Over and over, it seems technology startups in New York have to validate their existence to outsiders.
Whether it is comparisons to the legacy of Silicon Valley or the depth of research in Boston, this city never measures up for some folks. Hecklers in the peanut gallery want to see big exits or companies go public before they take a technology hub seriously.
Etsy’s IPO last week was a huge step in cementing that legitimacy, observers say.
Called the largest IPO ever for a venture-backed, New York-based startup, Etsy raised $267 million at a $1.8 billion valuation when it went public. Headquartered in Brooklyn, Etsy (NASDAQ: [[ticker:ETSY]]) is an online marketplace that lets independent artisans and crafters sell their items. This includes wares that might be a challenge for general consumers to discover on their own, even on Amazon or eBay.
Etsy CEO Chad Dickerson was unavailable for comment, but the IPO sent ripples through the New York community.
“Etsy’s creative artist marketplace vision played to New York’s historic strengths,” says Brian Cohen, chairman of New York Angels. “That deep appreciation for the creative community was as much an enabler as the tech it was built around.”
It has been a bit of a bumpy climb for Etsy, though. Founded about 10 years ago, the CEO chair went back and forth in 2008 and 2009 between Maria Thomas and co-founder Rob Kalin. By 2011, both were gone from the company and Dickerson, who had been CTO, took over as chief executive.
Now that the company has gone public in a big way, the hope in New York is that the city’s momentum will keep building. “Anything that Wall Street approves of—that starts the way all technology companies start, trying to find a niche and create something big—is great for New York,” says Jonathan Peachey, CEO of local startup Filip Technologies.
I ran into Peachey at demo day for the latest class of Techstars NYC. Surprise guest Brad Feld, a co-founder of Techstars and managing director with Foundry Group, made it clear he believes New York “has been amazing for a long time.”
At the same time, he acknowledged the city gets flak from detractors who watch the innovation scene. “There’s this continual external noise, which is something people should ignore,” he says.
It can be a fight to prove that startups from New York are significant, Feld says, despite more examples emerging since the days of DoubleClick, which got acquired by Google in 2007 for $3.1 billion.
Last December, New York-based OnDeck went public, raising $200 million. Even when Makerbot got acquired in 2013 for more than $400 million, Feld says, some folks refused to be impressed. “Notwithstanding that they’ve built a company that in the public markets would be worth more than $1 billion based on their trajectory,” he says.
The Etsy IPO might still be called a one-off example by New York’s detractors, but Feld says startups in the local scene should forge ahead. “Don’t worry about it; just keep building stuff,” he says. “It’s nice to see it mature in a way where you can dismiss those things.”
