Hey, Enterprise Startups, You Should Move To New York

Soho, crowd, New York City

[credit provider=”Aimee Groth, Business Insider”]

I recently read the article “17 Enterprise Startups to Bet Your Career On” in Business Insider.   As a longtime enterprise investor, I was happy to see more attention being paid to this major area of venture, but a little disappointed in one dimension of the article.  

For the last couple of years we’ve been paying an increasingly large share of attention to the  enterprise and companies who sell to them.   

While much of our industry has been quite focused on social media or local deals, I noticed what is happening in the enterprise markets.  I look at some of the deals we did almost a decade ago and have seen what has happened to their valuation. Concur is trading at over $3 billion. Broadsoft went public last year and has been trading around the billion dollar mark.  Proofpoint and Vocera just went public. Taleo was acquired for $1.9 billion by Oracle. These aren’t the world’s sexiest businesses (although Vocera’s product is reminiscent of Star Trek) but they make money and have been great investments.

Why are the large bulk of the enterprise startups highlighted in the article based in Silicon Valley?  New York has become a startup phenomenon for a variety of reasons, all of which are applicable to enterprise startups.

Closer to Customers
If you are selling an enterprise solution to the Fortune 500, whether it is ERP, CRM or Security, .  New York has 45 of the Fortune 500 companies located here, more than twice the number of our closest competitor, Houston.  As a point of reference, San Francisco has 8.  Being close to your customer means understanding what their needs are and, for the first few implementations, being available to fix and adjust the software.  

Experienced CEOs Available
A big stumbling block used to be the number of battle tested startup CEOs available.  After more than a decade of Silicon Alley startups, NY has a plethora of excellent startup CEO’s, many of whom have made it through two or more startup experiences.  In addition, we also have IBM, CA and a number of other employers who have been known to sell a piece of enterprise software.

Tech Talent Available
Not a problem. With hundreds of thousands of programmers from Google, Microsoft, Facebook, Ebay plus all of the talent from the startups, Techstars, Betaworks, and the other incubators/accelerators, an enterprise startup is in good shape. In addition Columbia Engineering is doing a great job and Roosevelt Island will soon be filled up with Cornell/Technion students.  There will be plenty to go around.

Any old issues of not enough servers or hardware has been taken care of by the cloud.  Nothing more needs to be said.

VC Available
It used to be that people started up companies in the valley because that is where the VC’s were.  Not anymore.  USV, IA, DFJ, Firstmark; a bunch of the Boston guys (Matrix, Polaris, Flybridge) and some from the valley (Accel and KP) are all here. We at RRE have always been here. And are investing aggressively out of our new fund. We welcome enterprise startups. I am happy to announce right here, if you are a NYC enterprise company, please send me the deal.

I am looking at some of the newest deals we have done in our Fund V. A bunch of them are selling to enterprises and growing rapidly, whether it’s Whiptail and solid state storage arrays, Sailthru’s personalised marketing technology or Yieldbot’s big data ad platform. So, let’s get Facebook public already. Then let’s see the IPO’s of Workday and Cloudera come out. Time to get back to business, enterprise business.