recruit for companies in New York, Seattle, Boston, Austin, L.A., the Bay Area, etc., you just can’t do it — or you’d need an army.”
And while he said San Francisco and Silicon Valley remain “unquestionably the center of the universe that we operate in, the sun around which everything else evolves,” he suggested that New York has unique advantages: “Unlike the Bay Area, New York is powered by a whole collection of industries. That diversity makes the place radically more resilient.”
That doesn’t mean things won’t change as we emerge from the pandemic. For one thing, Svrluga anticipated that companies that are ostensibly New York based will be more distributed, with “a relatively lower percentage of their workforce in New York City proper,” and of that NYC workforce, “fewer of them in the office on any given day.” He’s also hopeful that startup real estate costs will “shrink materially.”
“I would love it if you and your peers continue to trumpet the demise of New York, so other investors can stop paying attention and we can have a less competitive environment,” he added.
Another change — one that’s not limited to geography — is the growing size of seed rounds, which Svrluga said is one of the reasons for the larger fund. The seed, he suggested, has become “the first third of the A” round, but that doesn’t mean startups raising seed rounds need to be more further along.
“A whole bunch of what we do has always has been way pre-product,” he said. “It could be just a founder or just two three people …. some early code might be written but you’re months and months way from launch. They’re now capable raising $2.5, $3, $4 million right out of the gate.”
In addition to the new funds, Primary is also announcing that it has appointed Rebecca Price as operating partner and promoted Jason Shuman to partner.