Many New York City-based ad tech leaders saw Tuesday’s acquisition of Moat by the Silicon Valley titan Oracle as a testament to the city’s distinct startup ecosystem.
The Moat deal was a victory for the city and “a validation of the tech scene here,” said DataXu CEO Mike Baker, a prolific ad tech angel investor, in an AdExchanger Talks podcast this week.
Baker’s sentiments echoed other New York ad tech founders and investors after Moat’s acquisition was announced.
“SaaS startups are much harder businesses to get off the ground in terms of revenue, and it’s something New York City startups have done more effectively than others,” said Chris Cunningham, Unacast’s CRO and founder of the seed-level investment firm C2 Ventures. Redwood giants like Google, Facebook and Amazon have world-setting advertising businesses, “but they don’t know the ins and outs of how agencies and brands work like people in New York who are really in the trenches.”
It isn’t a matter of good or bad, Cunningham said, “there’s just a consistently different perspective that I think comes from New York City firms being a part of the media agency world and really feeling those same pain points in the ecosystem.”
Joe Zawadzki, MediaMath’s CEO and another prominent ad tech angel investor, told AdExchanger in a previous interview that the New York startup ecosystem mirrors Silicon Valley in the sense that it’s “people who know each other and the space who wanted to keep talent local and invest in second-generation companies in a space they know.”
But whereas Silicon Valley technology builds owned-and-operated vehicles – like app-based companies with their own audiences – Zawadzki said New York ad tech is a more organic part of the agency and brand world that calls the city home.
All of New York City’s venture funding “could fit into one room in one building on Sand Hill Road,” said Lewis Gersh, CEO of the programmatic direct mail startup PebblePost and a former industry venture capital (VC) investor. “So that seed-level activity fell pretty much to people in the industry who had exits under their belt and could step in and support companies.”
The different investment systems between New York and Silicon Valley, where VCs place bigger bets on riskier startups, made it tougher for East Coast startups to achieve early scale.
But in the end, these difficulties instilled stronger business discipline and an insistence on sound revenue models, said AppNexus co-founder and CEO Brian O’Kelley, who has investments across the ad tech space. “As people left AppNexus and other leadership teams to start their own companies,” he said, “they applied that professionalism to the space.”
What distinguishes New York ad tech investors from established VCs is that “these kinds of angel investors (are) trying to add more value personally,” Baker said. “I can tell you directly it’s what I do and my cohort of investors in terms of recycling the gains you make (on previous M&A deals) back into the space.
“And there’s been a lot of gains.”
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