#LongNYC: Primary Announces a Fresh $200MM Commitment to NYC Founders

Team Primary: 16 today, soon to be 21, and still growing….

It was one day shy of six years ago that my partner Ben Sun and I announced the launch of Primary Venture Partners with a $60MM fund focused on partnering with New York City’s most promising founders. Today, we turn the page on a new chapter, announcing two new funds totaling over $200MM in capital commitments, two new partners, and most importantly, a commitment to the tech community of NYC that is deeper than ever. (More here from TechCrunch)

PVP III is our third core seed fund and an oversubscribed, $150MM vehicle that will see us continuing to play the same game we’ve been playing in seed for six years now: 8–10 investments per year where we are high-conviction leads of seed and pre-seed rounds in companies started by NYC’s most talented founders. Primary Select II is our second ‘opportunity fund,’ a $50MM fund focused on Series B and later investments in some of the fastest growing companies from across our prior investments.

We are humbled by the confidence that our investors have shown us in entrusting us with this capital at such a complex time in global markets. Indeed, raising a fund in the midst of a global pandemic isn’t the simplest of challenges. But our LPs see the value in our differentiated approach and focus: bring overwhelming support to NYC’s best founders. Amidst a global pandemic and recession that has left many institutions sitting on their hands, they didn’t flinch. We are honored to work for and alongside them.

The credit for this fundraising success is due primarily to our founders, who have done a damn nice job of making us look good over the past twelve months. Brynn Putnam and Mirror sold to Lululemon for $500MM. Luke Schoenfelderand Latch are going public via a SPAC at a $1.5 billion valuation. Allon Bloch and K Health raised at a $1.5 billion price tag and appear nowhere close to slowing down. Those three companies anchor a first fund that has grown into a remarkable collection of founder-driven success stories. Add Ilir @Slice, Ryan @Electric, Tommy & Laura @Alloy, Nick @Ollie, Aaron @Vestwell and Harry @Alma — all of them coming off past 12 months fundraises that put their valuations on unicorn trajectories — and you have a recipe for something truly special. And don’t sleep on Chief and Penrose Hill/FirstLeaf just because they haven’t announced a gaudy financing recently. After all, why raise money when you’re printing it, right?

Ben and I set out in 2015 to build a firm that would attract the best founders in NYC to partner with us as they launched a new generation of iconic companies in this ecosystem. The group above is doing just that, and then some, and our 2018 second seed fund has birthed another wave of future icons — still early in their journeys, but poised to break out in short order.

At $150MM, PVP III is 50% bigger than PVP II and over 150% larger than our $60MM Fund I. In a world of fund size creep and allegations of big firms piling on AUM in search of juicier management fee streams, are we just another opportunistic guilty party? No, we are not. Our growth is highly intentional and strategic, and the $150MM cap on our fund size was determined in close consultation with our core LPs. We are growing for four simple reasons:

1. Our target market, NYC, is producing top quality companies at an ever-increasing rate. We were all-in on NYC’s emerging tech scene in 2014 when we were raising our first fund, and we were met with *a lot* of skepticism. But there is now little doubt about the global importance of this market we call home. With today’s clear abundance of opportunities, we want to be able to cover the landscape as well as ever and pursue the best of what we see.
2. With an expanded opportunity set, we see the potential to do incrementally more deals, if we have the team to do that without stretching ourselves too thin. Fortunately, we do. With this new fund announcement we are proud to announce that Jason Shuman is our newest investing partner. Jason joined us 2.5 years ago after he and I met via our shared seed investment in Latch (now going public via a merger with a Tishman Speyer-sponsored SPAC). Jason’s contributions to the firm have been extraordinary, and we genuinely believe he’s the best young investor in NYC. He has a hot hand, clearly, having led our efforts at Dandy, Lilli, Helaina, and Realm, amongst others, over the past 18 months. He is well on his way to building one of the best portfolios out there. We are excited that a portion of our growth is about enabling Jason to flex his skills further and lead a good chunk of the deals from this new fund.
3. The dynamics of seed rounds have changed dramatically. Increasingly, the best companies are rolling a pre-seed and seed round together (and seemingly sometimes adding a small portion of an A in there for good measure!) into one $4–6MM round. If we want to be a credible lead investor for rounds like that, we believe we have to be able to write a $3+MM first check at times. Run that math against an appropriately diverse seed portfolio (we think that means 25–35 companies), reserve appropriately, and you quickly need a materially larger fund.
4. We are committed to continuing to grow our team and expand our Portfolio Impact capabilities. Our PI team, soon to be nine teammates strong, is our not-so-secret weapon, and the most high impact approach to after-the-check support in the entire seed landscape (ask our founders and we think you’ll hear a convincing story on this front). With this additional growth we can support an ever-expanding team to drive ever more value for our companies. Our philosophy continues to be one of putting our resources on the field, not in the owners’ box. On that note, we are proud to announce the addition of Rebecca Price to our team in the role of Operating Partner. Rebecca is leading our world class talent team, driving our efforts to build the deepest talent database in NYC, and becoming the go-to source for new hires of any sort for our portfolio companies. Rebecca comes to us by way of Capsule, Enigma and Sailthru, having overseen people operations at all three through phases of rapid growth. Stay tuned for more news with some more pending additions to our Portfolio Impact team.

We are off and running already, having closed our first three investments from PVP III before the end of last year, and we have three others that will close shortly. The sun is shining on NYC Tech, pandemic-be-damned, and we’re excited to have a fresh checkbook to support the very best founders in town! And with new resources like our NYC Founder Guide and NYC Founders Fellowship, we’re committed to investing not just our capital in new companies, but our time and energy in supporting activity at the top of the funnel for everyone in our community. With these new programs we hope to support an ever-more diverse set of founders as they get started on their journeys.

I’ll be sharing more in the coming weeks in the interest of opening the kimono a little further on how we’re operating here at Primary and also offering some insights into how this business of seed stage VC works. Look for posts upcoming on lessons learned from our first six years, an inside look at raising a venture fund in the midst of a pandemic, and more.

For now, though, I’ll close by offering (1) a hearty thank you to our amazing founders for enabling us to get to this point — our success is entirely derivative of your amazing work, and (2) an open invitation to everyone to come talk to us at any point in your founding journey. We are, as always, happy to be everything from a sounding board on your earliest conversations, to writing that first $100K check that enables you to spring free from your current employer, to leaning in with a $3MM check to lead your full size seed round.

We’re open for business and Long NYC — Let’s talk!