For a well-rounded perspective on the New York City startup and venture investing scene, there's few who could top James D. Robinson IV.
The co-founder of one of the Big Apple's leading venture capital firms, RRE Ventures, Jim has been investing for nearly 30 years and has backed dozens of startups in information technology, e-commerce, mobile and digital media. Now investing its fifth fund at $230 million, in 2012 RRE Ventures made seven venture deals and eight angel investments -- and has even backed an innovative Chinese luxury travel network, Affinity China.
Having worked in both Silicon Valley and New York City, Robinson knows full well the customs of investing coast to coast will never meet. I asked Jim what are some key differences, and what follows is an excerpt of our interview in prep for Silicon Dragon Alley.
Q. Would you consider New York as the digital media startup capital? A. There are basically seven business sectors in New York such as finance, fashion, advertising, media -- and two of those are being tremendously transformed by technology and the move to a digital future. This has created a lift for New York as a startup hub over the past few years after the end of the dotcom era.
Q. Why doesn't the east coast have a Facebook, Google or Twitter? A. I would argue that it does -- Bloomberg. It's an information service and tech business that was created in the mid-1980s and blew up in size over the past dozen years.
Q. Where will the next major media public company come from? A. Not from the Valley, but likely from here. New York City is a business center with domain expertise and business centers with the energy, talent and the right DNA lead to company formation.
Q. How would you compare the tech clusters of New York and Silicon Valley? A. The Valley has the hard sciences, the labs, the R&D centers. You're not likely to see anyone doing semiconductors, cloud computing or big data in the city. The Valley activity is centered on two key areas -- information technology and biotech. New York is less about creating the technology platform but using the technology.
Q. How do startup investing trends compare coast to coast? A. I think New York is under-capitalized as a venture hub. There are only about eight to ten venture firms here. Valuations to invest in startups are lower here than in the Valley. While valuations are on the rise here, they're still at about a 20-30 percent discount to the Valley.
Q. What's the impact of angel investors on venture capitalists? A. Angels have a meaningful piece of the business. Today, you can start up a business at only $50,000 and have it ready within weeks of concept, and angels are in a good spot to capitalize on that phenomenon. We started doing seed investments about three years ago, investing up to $200,000 to $300,000 and the seed fund has already doubled its money.
Q. How would you describe the cycle of investment in digital media? A. I think we're nearing the stage where we're seeing consolidation and roll-ups at a much higher velocity as traditional publishing models are being displaced.
Q. Is there a big winner in your portfolio of companies? A. In 2012, we had two IPOs -- wireless communication system Vocera, cloud-based email security solution Proofpoint and a secondary offering for exchange-traded fund sponsor fund and asset manager WisdomTree. We think MakerBot in the 3D printing industry and Quirky in crowd-sourced product development are among those that have big potential.
