Yukako Kiso has been planning restaurant gatherings among friends and strangers for as long as she can remember. But the nights always end in the same awkward way, with a “big fat check” sucking the energy out of the room.
So in 2021 she started a social dining app called Cuculi, named for the Japanese goddess of connection, to assuage bill-splitting anxiety and solve another quintessential problem for New Yorkers: making new friends. Users can set up and advertise “public tables” via the Cuculi platform, where diners can mix and mingle with others looking to connect.
“People move to New York City, and they start their new life, not knowing anybody,” said Kiso, Cuculi’s CEO.
Cuculi has taken in about $420,000 through fundraising from friends and family and made $100,000 in revenue during its first three years. The app has roughly 7,000 users who pay $1 each to set up or attend a public table. Cuculi also receives a cut of the restaurants’ revenue from bills; they say their partners have made just over $1 million from their users’ reservations.
But the platform, like many other early-stage startups in New York, has struggled to raise money from venture capitalists. The stagnant IPO market may be partly to blame. Stubbornly high interest rates, an unpredictable public market and an aggressive regulatory environment are stifling activity. The hesitancy to go public leads to a trickle-down effect on the local tech ecosystem: a lack of IPOs or mergers limits the flow of capital, and highly skilled tech employees who are tied up in equity can’t move forward in their careers or start new companies.
“There are real risks to the broader tech ecosystem when you have fewer exits,” said Julie Samuels, president and executive director of Tech:NYC, an organization representing the city’s tech industry.
In the first quarter of 2024, dealmaking slowed year-over-year by most measures in the New York market. There was just $4.2 billion in capital invested, a 23% decrease from the first quarter of 2023, and 401 deals, a 31% plummet from the same period last year, according to data from research firm PitchBook. The firm said it was the lowest count since the fourth quarter of 2018.
The number of new venture capital-backed companies entering the New York ecosystem, in addition, has been off to a rough start in 2024. In the first quarter, there were 128 deals among city startups raising VC funds for the first time, a 24% decrease from the first quarter of 2023. The deals were worth a total of $322.4 million, a 63% nosedive from the same period last year, PitchBook data says.
There have also been limited public offerings: Just six companies located in the city have had IPOs so far in 2024. There were 24 exits — liquidity events which include mergers — in the New York-area in total in the first quarter, a 38% fall from the first quarter of 2023, according to PitchBook.
IPOs and mergers benefit a local tech sector because they put capital back in the hands of people who have had experience building a successful company, according to Maria Gotsch, president and CEO of the Partnership Fund for New York City, the $180 million investment arm of the city’s leading business membership organization.
She said there is a “dandelion effect” among tech workers, where an employee cashes out and starts a new company or becomes an angel investor, helping early-stage startups get off the ground.
“Some retire to the Caribbean,” Gotsch said, “but others say, ‘I want to do that again, and I have an idea.'”
Getting the ‘tourists’ out
Local venture capitalists say that the slowdown isn’t cause for alarm but rather a return to earth from the sky-high dealmaking and subsequent IPOs that defined 2020 and 2021.
Most of the firms that debuted during the dealmaking bonanza that defined 2020 and 2021 have seen their stock take a nosedive, said Brian Cohen, a founding partner of Kips Bay-based VC firm New York Venture Partners, which specializes in seed stage companies, and chairman emeritus of investor network New York Angels. He said that he “shed a tear” for many of them.
“People wanted that IPO so badly that they did not do the due diligence that would have stopped [them] from investing,” he said. Many investors are forced to apply more appropriate scrutiny now that money is no longer “sloshing around in a bathtub,” he added.
Many of the companies that defined the golden age of IPOs in the city have since fallen from grace. To name a few, real estate platform Compass, which debuted in April 2021 at $20.51 per share has since tanked to $3.28. Rent the Runway, also listed in October of 2021 at $342, currently trades at $13.22. WeWork, which at first traded for $392.80 per share, recently traded at 16 cents after its bankruptcy. West Village-based Squarespace, which IPOed in May 2021, lasted just three years on the public market; on May 13, London-based private equity firm Permira acquired the company for $7 billion. The website builder, which had been valued at $10 billion at one point, had fallen about 24% from its debut.
However, there are signs that the frozen IPO market is thawing. There have been several high-profile success stories this year, such as San Francisco-based Reddit, whose shares jumped 48% upon its debut in March. The company’s revenue also climbed by 48% in the first quarter, according to Reddit’s inaugural earnings report filed in May. Also, shares of Walmart-backed Ibotta, a Denver-based company that offers cash-back rewards for grocery brands, jumped 17% during its April Wall Street debut. Reddit recently traded at $62, while Ibotta was trading at just under $105.
Some investors believe that the current environment culls the entrepreneurs who aren’t serious enough to ride out less-than-ideal market conditions.
“I’m happy. You get the tourists out,” said Zach Aarons, co-founder and general partner at Midtown-based venture capital firm MetaProp. “The only people crazy enough to start a company are not thinking about anything else. That’s what you need to be an entrepreneur.”
