Venture capital investment in New York startups is on the rise and will outpace the uncharacteristically low levels of 2023 if it remains on the current trajectory.
That's according to the latest monthly economic snapshot from the New York City Economic Development Corp., which traces metrics relating to the health of the labor market, business activity, tourism and more. NYCEDC uses PitchBook data to track VC activity.
VC funding in New York hit $7.72 billion in Q2, a 43% increase from the $5.4 billion raised in Q1. The year-to-date total is now $13.1 billion, up 74% from the same point in 2023.
The rebound is being largely led by deals in SaaS, or software as a service cloud computing, artificial intelligence, machine learning and other emerging tech subsectors, the report said.
Many early-stage startups in New York struggled to raise money in late 2022 and 2023. The stagnant IPO market was partly to blame. Stubbornly high interest rates, an unpredictable public market and an aggressive regulatory environment stifled activity. The hesitancy to go public led to a trickle-down effect on the local tech ecosystem as a lack of IPOs or mergers limited the flow of capital, and highly skilled tech employees who were tied up in equity couldn't move forward in their careers or start new companies.
Local venture capitalists have insisted the slowdown wasn't cause for alarm but rather a return to earth from the sky-high dealmaking and subsequent IPOs that defined 2020 and 2021.
There are now signs the frozen IPO market is thawing. There have been several recent high-profile success stories, 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. It's now trading at about $62.
The NYCEDC report goes beyond just tracking venture capital activity. Over the past year, New York saw a net decrease of 840 in the number of businesses operating in the city. The local unemployment rate overall stayed steady at 4.8%, while the city's Black unemployment rate declined for the fifth consecutive quarter to 7.3%.
The report also said citywide office vacancy rates decreased for the first time since 2018, now at 14.8%. "Though still elevated compared to pre-pandemic levels, this decline further reinforces that vacancy has already or will soon peak as the commercial real estate market recovers," it read.
Crain's Amanda Glodowski contributed.
WMCHealth broke ground Wednesday on a $220 million tower at Westchester Medical Center in Valhalla as part of an ongoing expansion and a shift to all-private patient rooms.
When completed the 162,000 square foot, five-story tower will host 128 private rooms for patients, which will be convertible into intensive care units. All trauma intensive care services will be moved to the new building, which will also be home to cardiac, neuroscience, oncology, and surgical units. The expansion is intended to make more room for existing units in other buildings, like pediatric emergency medicine and women’s health services.
WMCHealth, which brought in $2.7 billion in revenue last year, according to spokesman Andrew LaGuardia, will be opening its new cardiac unit at a time when the business of heart disease is booming. Hospital systems across the country are investing more in cardiovascular programs as poor heart health remains the number one cause of death in the country, according to the American Heart Association. Since the end of last year, Northwell Health has invested more than $600 million into its cardiac services. And earlier this month, NYU Langone launched an $11 million expansion of an ambulatory care hub for children with congenital heart disease.
The project received $195 million in tax-exempt bond financing from the Westchester County Local Development Corporation, one of the largest projects funded by the body, WMCHealth said. The county expects to reap more than $3.5 million in economic benefits from the project, which it estimates will create 770 construction jobs and 127 new permanent jobs.
The tower, expected to be completed in 2026, is the second major addition to the Valhalla-based hospital complex in recent years. In 2019, WMCHealth cut the ribbon on a $230-million Ambulatory Care Pavilion, which boasts eight stories of modern patient and procedure rooms.
Northwell Health, New York’s largest health care provider, is raising the curtain on a film studio to elevate its visibility and get more credit for its behind-the-scenes work. The move into the spotlight could also unlock valuable state tax breaks for the mega system.
The new venture, dubbed Northwell Studios, will develop and co-produce scripted and unscripted films highlighting the system’s clinical offerings, latest tech and some of its staff, the health care giant announced Wednesday. Northwell already holds a development deal with Dumbo-based CreativeChaos, a documentary film and television company, on five media projects now in the works.
