Gridley's Guide to Digital NY November 2012

© 2012 Gridley & Company LLC

November 2012

2© 2012 Gridley & Company LLC

I. Introduction to the Report

II. Digital NY Overview

III. Overview of NY Area Private Digital Companies

IV. Venture Capital and Private Equity Firms with NY Area Digital Investments

V. Overview of NY Area Public Digital Companies

VI. Advice for the Audience

Table of Contents


I. Introduction to the Report


IntroductionGridley’s Guide to Digital New York is a unique and comprehensive report for investors, buyers and entrepreneurs looking for one place to quickly get up to speed on New York’s exciting, explosive digital ecosystem. In addition to this report, we have designed an “easy to use” website that lays out the information in this report (and more) in a fun, creative way. You can access this website from our firm’s home page, www.gridleyco.com, or at www.gridleydigitalny.com.

We decided to put together this report when we were out visiting companies and investors in May/June of last year and people starting asking us about all of the “digital momentum” in NY. There was a feeling that lots was going on, but people didn’t really understand just what “it” was and how extensive “it” was. Well, now we can tell you a few things about “it”:

• There has been $5.6 billion of capital invested in Digital NY companies since 2006.

• While the total number of Digital NY private companies probably is well over 500, we have identified 308 to be included in this report. Companies in our report either have raised at least $5 million of outside capital or are prominent enough in the Digital NY scene to merit inclusion. The digital sectors we focused on are: Content, eCommerce, Marketing, Mobile, and Social.

• There are approximately 150 investors with a focused interest in Digital NY. This includes all stages – Seed, Early Stage, Growth, and Buyout – and includes local firms as well as firms with little or no physical presence in NY.

• There have been seven private companies that have raised over $100MM of capital (Fab.com, Fotolia, Tremor Video, ZocDoc, Gilt Groupe, Tumblr, and Everyday Health) and 18 that have raised between $50MM and $100MM.

• There have been twelve $100MM+ sale transactions of private Digital NY companies since January 2008 (Buddy Media, Mediamind, Admeld, Huffington Post, Webloyalty, Hotjobs, Innovation Interactive, Zagat, OMGPOP, Register.com, Daily Candy, and Answers.com).


IntroductionThe Digital NY scene is still in its early formation days with lots of growth ahead. We believe that New York’s existing ecosystem with big traditional advertising and media companies as well as many large data and internet industry leaders all headquartered here sets the stage for the unique development of the next generation of disruptive digital companies. Nowhere else in the country is there such a blend of the “old guard” with the “new kids on the block” – all in the same city.

So, whether you are looking to buy, sell, invest, or merely “browse”, we hope this report and our accompanying website will be of great use to you.

Sincerely,

On Behalf of the Gridley Team

Questions About This Report?

Linda GridleyPresident & CEO

[email protected]

Pratik PatelDirector

[email protected]

Peg JacksonManaging Director

[email protected]

About Gridley and Company LLC

Gridley is a boutique investment bank that provides financial advisory services to companies in the Information Services industry with a specific focus in the following sectors: Marketing Services, Internet Services, Financial Technology, Data Services, and Outsourcing Services. Our dedicated industry focus, thoughtful strategic insights and extensive relevant transaction experience differentiate us from other Wall Street firms and lead to successful results for our clients. Gridley & Company LLC was founded in 2001 and is headquartered in New York City.


Interested in Other Gridley Reports?• Available at www.gridleyco.com/what-we-think/resources/

Comprehensive Industry Overviews Quarterly Newsletter


II. Digital NY Overview


The Past Six Years Have Shaped Much of NY’s Digital Media and Technology Landscape• Notable events in NY since 2007:

June

2011

January

2007

/

April

2007

September

2010

November

2007

June

2008

September

2009January

2011

is founded announces spin-offs of:

opens a Googleplex in New

York City

Mayor Bloombergstarts up city-funded business incubator

programs

comes to New York

leads

in tech VC funding and deal quantity

Mayor Bloomberg offers $100 million and

land to develop a top engineering school to

encourage tech development, to bring New York City to the

forefront of innovation.

