Tech:NYC Digest: March 2

Tech:NYC Digest: March 2

March 02, 2023 • Estimated Reading Time: 9 minutes

Thursday, March 2, 2023

In today’s digest, the stats that show a more diverse NYC, what recession doom-sayers got wrong, and BBG Ventures principal Claire Biernacki’s top five tips on fundraising during a downturn.

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  • A new CUNY report shows that NYC grew more ethnically diverse and less racially segregated between 2010 and 2020, where foreign immigration is fueling the city’s population growth. Asian immigrants, in particular, accounted for more than half of the city’s net growth of 630,000 residents in the last decade. (Gothamist)

  • NYC today unveiled a new mental health agenda focused on improving family and child mental health, as well as doubling investments in serious mental illness support initiatives. (ABC New York)

  • The NYC Council passed a slate of bills today to establish safety standards for the lithium-ion batteries used in many e-bikes and scooters. (Gothamist)

In other reading:

  • What Happened to the Recession? (The Atlantic)

  • Will You Get a 212? They’re Finally Handing Them Out Again (Curbed)

  • Save the Slice Joints! (Grub Street)

One of the most common questions Tech:NYC is hearing from our early-stage startup members is: ‘How much harder will fundraising really be in 2023?’ 

We spoke to BBG Ventures principal Claire Biernacki, who shared five tips for setting your financial model up for success at the early stage, especially in a downturn:

Show a path to $100M+ in revenue. Why do you focus on $100M in revenue?  

  • “The No. 1 thing VCs are asking themselves when reviewing a financial model is ‘can this company become a multi-billion dollar business?’. Founders should show their aspirations to scale quickly via their model. While the revenue level the company needs to achieve to generate a multi-billion dollar exit will vary depending on exit multiples, BBGV likes to consider the $100M case, as well as what revenue level is needed to return half of our fund as a way to compare each investment opportunity.”

Demonstrate a path to profitability. What is the most important thing for founders to show in a model?

  • “In today’s market environment, VCs are even more focused on business models with high margins, low operating costs, and a path to profitability. Equally as important: VCs are focused on the business fundamentals and ensuring the unit economics work. The model should show a path to reaching break-even. And VCs want to know that founders understand the levers to get there.”

“Sanity check” assumptions. How can pre-launch or very early-stage founders build models without data? 

  • “Founders can compare their revenue projections to the size of the market to ensure they’re not capturing share at a pace that is too fast or too slow. Even pre-launch, founders can use data from their initial testing with users to come up with realistic assumptions coupled with research about other companies in their industry.”

The round size should provide enough runway to get to the next milestone round. Assuming a downturn plays out like we think, should startups right now be focused on sustaining current revenue or scaling growth? How important is longevity right now? 

  • “This is a tough answer but both! VCs still want to see that founders are thinking about the unlock to raise their next round of financing (i.e. what is being de-risked between the seed round and the Series A?), but also about steps to building a sustainable business model. In many industries at the early stage, the metrics for success at the next round have moved away from specific revenue metrics and more towards 'can this business model scale profitably.'"

Be the financial “tour guide” investors can rely on. What are the primary details investors are looking for *beyond* the first meeting/in subsequent meetings? How do founders keep investor interest?

  • “At BBGV, the three most important areas we consider to get to a ‘yes’ on an investment decision are: ‘why this team,’ ‘why this product,’ and ‘why now.’ After the first meeting, we typically have a certain level of excitement around each of these — we want to use subsequent meetings to go deeper with the founder and understand the broader vision for the company. We’ll double click on areas like product roadmap, GTM, market size, and team evolution — the best founders are able to go deeper and get more detailed with each conversation.” 

In other reading:

  • Office Mandates. Pickleball. Beer. What Will Make Hybrid Work Stick? (New York Times)

  • Is the 4-Day Week Just for White-Collar Workers? (New York Magazine)

  • The No. 1 reason women say they would quit their jobs in 2023 (CNBC)

  • BlocPower, a Brooklyn-based green energy technology startup, raised $24 million in Series B funding, as well as $130 million in debt financing. VoLo Earth Ventures led the Series B round and was joined by Microsoft’sClimate Innovation Fund, Credit Suisse, Builders Vision, New York State Ventures, Unreasonable Collective, Gaingels, Kapor Capital, and others; and Goldman Sachs led the debt financing funding.

  • EvolutionIQ, a NYC-based claims guidance platform for insurers, raised $7 million in Series B funding. Brewer Lane Ventures led the round and was joined by First Round Capital, FirstMark Capital, Foundation Capital, and Principal Financial Group.

  • Novata, a NYC-based ESG platform for private markets, raised $30 million in Series B funding. Hamilton Lane led the round and was joined by Microsoft's Climate Innovation Fund, as well as insiders S&P Global and the Ford Foundation.

  • Skillit, a NYC-based recruiting platform for construction labor, raised $5.1 million in seed funding. Building Ventures led the round and was joined by MetaProp, HOLT Ventures, Great North Ventures, and others.

  • Wunderkind, a NYC-based behavioral marketing platform for brands, raised $76 million in Series C funding. Neuberger Berman led the round.

Downtown Brooklyn Partnership is accepting applications for its Make It In Brooklyn Female Founders pitch contest. Five female-led, early-stage startups will be selected for a chance to win a $5,000 cash prize. Learn more and apply by March 3 here.Element 46 Startup Accelerator, a Westchester County program for tech startups, is accepting applications for its Spring cohort. Applications are reviewed on a rolling basis. Learn more and apply by March 6.FounderBoost is accepting applications for its next NYC cohort. The six-week program is a tech startup “pre-accelerator” to help founders prepare for accelerator programs, seed investment, and revenue strategy. Learn more and apply by March 15 here.Entrepreneurs Roundtable Accelerator is accepting applications for its Summer 2023 NYC accelerator program. ERA invests $150,000 for a 6% post-money SAFE and provides a four-month intensive mentorship program. Learn more and apply by April 17 here.The Grand Central Tech Residency Program is accepting applications for its Fall 2023 cohort. Selected startups receive free office rent for a year, as well as other community and programming benefits. Learn more and apply by July 15 here.

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