Under the new studio model, Northwell will not pay for product placement; instead it will offer its intellectual property and access to facilities to show runners and distributors who will commercialize it, according Chief Marketing Officer Ramon Soto, who will lead the studio. The health care system, which brought in $16.8 billion in revenue last year, has already played a part in the growing market for medical media content, serving as the backdrop for five documentaries since 2017, including HBO’s “One South: Portrait of a Psych Unit,” which was filmed at Zucker Hillside Hospital in Queens. Northwell’s second project with Netflix, “Emergency NYC,” had millions of hours of viewership in its first months on the platform.
“If you were to…convert that into 30-second ads, I could never afford that much branding and that much brand exposure,” Soto said.
Northwell has not disclosed the terms of the arrangement with CreativeChaos or the value of any contracts with them. Ilan Arboleda, co-founder and CEO of CreativeChaos, said a non-disclosure agreement prevented him from discussing the deal’s financials. It is unclear what the studio’s budget will be, how it will be staffed, or how it is expected to impact Northwell’s bottom line.
The studio will be wholly owned by Northwell. Its projects will star some of Northwell’s 85,000 employees along with consenting patients. “We’re trying to stay in the upper echelon,” Arboleda said. “You’re not going to see some, for lack of a better term, cheap reality programing from the stuff we’re developing.”
Roll credits
With the new studio billing, Northwell will be able to receive producer credits, said spokesman Matthew Libassi. The company was not credited as a producer when it provided access to film crews in the past, though it had staff present on set and retained some editorial rights, he said. The deal with CreativeChaos is not exclusive and Northwell also plans to work with other production companies.
The new studio moniker could also give the hospital system access to New York’s lucrative film tax credit, which distributes $700 million a year and covers a quarter of eligible production costs. That credit does not cover unscripted content, like documentaries. But one of the five films CreativeChaos is working on with Northwell will be eligible, Arboleda told Crain’s.
“We plan to definitely take full advantage of the incentive. We love the program,” he said.
John Kaehny, executive director of government watchdog Reinvent Albany, said the new endeavor could conflict with Northwell’s mission to prioritize health care. With a sizable chunk of Northwell's revenue coming from government sources, Kaehny questioned what firewalls are in place to ensure taxpayer money is not subsidizing a media company.
“It seems completely incompatible with the mission of any health care entity to be also involved in producing, financing, distributing, or otherwise fostering entertainment content. It’s mindboggling and it’s disconcerting,” Kaehny added.
Asked about the potential for conflicts of interest with Northwell’s health care mission, Soto said the studio would be subject to “a fairly rigorous operating review.”
“Everything we do is signed off by senior leadership,” he said. “Ultimately the person who has final say on a project is [Northwell CEO] Michael Dowling.”
DRUG WARNING: The New York City Department of Health and Mental Hygiene has identified the powerful synthetic opioid, carfentanil, and the non-opioid anesthetic, medetomidine, in the city’s drug supply. In a warning issued Thursday, the city is urging health care providers to contact the Health Department if they observe atypical overdoses. Carfentanil has been linked to at least seven unintentional overdose deaths in the first half of 2024, according to the department’s provisional data.
WORKFORCE TRAINING: More than two dozen health care facilities across the state are set to receive $22.5 million in state funding to help train their health care workforce, Gov. Kathy Hochul announced Thursday. The funding, part of a $10 billion multi-year workforce initiative, will support training for nurses, physician assistants, home health aides, community health workers and other direct support professionals, according to the governor’s office. The awards will flow to 13 hospitals and 15 nursing homes and amount to up to $1 million a year for two years.
9/11 HEALTH IMPACTS: Federal lawmakers introduced new bipartisan legislation on Thursday that would extend enrollment for the World Trade Center Health program, which covers medical care for first responders and civilians who developed illnesses related to the 9/11 attacks. The bill seeks $3 billion to cover a funding gap that could halt enrollment by 2027, as well as correct a funding formula that will keep the program up and running through 2090. Sens. Chuck Schumer and Kirsten Gillibrand and U.S. Representatives Representatives Andrew Garbarino, Anthony D’Esposito, and Dan Goldman introduced the legislation.
CORRECTION: The glance in yesterday's issue about the city ending vending machine services has been updated to reflect that the four existing machines are still functional.
A SoHo-based biotech that develops tech-based storage units that freeze and digitally track eggs and sperm used in fertility treatments raised $28 million this week to expand to additional clinics, the firm said Wednesday.