($3.1 billion)

($680 million)

July

2007

/

/($275 million)

Closes deal and announces HQ move to NY in September

Raises Series B round

Raises series A round

Acquires

For $125 million

August 2008



September 2007

October 2007


Development of brand names across broad set of

verticals

Raises Series A round

December

2007


announces acquisition of

December2009

Announces acquisition of

for $30 billion


June

2012

For $183 million

March

2011


for $745 million


San Francisco, 69

Palo Alto, 13

San Mateo, 9

Sunnyvale, 6Los Altos, 1

New York, 52

Boston, 16Los Angeles, 9

Others, 197

San Francisco31%

Palo Alto3%

San Mateo3%

Sunnyvale2%

Los Altos5%New York

13%

Boston7%

Los Angeles5%

Others31%

NY’s Emergence as a Tech Hub• New York City has become a true digital media innovation center

Source: CB Insights “Venture Capital Activity Report”

Total of Top Cities = $1,853 millionTotal including Others = $2,672 million

Q3 2012 Internet VC Funding by Top Cities Q3 2012 Internet VC Deals by Top Cities

Total of Top Cities = 175Total including Others = 372

Bay Area98

Bay Area$1,171M


NY’s Emergence as a Tech Hub• New York City has become a true digital media innovation center

NY Tech Investments Over Time

$608$688

$453

$791

$1,141

$0

$200

$400

$600

$800

$1,000

$1,200

2007 2008 2009 2010 2011Source: PriceWaterhouse Coopers “MoneyTree Report 2012”, Media & Entertainment and Software investments


NY is a Major Contender for Tech Dollars Now• New York City has gained much ground against Silicon Valley in the past 15 years

VC Funded Deals

41

171185

549

1995 2011

NYC Silicon Valley

Source: PriceWaterhouse Coopers “MoneyTree Report 2012”, Media & Entertainment and Software deals


NY Ecosystem has Very Different Roots and Growth Opportunities than Silicon Valley

OperationalEfficiencies

LeadershipTalent

EngineeringTalent

CreativeTalent

Strategic Partnerships

StrategicAcquirers

KeyCustomers

Internet Services

AdvertisingData Services

Wall Street

Business Development

MediaFashion


Major Disruption is Happening Across All Sectors

Advertising / Marketing Commerce Content

TVFinance Social


Source: Capital IQ, TechCrunch, public filings, and press releases

$0

$800

(Enterprise Value in $MM)

(Enterprise Value in $MM)

$200

$400

2007 2008 2009 2010 2011

$1,000

Top 25 Private Digital NY Sale TransactionsJanuary 2007 – October 2012 (Disclosed deals / rumored pricing available)

2012


III. Overview of NY Area Private Digital Companies


Digital Sector Categorizations (313)

Commerce

Content Curation

Dating

Enterprise Social

Funding

Local

Social Network

Other

Social(28)

Brand Storefront

Daily Deals

E-Commerce Infrastructure

Marketplace

Private Sales

Third Party Retailer

Other

eCommerce(52)

Content

E-Commerce

Marketing

Social

Mobile(34)

Audio & Video Advertising

Digital Agencies

Display Advertising

Email Advertising

Lead Generation

Local Advertising

Search Advertising

Social Marketing Management

Digital Marketing

(114)Content Enabling

Family & Education

Finance & Professional

Games

Health & Fitness

Lifestyle

Music

Tech

Video & Images

Digital Content

(85)

Note: Several companies have distinct business units that place them in multiple categories


Note: More companies illustrated on the following sector breakdown pages

NY Area Private Digital Companies by Sector

Social

SpotOn

eCommerce

FashionStake

MobileDigital

MarketingDigital

Content

Electric Sheep


NY Area Private Digital Content Companies (85)

Video & Images

TechMusicHealth & Fitness

LifestyleGames

Electric Sheep

4 3 4 17

Content Enabling

12 Family & Education

6 Finance & Professional

9 5 25


NY Area Private Digital Marketing Companies (114)

Social Marketing

Management

Lead Generation

Local Advertising

Search Advertising

Email Advertising

Audio & Video

Advertising

Display Advertising

Digital Agencies

7 32 28 5 5

10 11 16

Cloverhill EnterprisesCloverhill Enterprises


NY Area Private eCommerce Companies (52)

