When Walmart acquired Jet.com
for $3 billion in cash Monday, it became the biggest e-commerce deal ever. But the deal is also a “watershed moment” for the New York tech scene, according to investor Ben Sun from Primary Venture Partners.
It’s the biggest acquisition ever for a New York-based startup — the runner up is Tumblr, which was acquired in a $1.1 billion deal by Yahoo in May 2013.
“You’re finally getting entrepreneurs and operators who really are striving to build extremely large companies,” Ben Sun, cofounder and general partner at Primary Venture Partners, told Business Insider.
“It’s so hard the first time around and all the people in the Valley, they have had that experience and they have been building large companies, or have been part of big companies. We just didn’t get that experience in the tech scene in New York until I’d say the last couple of years.”
Primary Ventures was one of Jet’s first investors, taking part in a venture round led by New Enterprise Associates in 2014. The round included Accel, which is based in the Bay Area, and Bain Capital Ventures, headquartered in Boston. The fact that Jet had out of town investors is a good sign, Sun says.
“Your good indication is, are West Coast guys coming out here? And are they doing deals?” Sun said. “We see it all the time now. The amount of interest that we get — as New York seed investors — coming from the West Coast has gone up dramatically. The big reason why is that you’re actually seeing big exits.”
Sun says that when he met Jet CEO Marc Lore for the first time, he was expecting an intro meeting. But less than 40 minutes later, Lore had negotiated a deal with him and told him the one thing no one else was saying yet: that he wanted Jet to be a billion-dollar company.
“We were like, ‘Finally! We’re playing in the big leagues now, not minor league ball,'” Sun said.
Kenny Herman, a New York entrepreneur who founded SinglePlatform and recently served as vice president of business development at Shutterstock, witnessed a big acquisition from the inside when ConstantContact bought SinglePlatform for $100 million.
A successful exit like Jet’s has broader implications for city, he says.
“Successful exits spawn a new breed of entrepreneurs who now have the capital, network, and positive outcome necessary to roll the dice on creating their next big thing,” Herman told Business Insider in an email. “Between the Jet team members who are fortunate enough to now have the means to think/build on a larger scale and the capital infused into New York-based VC and LP’s, this could be a potential grand slam for the city.”