In the meantime, Cuculi has turned to a new group of fundraisers: its users. Those who have direct experience with the platform have so far given around $50,000, money that will go toward scaling the platform to other cities, according to chief financial officer and co-founder Aleksandar Tisinovic.
“That was really encouraging,” said Tisinovic. “It gave us more of a sense of responsibility to make this work.”
LEAD VIOLATIONS: More than one-fifth of homes in the city that are cited for having lead paint rack up repeated violations year after year, according to a Gothamist investigation published Wednesday. While the number of children poisoned by lead each year has plummeted by 90% since the city introduced Local Law 1, which aims to prevent exposure, some 5,000 kids still have elevated lead levels each year.
TELETHERAPY: Mental health conditions made up 76% of all telehealth claims in the Northeast in February, maintaining their rank as the top reason individuals sought out virtual care, according to new data from the claims analysis nonprofit FAIR Health. Generalized anxiety disorder was the top reason individuals sought out telehealth, accounting for 38% of claims, followed by major depressive disorder, adjustment disorder and ADHD.
HEALTH ACCESS: New York City Health + Hospitals selected 22 community-based organizations Wednesday to help New Yorkers enroll in NYC Care, a health access program that provides low-cost or free health care to people who cannot afford or are ineligible for health insurance. The programs will help New Yorkers who are eligible for the program navigate health care services and set up medical appointments during their three-year contract term. More than 135,000 New Yorkers are currently enrolled in NYC Care.
Overdose deaths across New York state decreased slightly according to newly released federal data, but experts say they are still at crisis-level.
More than 6,000 New Yorkers still died from a drug overdose in 2023, data released Wednesday by the U.S. Centers for Disease Control and Prevention shows. Counties outside of the five boroughs recorded an estimated 3,362 overdose deaths in 2023, down 3.5% from 2022.
The number of overdose deaths in the city had a more meager decline. There were a predicted 3,156 deaths in the five boroughs last year, a less than 1% decrease from the year before.
“These are still record breaking numbers,” said Toni Smith-Thompson, New York state director of the advocacy nonprofit Drug Policy Alliance. “We don’t want to normalize what crisis-levels are.”
The CDC says its provisional overdose data counts are an underestimate, as ongoing death investigations could add to the tally. The agency publishes predicted overdose counts that convey the expected toll of the crisis. The data includes drug overdoses linked to opioids, as well as other substances such as cocaine and methamphetamine.
The provisional numbers are an indication of a relentless opioid epidemic that’s been driven by the presence of fentanyl, a synthetic opioid that’s 50 times stronger than heroin. Last year marks the third year in a row that the U.S. saw more than 100,000 overdose deaths – a bleak milestone set for the first time on record in 2020.
The crisis takes a disproportionate toll on low-income New Yorkers and people of color, a nuance that’s not often reflected in statewide data, Smith-Thompson added.
Sizable death tolls have continued as New York state scrambles to distribute opioid settlement funds, a sum of money won from settlements with opioid manufacturers and distributors that will amount to roughly $2.9 billion in the coming decades. So far, the state has made $335 million of those funds available to local governments, medical providers and nonprofits that provide harm reduction and substance use disorder treatment services.
New York City has its own pot of funding amounting to roughly $300 million in the next 20 years. But in contrast with the state, the city has opened up settlement funds to a small pool of providers and has dedicated most of the funds to agencies including the public hospital system, the city’s health department and the Office of Chief Medical Examiner.
More than a year since the state started distributing settlement fund payments to providers, Smith-Thompson said advocates and medical experts are looking to see which interventions are working – information that’s difficult to glean from a death count that’s moved so little.
The state’s spending of opioid settlement funds is guided by the settlement fund’s advisory board, a group of government-appointed experts that makes recommendations to the state’s substance use officials. Gov. Kathy Hochul’s administration and that board have been at odds over the use of settlement funds for supervised drug use sites called overdose prevention centers, due to concerns around legality of supervised use of illegal substances.
The state’s Office of Addiction Services and Supports has touted $35 million in spending on harm reduction services, including the distribution of the overdose reversal medication naloxone and the widespread availability of strips that allow people to check their drugs for lethal substances.
“It’s great that more people are carrying Narcan and more people carrying fentanyl testing strips,” Smith-Thompson said, adding that she hopes those interventions contributed to declines in overdose deaths. “Those things alone are not going to get us out of the crisis.”
She added that advocates have continually pushed the state for a comprehensive plan on substance use disorder spending and the declaration of an overdose public health emergency – a request that Hochul has not met despite years of persistent deaths.
A company hired to provide food to underserved New Yorkers overbilled the city by $9 million, a new report from city Comptroller Brad Lander shows.
The city Department of Social Services contracted with Driscoll Foods from 2020 to 2022 to run the Pandemic Food Reserve Emergency Distribution Program that provided families facing food insecurity with fresh produce and shelf-stable items. The $90 million contract included $65 million dedicated to sourcing food. According to the audit, released Wednesday, the initiative delivered nearly three million cases of food to 400 emergency providers, food pantries and community kitchens around the city, accomplishing its goals.