TMRW Life Sciences, founded in 2018, will use its Series D funding to grow the number of clinics that use its automated storage units and encrypted digital platform to safely store frozen eggs, sperm and embryos for in-vitro fertilization. The units provide freezer storage and link patients’ eggs and sperm to their electronic medical records to safeguard against mix-ups or damaged embryos, consequences some clinics encounter when storing thousands of patients' eggs and sperm.
More fertility clinics are looking for safe and reliable ways to store frozen eggs and embryos amid high-profile mistakes by fertility clinics and legal decisions that have outlawed the destruction of embryos. An Alabama state Supreme Court ruled in February that an embryo is considered a human life – a first-of-its-kind decision that made it illegal to discard embryos and raised the stakes for clinics to safeguard fertilized eggs.
Although the Alabama decision itself did not change laws regulating embryo preservation nationwide, it raised serious concerns about whether the 1 million embryos in storage across the country were in jeopardy. TMRW Life Sciences received calls from clinics in states hostile to abortion to inquire about storing their patients’ embryos in the company’s offsite repository in New York, said Louis Villalba, chief executive of the firm.
The recent funding round was led by the San Francisco-based venture capital firm 5AM Ventures and included participation from actress and comedian Amy Schumer. Investors including FIOS Venture Holdings, DF Investment Partners, Transformation Capital, Life Sciences Innovation Fund and Casdin Capital also participated in the funding round.
The funding comes as women’s health companies in New York have continued to attract venture capital attention, cementing the city as a hub for firms innovating fertility and reproductive health solutions. New York-based women’s health tech firms raised $256 million in 2023, accounting for half of all fundraising in the U.S., according to an analysis from Deloitte.
TMRW Life Sciences has focused on automating what it says are antiquated procedures for storing fertilized eggs. Typically, a patient freezes embryos for months at a time so they do not have to go through additional hormonal treatments and produce more eggs for each IVF cycle. Clinics store these materials, but few have the digital technology to track and trace patients’ specimens.
Egg freezing has increased at a rapid rate since 2010 because of scientific advancements in preservation, but the fertility industry’s storage and tracking systems have not kept up with the pace, Villalba said. The firm emerged to create a digital repository to make sure clinics can keep track of patients’ embryos and protect against damage.
TMRW Life Sciences has two fertility storage machines, one that can preserve biological materials for up to 3,500 patients at a time and another that can fit in standard fertility clinics and accommodate up to 1,100 patients at a time, according to Villalba. The smaller unit is approved by the U.S. Food and Drug Administration.
TMRW Life Sciences provides its embryo storage technology to more than 60 fertility clinics and serves roughly 39,000 patients in the U.S. and the U.K. – a number it expects to continue to grow. The biotech expanded its technology across the pond at the end of last year, and is seeking a partner to further its international expansion in 2025, Villalba said.
Mayor Eric Adams and Council Speaker Adrienne Adams have maintained a publicly cordial relationship even as they battled over budget cuts and butted heads on legislation. But that decorum could dissolve in the coming months, as lawmakers prepare to campaign against a set of questions the mayor is putting before voters in November that could rewrite the city’s governing document to curb the City Council’s power.
“It is a dangerous attempt to shift power away from the people represented by the City Council to one single individual,” Speaker Adams said during a rally on Thursday, outside the Brooklyn Public Library’s central branch. “Do you want a king?”
She made the remarks minutes before the mayor’s handpicked 13-member Charter Revision Commission met inside to approve the proposed changes, which mirror Mayor Adams’ own grievances against the City Council by slowing the legislative process when it considers bills that affect public safety, and tightening rules about how the council studies the fiscal impact of new laws.
Speaker Adams described the charter commission’s ballot measures as an “attack on democracy,” a claim that was echoed by the other politicians and progressive groups that spoke out against the charter rewrite. The allusion to former President Donald Trump was intentional.
A City Council staffer who spoke on the condition of anonymity argued that the mayor had “laid the groundwork for people to compare him to Trump." (City Hall declined to comment on the provocative comparisons, and skeptics will note that none of the proposed revisions would radically change how the council does its work.)
Council members were clearly conscious of the charter revisions’ unusual placement on a presidential election-year ballot — a change from the most recent City Charter changes in 2019, which took place during a lower-turnout, odd-numbered election years and passed easily. Those 2019 amendments all passed with about three-quarters of the vote, including a measure that instituted ranked-choice voting.
