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December 01, 2010

IPO Anxiety - East Coast Version (part 2: NY)

Yesterday, I analyzed the Massachusetts IPO ecosystem.  Today, I look at NY. 

Unlike MA’s robust public company ecosystem, where I counted 33 companies with greater than $1 billion in market capitalization, I was shocked to discover how very few public companies in the Innovation Economy that exist in the Big Apple.  If you restrict the geography to 30-45 minutes driving distance and part of the “scene” (which encourages mingling and productive talent and idea sharing), you have to eliminate CA, IBM and Priceline.  I think that only leaves you with the following companies that have greater than $1 billion in market capitalization:

  • AOL ($2B)
  • Intralinks ($1B)
  • TakeTwo Interactive ($1B)

I’m sure I must be missing a few, but my informal survey of NY VCs, bankers and entrepreneurs didn’t yield any others.  There are a few smaller public companies, like Travelzoo ($660M) and Medidata ($470M), but even the sub-$1 billion market cap list is uninspiring. Given the digital transformation of media and advertising, some may argue that the big media companies and advertising agencies should be included here and certainly they play a very important part of the NY ecosystem, but in terms of pure technology companies with entrepreneurial DNA and technology roots, it’s disappointing to see how few are in NY. 

That said, when you analyze the pipeline of IPO candidates, you begin to see a very different picture.  Not only is it quite robust – there are roughly 30 companies with estimated market values of greater than $100 million – but arguably full of companies that feel more promising and explosive than the MA companies.  The chart below is lifted from the Business Insider list, but I also cross-checked with AlwaysOn, Inc’s various lists and input from local members of the entrepreneurial community.

Rank

Company

Estimated Market Value (mn)

Estimated 2010 Revenue

1

TheLadders.com

$800

$100-120

2

Gilt Groupe

$750

$400-500

3

Everyday Health

$480

$120

4

FreshDirect

$300

$300

5

Etsy

$300

$30-50

6

Vibrant Media

$275

$125-150

7

Thumbplay

$260

$80-100

8

Yodle

$250

$70

9

SecondMarket

$250

$50

10

ideeli

$250

$150-175

11

Huffington Post

$200

$30

12

Tremor Media

$175

$60-70

13

Undertone Networks

$150

$65

14

Gawker Media

$150

$50

15

CafeMom

$150

$25-30

16

NextJump

$135

$20-30

17

Betaworks

$100

$0-5

18

Rent The Runway

$100

$20

19

Recycle Bank

$100

$10

20

Media6Degrees

$100

$20-22

21

Foursquare

$100

$0

As far as I know, none of these companies has yet registered to go public.  Everyday Health almost did, but then pulled out and raised a private round of financing instead.  Behind this list, there are tens of other strong NY-based start-ups with real revenue momentum (> $30m) and belong in the > $100 million market capitalization category.  Folks cite:

  • 33Across
  • Antenna Software
  • BuddyMedia
  • Clickable
  • GLG
  • LiquidNet
  • MediaMath
  • OLX
  • Vostu
  • Yext

The conclusion is that NY is missing, that robust public company ecosystem does not exist.  Unlike in MA, one doesn't see public company CEOs regularly mingling with their pre-IPO brethren at cocktail parties and industry gatherings.  If you fast forward two or three years, however, the NY-based IPO company pipeline appears quite promising – arguably more promising than MA’s – and bodes well if the investors and management teams have the courage to go all the way.  Then, the CEOs of these companies will need to heed the warning of many wise men and women before them who know that an IPO is not an exit, it’s a financing event.  The best is yet to come.

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Comments

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I think you need to consider all of the major media companies with big NYC operations as part of the NYC ecosystem. Add

Google
IAC (HQ)
Yahoo
WebMD
NyTimes (Including About)
Hearst
Omnicom
NBC
ABC
CBS
Viacom
Bankrate
Bloomberg
Ogilvy
Barnes and Noble

Martha Stwart Omnimedia...

to name a few

Fair point - although not clear they really have the same talent mix as a truly entrepreneurial company, particularly at the exec level.

This website list is really good!

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