E-Com Infrastructure

Third Party Retailer

Marketplace

Other

Brand Storefront

Private SalesDaily Deals2 12 6 11 7

11 3

FashionStake


SocialMarketingeCommerceContent 9 4 17 4

NY Area Private Mobile Companies (34)


Enterprise Social

DatingContent Curation

OtherSocial Network

Funding

Commerce

SpotOn

2 8 2 1

1 12 2

NY Area Private Social Companies (28)


NY Area Private Digital Companies by Equity Raised (185 )

Sources: Capital IQ and TechCrunch, November 2012

>$100M

$30-$50$30-$50

7

$50-$100$50M-$100M 18$20M-$30M$10M-$20M $30M-$50M 2848 33

Ryzac

$5M-$10M 58

Electric Sheep

FashionStake

24© 2012 Gridley & Company LLCSource: Capital IQ, TechCrunch, public filings, and press releases. *rumored value

Private Digital NY Sale Transactions >$100 millionSince January 2010 (Disclosed deals / rumored pricing available)

Date Acquirer / Target

Transaction

Value ($MM)

6/4/2012 salesforce.com, inc (NYSE:CRM)

Buddy Media, Inc. $745

6/16/2011 DG FastChannel MediaMind Technologies Inc.

524

6/3/2010 The Hearst Corporation

iCrossing, Inc. 425

6/13/2011 Google AdMeld 400

2/6/2011 AOL Huffington Post 315

1/19/2011 Affinion Web Loyalty 296

8/26/2012 IAC Search & Media, Inc.

About.com, Inc. 300

11/1/2011 Yahoo! Inc. (NasdaqGS:YHOO)

interclick, inc. 264

2/3/2010 Monster Worldwide, Inc.

HotJobs.com, Ltd. 225

1/25/2010 Dentsu Innovation Internactive

200

3/21/2012 Zynga, Inc. (NasdaqGS:ZNGA)

OMGPOP, Inc. 183

11/12/2012 j2 Global, Inc. (NasdaqGS:JCOM)

Ziff Davis Media Inc.

165

9/8/2011 Google Inc. (NasdaqGS:GOOG)

Zagat Survey, LLC 151

6/17/2010 Web.com Group, Inc.

Register.com, Inc. 135

**

**


IV. Venture Capital and Private Equity Firms With NY Area Digital Investments


BuyoutGrowth Equity ($10M-$50M)

Seed (<$2M)

Early Stage ($1M-$10M)

30 33 23 7

Note: Firms may be active in more than one category. Source: Capital IQ, TechCrunch, public filings, and press releases

“The Locals” - Digital Focused VC/PE Firms Headquartered in NY Area (72)

UpstageVenturesUpstageVentures



Seed

Early Stage

Growth

1-3 4-10 >10

Buyout

1-3 4-10 >10 72725

“The Locals” - Digital Focused VC/PE Firms Headquartered in NY Area• By Number of NY Area Digital Investments January 2008 – October 2012


BuyoutGrowth Equity ($10M-$50M)

Seed (<$2M)


9 13 12 5

“The Satellites” - Digital Focused VC/PE Firms With a NY Office (27)



“The Satellites” - Digital Focused VC/PE Firms With a NY Area Office


Seed

Early Stage

Growth

1-3 4-10 >10 279

• By Number of NY Area Digital Investments January 2008 – October 2012


Growth Equity ($10M-$50M)

Seed (<$2M)


11 34 30


“The Outsiders” - Digital Focused Non-NY VC/PE Firms (50)


“The Outsiders” - Digital Focused Non-NY VC/PE Firms


Seed

Early Stage

Growth

4-101-3 >101-3 4-10 >10 21534

• By Number of NY Area Digital Investments January 2008 – October 2012


“The All-Stars” - VC/PE Firms with at Least 5 NY Area Digital Investments


“The Locals” “The Satellites” “The Outsiders”

Seed

Early Stage

Growth

12728

• January 2008 – October 2012


V. Overview of NY Area Public Digital Companies


Public Companies with a NY Area Presence by Industry (47)