This year, the presidential turnout will alter the landscape.
Adams kickstarted this year’s fast-moving effort just two months ago, in what lawmakers saw as a clear maneuver to block the City Council from adding its own November ballot measure, which would increase its oversight of mayoral appointments.
To persuade New Yorkers to reject the proposals, however, council leaders and their allies may need to mount a paid campaign.
Details of the potential opposition campaign remained unclear on Thursday. But Gale Brewer, a veteran Manhattan City Councilwoman, predicted that “the money will come.”
“And I think we can do it in a very short time period,” Brewer added. (Any campaign could not be paid for by the City Council itself, since it would amount to illegal electioneering; instead, it would need to be funded by outside groups or through elected officials' campaign accounts.)
In a last-minute twist on Thursday, the Charter Revision Commission revealed right before its meeting that it had removed a few of the more controversial measures announced earlier this week. A proposal forcing the council to wait about three months before voting on bills that affect the NYPD, Fire Department or Corrections Department has been shortened to require just a 30-day window. It no longer tasks those departments with filing their own “public safety impact statements” on proposed laws.
Carlo Scissura, the commission’s chair and head of the New York Building Congress, said Thursday that the changes came in response to feedback from the public “and others” in the short time since the proposals were released on Tuesday.
But the City Council showed no immediate signs of being mollified by the changes. Mayor Adams, who has consistently defended the charter rewrite as a sincere effort at improving government responsiveness, praised the final ballot measures as “thoughtful.”
Besides the contested items that affect the City Council, the commission also approved a few less controversial questions that would clarify the Sanitation Department’s street-cleaning authority, enshrine a new City Hall position focused on boosting minority- and women-owned businesses, ease permitting for film shoots and tweak how the city plans for costly capital projects.
Dominated by friends and allies of the mayor, the Charter Revision Commission held a dozen public hearings — many of which were sparsely attended. Although the mayor has come under fire from legislators, he got nothing but praise on Thursday from members of the commission he convened.
"I want to take the time and thank a man that really cares about the city, our very own Mayor Eric Adams,” commissioner Jackie Rowe-Adams, an anti-gun violence advocate, said at the start of the meeting. “He heard the voice of the people.”
Another one bites the dust.
Astoria's Neptune Diner is closing for good on Sunday after four decades in business.
The popular eatery on Astoria Boulevard will join the ghosts of New York institutions past after the property was recently sold to new owners, a member of the family-run diner, which leases the building, confirmed to Crain's.
"The neighborhood is coming in, taking pictures, having one last meal," said Sarando Katsihtis, whose father, Peter Katsihtis, has owned the diner with Peter's brother, George, for about 40 years.
The Katsihtis family had managed to stave off closure at least twice before: once in 2015, when rumors circulated online that the roughly, 3,200-square-foot restaurant would shutter amid a scourge of diner closures in the city that were chronicled in Crain's at the time; and again, in 2022, when a nearby rezoning application threatened its existence. Neptune will now officially serve its last meal; its menu runs the gamut from lamb chops to Belgian waffles.
A manager who answered the phone at the property, located at 3105 Astoria Blvd N., Thursday, and who identified himself only as Chris M., said the family had been about to renew their lease, but the property is in contract to be sold.
"Like everybody, I'm upset," he said.
An attorney for the seller, Nick Tsoromokos of the Astoria-based law firm Tsoromokos & Papadopoulos, told Crain's Thursday that his client — the Thomas Anagnostopoulos Family Trust, according to city records — is expected to close on the sale of the building within the next 45 days. He declined to name who is purchasing the building, the price paid or what the new owner has in store for the property, between 31st Street and 32nd streets. Tsoromokos's client, the Anagnostopoulos family, bought the building in 2018 for $10.3 million, records show.
A permit the family filed to the Department of Buildings in 2022, however, called for a 6-story, mixed-use building with 24 dwelling units and either commercial space or a community facility on the ground floor.
The Katsihtis family still runs two other Neptune Diner locations in the city — one in Crown Heights and another in Bayside, Queens. With the closure of the Astoria location, a third is now in the works for Nassau County on Long Island, according to the younger Katsihtis, who declined to provide more details.