Mark Gorenberg
Venture Capital activity produced another record setting year in 2021. According to Pitchbook Monitor, US venture-capital backed companies raised $329.6 billion in 2021 nearly double the dollars invested in the previous year. While rounds for later stage rounds were larger in 2021 over 2020, a record year for deals also occurred with 17,054 venture rounds and a record year occurred for angel, seed, first financings, and early stage venture capital investments with 9,726 financings compared to just 6,906 such financings in 2021. What made this even more remarkable was that most meetings were still conducted virtually, due to new variants constantly changing meeting plans, supply chain issues, chip shortages, and an unprecedented war for talent. The appetite for entrepreneurs to start companies and venture capitalists to fund them is recreating the economy faster than ever.
In 2021, the New York metro area saw the fastest growth of any major US area in the country with 276 percent YoY increase in funding dollars ($53.8B) and 139 percent increase in deals (2,295). New York remained a solid second to the San Francisco Bay Area for venture capital deployment.
CB Insights reported that 2021 continued to be a breakthrough year for AI with funding at $68B in 2,348 deals as businesses continued to accelerate the adoption of AI and machine learning to solve problems and increase revenue. And according to Traxn, as of July 2021, there were already 986 AI-based startups in NYC. Flatiron and Brooklyn seem to be particularly growing the AI startup ecosystem, while Chelsea has become a second home to the large companies from the San Francisco Bay Area and Seattle.
Traditional areas of New York technology strength –financial services technology and media and marketing – continue to flourish. In those areas, for example, we were the first investors in Tractable (NYC-based unicorn that started in London) and Marketing Evolution. But new areas in AI-based startups have also diversified NYC strengths into areas such as ML Ops, AI-based healthcare, business process optimization, fraud prevention, risk detection, application development, customer service, urban agriculture, and robotics. And existing NYC-based applied companies are moving into new AI areas via acquisitions, such as the recent acquisition by Aetion of Replica Analytics.
NYC has seen a strong venture capital community with leading NYC-centric firms like Insight, Union Square, FirstMark, RRE, Greycroft, Eniac, Lerer Hippeau, Lux, Tiger Global, and Addition and ecosystem convening centers like NYU’s Endless Frontier Lab led by Professor Deepak Hedge and Lowenstein Sandler’s Venture Crush led by Ed Zimmerman.
Zetta Venture Partners was the first firm to invest solely in AI, B2B business models, and seed stage. We invest in enabling AI and applied AI and have made 50 investments to date. While starting in San Francisco in 2013, Zetta Venture Partners opened its physical presence in Flatiron in 2018. Dylan Reid, who is particularly interested in AI-based life sciences, leads that office with Zetta founding partner, Mark Gorenberg. Our specific areas of interest, such as ML Ops, Life sciences, and climate tech, among others are on our website. We pen a monthly newsletter and moderate a bi-monthly live interview with industry luminaries. We look forward to hearing from you and if you have an AI-based startup, we hope you will contact and consider us for funding.
