Swipe to close
It’s been a crazy year for the New York tech scene.We saw the Draw Something craze take over the world, startups get acquired for hundreds of millions of dollars, and entire offices get shut down in Hurricane Sandy.
In early February, New York game shop OMGPOP launched a mobile game, Draw Something.
The game grew faster than any mobile app ever before. In its first 10 days it was downloaded 1.2 million times. After five weeks, it was downloaded 20 million times.
By week six, Zynga swooped in with an offer to buy the company for about $180 million. By then had been downloaded 35 million times.
May: Facebook had a disaster of an IPO, and the aftermath affected the entire startup ecosystem, even on the east coast.
On May 18, Facebook went public. It priced its IPO at $38 per share, valuing the company at about $100 billion.
But the stock didn't pop. Instead, it fell a lot. Today, its stock is trading $11 below the opening price.
The Facebook Fallout affected the entire tech ecosystem, especially startups, and it spooked a lot of investors.
Paul Graham warned all of his Y Combinator founders of the fallout in an email:
The bad performance of the Facebook IPO will hurt the funding market for earlier stage startups. No one knows yet how much. Possibly only a little. Possibly a lot, if it becomes a vicious circle....What I do worry about is (a) it may be harder to raise money at all, regardless of price and (b) that companies that previously raised money at high valuations will now face 'down rounds,' which can be damaging.
Sean Parker and Shawn Fanning launched Airtime before a few hundred people on June 5 at a star-studded event in MILK Studio's New York City space.
Journalists from The Wall Street Journal and E! Entertainment were there, and the launch included cameos from Olivia Munn, Martha Stewart, Jim Carrey and Jimmy Fallon.
But as elaborate as the launch was, the demo of Airtime didn't work, and the press made a mockery of the event.
Shortly after, Shawn Fanning departed from the company and users dropped off. Parker's company is still trying to gain initial traction.
Kayak went public on July 20 with a $1 billion valuation, and its shares were up 30 per cent after the first day of trading.
Investors used to get really excited when they saw startups hit the 1 million user milestone.
In August, early stage investor Chris Dixon said that was no longer the case. Instead, investors were looking for startups trending toward 10 million users.
'If you are thinking of starting a non-transactional consumer startup, be aware that you are entering what is perhaps the most competitive sector in tech in the last decade,' Dixon wrote.
It was a program he helped found and he spent a few years making it one of the most well-respected, powerful startup accelerators in the world.
'I've been doing this for two years and three programs. There's some amazing traction and I want to go do something else,' he told us then.
September: A bunch of VC firms raised new funds, including relatively new early stage investor, Joshua Kushner. Kushner's Thrive Capital raised a third, $150 million fund.
A lot of firms raised new funds this year. There was even a fund started in Brooklyn.
But one of the biggest VC funds raised in New York was completed by 26-year-old Joshua Kushner.
Kushner, who invested in Instagram just before its Facebook acquisition, raised a $150 million third fund on September 6 to continue investing in early stage companies.
One of the biggest exits of the year was Indeed, a Connecticut-based job search company that was acquired by Japan's Recruit Co. Ltd.
Indeed sold for an undisclosed amount on September 25, but it was profitable and reportedly worth between $750 million and $1 billion when it was acquired.
October: Yahoo made its first acquisition since Marissa Mayer took over. It bought New York startup, Stamped
On October 25, New York startup Stamped was acquired by Yahoo.
Stamped was run by one of Marissa Mayer's former colleagues at Google, Robby Stein. Stein's team is now building out a Yahoo engineering office in New York.
October: Hurricane Sandy struck the east coast, wreaking havoc on tons of businesses in the New York area.
News outlets including BuzzFeed, The Huffington Post, and Gawker were knocked out too. Coworking spaces worked overtime to make room for the displaced in the tech community.
November: One of New York City's top angel investors, Chris Dixon, joined Silicon Valley firm Andreessen Horowitz
Union Square Ventures' Fred Wilson didn't say consumer tech has died, but he did say things have 'changed.'
'As The WSJ notes, VC funding of consumer web and mobile companies is down 42 per cent in this first nine months of 2012 (vs the first nine months of 2011),' he wrote on November 25. 'And the big falloff is not in seed rounds, which are still getting done, but in follow-on rounds, which are not.'
Wilson listed three reasons for the falloff: 1. The consumer web has matured. 2. Consumer products are moving from the web to mobile. 3. The momentum has shifted from consumer to enterprise companies.
News Corp announced it would be shutting down its iPad-only publication, The Daily, on December 3.
'From its launch, The Daily was a bold experiment in digital publishing and an amazing vehicle for innovation,' Rupert Murdoch said in a release. 'Unfortunately, our experience was that we could not find a large enough audience quickly enough to convince us the business model was sustainable in the long-term.'
Gilt Groupe's Kevin Ryan decided to step down as CEO and chose Michelle Peluso, former CMO of Citigroup, as his replacement on December 7.
Peluso takes over in February. Ryan will then become Chairman, and Susan Lyne will become Vice Chairman.
A few weeks ago, we wrote that startups were running out of cash.
Now, every tech site is talking about the 'Series A crunch.'
Fortune's Dan Primack pulled some data to show just how tough the investing climate has become for startups. It turns out the crunch is very real, and it's only just beginning.
Business Insider Emails & Alerts
Site highlights each day to your inbox.