Data Traditional MediaMarketing

eCommerce

Digital Media9 10

6

11 11


Note: Market cap calculated on 10/31/2012. Source: Capital IQ and public filings

$5B-$15B$2B-$5B<$500M $500M-$2B >$15B12 7 7 5 12

Public Companies with a NY Area Presence by Market Cap


Public Companies <$1 Billion Valuation

0.0x 4.0x NM5.0x

$300

Ent

erpr

ise

Val

ues

Ent

erpr

ise

Val

ues

3.0x2.0x1.0x

$100

$60

$40

$20

$1,100

$900

$700

$500

($ in millions)

LTM Revenue MultipleLTM Revenue MultipleSource: Capital IQ and public filings as of 10/31/2012


Public Companies >$1 Billion ValuationE

nter

pris

e V

alue

sE

nter

pris

e V

alue

s

($ in billions)

LTM Revenue MultipleLTM Revenue MultipleSource: Capital IQ and public filings as of 10/31/2012

0.0x

$250

$100

$50

3.0x2.0x1.0x

$200

$150

$40

$30

$20

$10

5.0x 6.0x4.0x 7.0x


Public Acquirers with a NY Area Presence By Number of Acquisitions January 2008 – October 2012

Acquirer # of AcquisitionsSelect Acquisitions

(in $M Enterprise Value)

4)

3)

2)

1)

78

82

64

49

445)

Wildfire - $400 – 07/31/2012 (a)

TxVia – NA – 04/02/2012 (b)

AdMob – $675 – 11/09/2009

Admeld – $400 – 06/13/2011 (a, b)

LBi International - $582 – 09/20/2012

Rosetta – $575 – 05/17/2011

Razorfish – $530 – 09/09/2009

Big Fuel Communications – NA – 07/18/2011 (b)

Adam & Eve Group – $78 – 05/24/2012

Clemenger – $138 – 09/01/2010

Communispace – $100 – 02/07/2011 (a)

Kenexa - $1,397 – 10/27/2012

TeaLeaf Technology – NA – 05/02/2012

Netezza – $1,730 – 09/20/2010

Sterling Commerce – $1,400 – 05/24/2010

FX Alliance -- $680 – 07/09/2012 (b)

Global Objectives Limited – $530 – 05/16/2011

Pangea3 – $95 – 11/18/2010 (b)

Source: Capital IQ, TechCrunch, public filings, and press releases. (a) Rumored value,(b) New York deal.


VI. Advice for the Audience


• LOTS of exciting stuff is happening in Digital NY right now. Ignore it at your peril!

• Opportunities come in all shapes and sizes.

• The Digital NY entrepreneur network is tight – get connected.

• There is an increasing depth of NY engineering talent – tap into it.

General Advice


• Digital NY is getting crowded with lots of startups. Be sure of your objectives and how to achieve them.

• There is a quality group of NY-based technology focused lawyers, accountants and recruiters – network into them.

• Not everyone will be able to sell for $100MM+ valuations. Be realistic about where you stand on your chances.

• The scope of what is "strategic" to a buyer is constantly expanding. Make sure to keep as many lines of communication open to large organizations.

• There are LOTS of outside capital. Think through what is the right amount for you.

• Choosing a VC is as important as choosing a co-founder. It could be a 5+ year relationship, so get as much outside perspective on them as possible.

Focus on the partner involved, not the firm overall.

Advice for the Entrepreneur


• Digital NY is getting crowded with lots of startups. Make sure your deal filter is clearly understood.

• Not everyone will be able to sell for $100MM+ valuations. Keep the cap table in check.

• Leading VCs have common characteristics today – honesty, preparedness, respect and insight. Make sure to understand an entrepreneur’s expectations before investing your time or theirs.

• The "West Coast is coming". They are aggressive and highly persuasive to entrepreneurs. Be prepared.

Advice for the Investors


• Tremendous value being created, competitive dynamics are changing.

• There is a new generation of "Digital Leaders" among the emerging CEOs in the NY startup scene. Make sure you know who they are.

• Market leadership is a fungible thing these days. The traditional leaders today won't stay that way if they don't pursue digital growth strategies.

• If some of the "new billion dollar babies" (i.e., Facebook, Zynga, LinkedIn, Groupon, etc.) enter the M&A game in a meaningful way, you can forget about "winning" hot companies that are being sold.

Advice for the Public Companies


Date post:	20-Aug-2015
Category:	Documents
Upload:	linda-gridley
View:	303 times
Download:	1 times

Gridley's Guide to Digital NY November 2012

Documents