Lander’s office found that lack of oversight from the department led to overspending by $9 million. The city did not ensure that money budgeted in the contract for food was actually spent on food or that expenses that were claimed and paid for were “reasonable and necessary.” The agency also did not make sure Driscoll properly maintained its inventory records or approved subcontractors prior to issuing payments for related services.
About $3 million in overpayments went toward staffing, $214,000 went toward food costs and $780,000 went toward delivery and transportation expenses, the comptroller’s office found.
“Neither DSS, Driscoll, nor the auditors can be assured that all costs paid for by the Program were reasonable and necessary, or that food acquired through the program was delivered in its entirety to participating [emergency food programs],” the report reads.
The department has already recouped nearly $2.5 million from Driscoll, but another $7 million remains unaccounted for. Lander’s office recommends the agency recoup that money from the company, work to ensure future vendors comply with contract terms and require Driscoll to disclose all rebates it received for food supplied to the program. The report also recommends the department establish written cost allocation guidance for vendors and ensure staff who are responsible for fiscal oversight are aware of city policies.
According to the audit, the agency has agreed to take corrective action including providing staff with reinforcement training and standardizing its cost allocation language. Nicholas Jacobelli, a spokesman for the agency, said DSS will conduct an in-depth post-audit review of Driscoll’s invoices and potentially recoup overpayments. He added that the pandemic created staffing challenges that impeded the agency’s ability to monitor invoices.
Representatives for Driscoll, which is based in Wayne, New Jersey, did not respond to a request for comment. The department has no active contracts with Driscoll, Jacobelli said.
Chapter, a Greenwich Village startup that helps retirees find and enroll in Medicare plans, raised $50 million in a Series C funding round Tuesday.
The Medicare navigation startup will use the funding to upgrade its data tools, hiring engineers and product experts to develop software that helps match people with affordable health insurance, CEO Cobi Blumenfeld-Gantz told Crain’s.
The funding round was led by the San Francisco-based firm XYZ Venture Capital, with participation from existing investors Narya Capital, Addition, Susa Ventures, and Maverick Ventures.
Chapter was founded in 2020 to help adults over 65 find affordable Medicare plans, including traditional plans, supplemental Medicare and Part D prescription coverage. The company has a team of 50 Medicare advisors that assess plans and help older Americans sign up, earning the Chapter a commission of roughly $350 to $650 per enrollee for some insurance carriers.
The advisors assess every eligible coverage option for enrollees, even if Chapter doesn’t get paid by that plan – part of the company’s mission to ensure customers get the right coverage, Blumenfeld-Gantz said.
Blumenfeld-Gantz came up with the idea for Chapter while he was an employee at Palantir, a data company founded by Peter Thiel. He watched his own parents struggle to enroll in a Medicare plan when working with a small, regional broker that did not have the tools to adequately assess their coverage options – ultimately resulting in major financial and health consequences, he said.
“A lot of the challenges in Medicare are fundamentally data challenges,” Blumenfeld-Gantz said.
The CEO declined to provide the number of Medicare enrollees that have signed up through Chapter, but said the firm has served tens of thousands of older adults since it was founded.
Chapter has raised $111 million to date, collecting $42 million in a Series B round in 2022, according to data from the capital market firm PitchBook. The company was founded by Blumenfeld-Gantz, Corey Metzman and Vivek Ramaswamy.
Free yoga classes are returning to the lawn at Bryant Park this summer. Presented by performance apparel brand Calia, the classes kick off on May 29, with sessions hosted on Tuesday mornings at 10 a.m. on the park’s upper terrace and on Wednesday evenings at 6 p.m. on the lawn. Running through September 25, the [...]
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Inflation rose to the highest level in a year or more in four major metropolitan areas in April, even as prices moderated nationally.
The annual rate reached 4.1% in Philadelphia, 4% in St. Louis and 3.8% in both New York and San Francisco — all above the U.S. average — according to Bureau of Labor Statistics data released Wednesday.
The drivers varied from one city to another, but generally energy and housing costs were responsible for higher prices in New York, San Francisco and Philadelphia.
Consumer price growth also accelerated in Detroit in April, meaning the inflation pace is rising in the largest cities in Michigan and Philadelphia — two key swing states in the 2024 presidential election — with the economy and costs of living playing a major role in the race.
Food and beverages were also among the drivers behind higher inflation in both New York and St. Louis, while clothing prices jumped in San Francisco.
Phoenix, the largest city in swing-state Arizona and once an inflation hotspot, had the lowest annual inflation rate of the cities that reported April data, at 2.6%.
Overall, the annual inflation rate moderated slightly to 3.4%. A measure of underlying inflation that excludes volatile food and energy items also decelerated — a small step in the right direction for Federal Reserve officials looking to start cutting interest rates this year.
Dozens of new all-electric buses will soon hit the road in Queens, Brooklyn, and Staten Island. Gov. Kathy Hochul on Tuesday introduced a fleet of 60 electric buses that will operate on routes in neighborhoods most vulnerable to poor air quality, according to a press release. The buses are part of the Metropolitan Transportation Authority’s [...]
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