It wasn’t always like this…enterprise technology in NYC

By Owen Davis, Managing Director and Founder, NYC Seed and Maria Gotsch, President & CEO, Partnership Fund for New York City

Datadog went public today with an opening market capitalization of nearly $8 billion. Ten years ago, such a milestone for a New York-based company was unthinkable. There was limited seed capital for tech — even less for enterprise tech. And the idea of a formalized seed round was new. Typically, early-stage companies went to angels and individuals until they reached milestones that Series A venture investors required.

In early 2008, we sought to answer the lack of seed capital for tech and enterprise tech companies in New York City with NYC Seed, one of the first institutional seed funds in the city. The Partnership Fund for New York City partnered with NYU-Polytechnic University in response to a catalytic investment from New York state.

When the market collapsed later that year in September 2008, NYC Seed was one of the few groups actively open for business. Datadog got its start at SeedStart, an incubator initiative of NYC Seed with additional backing by venture funds Contour, IA, RRE and Polaris, receiving its first $25,000 investment from our consortium. Co-founders Oliver Pomel and Alexis Lê-Quôc spent the summer of 2010 writing some of the initial code for Datadog at SeedStart’s space at NYU. Smart, focused founders with an answer for a market hungry for solutions to cloud management at scale made them a company worth taking a risk on.

Over a decade later, New York now boasts several public enterprise technology companies that call the city home, including Medidata and MongoDB. There is also a robust pipeline of venture-backed companies in New York that are solving hard enterprise problems at scale, such as Dataminr, Digital Ocean, Sisense and UiPath.

Close to your customer

In retrospect, it now seems obvious that enterprise technology startups were perfectly suited to New York. There are few places in the United States that combine a concentration of large companies in very close proximity and talent experienced in numerous industries. In addition, world class universities in New York and the region provide access to a talent pool with the highest level of training in almost all academic fields.

Looking forward

Which came first, the startup or the accelerators and seed funds? The answer to that question doesn’t really matter in New York’s enterprise ecosystem. It has moved beyond its infancy, and enterprise technology companies are a regular part of the investment mix of many seed and Series A venture capital firms in New York. But there is still much to be done to continue to foster the enterprise ecosystem. Many large corporations, municipalities and public agencies still have onerous procurement processes for startups, making it difficult for early companies to engage. In addition, potential clients could proactively publish priorities and needs to better guide early startups trying to find product-market fit. Programs for internal company teams that understand problems up close and dedicated personnel for helping vendors succeed could also be beneficial for maintaining and growing a strong ecosystem.

Enterprise tech in New York City is gaining momentum and we are on our way to becoming THE most dynamic startup city in the country. There is always more to do, but the pieces necessary to support growth are here in a way that does not exist elsewhere in the U.S.

Congrats to the Datadog team — you will no doubt be a major pillar on which we build a deep and robust enterprise tech sector in New York.