Oxstones Investment Club™Tumblr wannabe heats up under the Flatiron
By GARETT SLOANE
Last Updated: 7:36 AM, May 27, 2013
Posted: 10:58 PM, May 26, 2013
Tumblr’s $1.1 billion sale price has set the stage for more massive paydays for New York’s tech scene.
At the front of the pack is ad tech firm AppNexus, which is spending $6 million to expand its headquarters in the Flatiron District. It has 400 employees here with plans to add 250 more this year.
AppNexus co-founder and Chief Executive Brian O’Kelley has had a taste of the riches thrown at 26-year-old Tumblr founder David Karp, who sold his blogging platform to Yahoo! last week.
In fact, before Karp hit tech treasure, O’Kelley was No. 1 in the exit sweepstakes. Right Media, which he co-founded, was bought by Yahoo! six years ago for $850 million, the largest such payday in New York City before Tumblr, according to data firm CB Insights.
“The aspiration is to build that great seminal New York City tech company that turns this into a bona fide tech hub — not just a place that had a couple good exits in the past,” O’Kelley told The Post.
The 35-year-old entrepreneur is not alone in the hopes he can top that $1.1 billion figure. Technology Crossover Ventures and TriBeCa Venture Partners led the latest $75 million round in January, bringing the AppNexus total venture haul to $141 million.
“The investors would be disappointed if we weren’t a multibillion-dollar exit for them,” O’Kelley said.
AppNexus is aiming to hit a milestone the city has yet to reach: a $1 billion IPO for a venture-backed company.
One of the biggest criticisms of New York’s so-called Silicon Alley is the lack of big exits compared to Silicon Valley, according to Anand Sanwal of CB Insights.
There has been only one IPO — iVillage in 1999, among the city’s 10 biggest venture-backed exits, with only Tumblr topping $1 billion, according to the data service company. The list doesn’t include Google’s $3.1 billion purchase of DoubleClick in 2007 because it was owned by private equity and was well beyond the VC phase.
More recently, Tremor Video, another ad technology firm, has filed to go public. Tremor, whose largest investor is city-based Canaan Partners, was valued at about $325 million, based on public filings that show the price of stock options awarded this month.
“The knock that folks have on New York is that there are no foundational companies here — à la Facebook, Google, Amazon — and so if that is your metric for success, Tremor is not that type of IPO,” Sanwal said.
While AppNexus is recently flush with cash and O’Kelley said there are no imminent IPO plans, it is among several firms to watch. Etsy, ZocDoc, Outbrain and Warby Parker could also turn out to be huge success stories.
“Success begets success in innovation ecosystems such as the Bay Area and New York, so I believe this is just the beginning of a new normal for New York with IPOs and acquisitions of meaningful proportions,” said venture capitalist Thomas Loverro of city-based RRE Ventures.
Tags: ad technology, Appnexus, entrepreneurship, Etsy, NYC, NYC IPOs, NYC start-up ecosystem, NYC tech scene, Outbrain, silicon alley, Startup, Tech, tumblr, Warby Parker, web 2.0, ZocDoc