created and built here, expanding here, or moving here. When you have industries that are so strong in financial services, advertising, media, banking, fashion, and apparel, it is a tremendous asset to be in New York or build relationships here to leverage where these industries are centered. Ideeli is selling all over the United States. NewComLink is serving retailers and banks all over the United States. Lucid is selling its value to advertisers all over the United States.
X: How does StarVest’s activity this year compare its investments with 2010?
LS: We’ve followed a pretty steady investment pace and that’s allowed us to get involved with companies where we can be a true partner and support them. That’s very important to us, we are able to give them that focus. It is at least on par [with 2010].
X: How do you make sure you invest in quality companies as more startups flood the market?
LS: The focus of our fund is expansion stage, so we’re looking for companies that have some “there there.” They have some talented management and they are looking to raise capital to scale the business; marketing, sales, and execution being the real key factors to their success at that point. We will invest earlier when it’s something exceptional, and we have found some opportunities that were exceptional this past year. We do that very selectively since our focus is expansion stage. That’s helped us keep the bar high for new companies.
X: Do you only look for entrepreneurs with proven track records when you consider backing a company?
LS: We’re not cookie-cutter about our investing, [as if] someone has to fit in a certain box. We’re looking for talented leadership and generally we will go in when we see that leadership. In some special cases we’ll go in when that leadership still needs to be put in place, but we’ve got to believe the elements are there to attract someone. In general, the CEOs of our companies are seasoned executives who we believe can execute their business to scale. It can take different shapes.
The CEO of ideeli, Paul Hurley, didn’t come from the retail, merchandising world. But the company really distinguished itself in its focus on data and analytics and its ability to proliferate that approach throughout the company. One of the things we look at is a company’s ability to take in, analyze, and capitalize on data.
X: Are you seeing a lot of activity in the data space?
LS: We’re seeing more. Just like we were ahead of the curve with software as a service, [where] we started investing in 1999 and 2000, we have invested in companies that value, analyze, and capitalize data. We have many companies in our portfolio at this point that have built their business doing this. This is not a new thing for us.
X: In the current climate where startups can rise and fall rapidly, are investors tightening their grip on cash?
LS: We’ve spent a lot of time looking at ad tech. That’s an area where there’s lots of opportunity being created but you have to be very selective, find companies that are going to have staying power, and invest at valuations that make sense. Ad tech is a very hot area, there are number of successful companies being created in this space. There’s been a lot of dollars that have flocked to ad tech. Some companies have seen fast growth, but [it’s] sustainable growth to build large companies that warrant the valuations they’ve been able to get. There will be some difficult situations. It’s one area to tread carefully.
X: What do you watch as the investment market evolves?
LS: We’re very excited about excited about e-commerce. See the growth that’s taken place in ideeli. We’re always on the lookout for new e-tailing models. There’s never been a better time to be investing in the New York venture scene.
