Riding the NYC tech wave it helped start, Primary raises $425m in two new funds

In April, Ben Sun and Brad Svrluga decided to raise $425 million for Primary, their seed-stage venture capital firm that focuses on New York-based startups. Even as the dry powder market began to contract, Primary shut down the entire sum within 90 days. “It was by far the easiest process we had, says Svrluga.

At its annual Primary NYC summit on Wednesday, the company announced a $275 million seed fund, its fourth such vehicle, and a $150 million fund to take larger positions in its portfolio companies. the most prosperous. Over the past two years, a number of its portfolio companies have reached billion-dollar valuations, including identity verification startup Alloy, IT support company Electric and Chief, a digital rolodex for female executives. Meanwhile, Sun debuted on Forbes‘ Midas listing earlier this year.

The momentum belies the difficulty Sun and Svrluga, co-founders and general partners of the company, faced when they attempted to raise their first fund in 2014. Arguing with VC peers over the concept of a seed fund for the city’s sleepy tech scene, Sun recalls a prominent Midas List investor saying, “This is crazy.” The initial $60 million vehicle took the pair two years.

In the eight years since its launch, Primary has built up a wide range of operational staff and organized community events to support its New York startups – a playbook that has been slow to catch on. “We bought into Brad and Ben’s vision of what they wanted to build, but at the time it was really just a vision,” says Abe Finkelstein of Vintage Investment Partners, which is a limited partner of Primary since its second fund. in 2018. Today, the Primary team numbers nearly 50 people and the firm hosts some 250 events a year, from intimate seminars to major conferences. “They’re executing way beyond what I expected,” says Finkelstein, adding that Primary’s team size is already comparable to many larger, more established companies.

Primary’s new funds will continue to follow the same playbook, but on a larger scale than before. “Now is not the time to go back and change course because what we have done is working too well,” Svrluga says. “Now is the time to double down on this strategy and go broke.”

The company has reached an inflection point, overtaking the ranks of emerging funds with unproven track records, says Christy Richardson, chief investment officer for The Sobrato Organization, the family office of billionaire real estate magnate John A. Sobrato, who was a new funder. in the last fund. “During the bull market, a lot of people were very focused on closing the next deal. I think Primary was also focused on building a sustainable franchise,” she says.

Primary’s strategy has helped it stay in place in New York as more investors, founders and employees flock to the city’s tech ecosystem. “I think every company will have an office in New York within the next 18 months,” said a prominent Silicon Valley investor. Forbes anonymously last November. At the time, leading companies such as Andreessen Horowitz, Greylock and Redpoint had started planting flags in the city. Since then, more touted Sand Hill Road veterans, including Sequoia and Index Ventures, have also opened offices in New York.

Svrluga says he welcomes the growing presence of traditionally West Coast-based businesses in New York. Still, he believes the years Primary has spent establishing a foothold in the city will help him maintain his edge by getting into top companies early. .

“The reality is that we’re going to get a great job done by these venerable companies that know what they’re doing,” he says. “The reality too, though, is that I think they’re almost entirely coming to New York in a bit of a down-and-out way – there won’t be any confusion about where these companies are center of gravity.”

On the other hand, predicts Svrluga, the global center of gravity for technology could still shift further to New York. “I think there are a lot of people who are tired of sitting in a restaurant in San Francisco where, on the left, someone is bragging about their condition sheet, on the right, someone is talking about their new option grant and behind them someone is talking about how long before their company goes public,” he says. If Silicon Valley’s bet that software is eating up the world is true, Svrluga claims, then software will boost all industries, providing an outsize boon to New York’s diverse economy, from financial services to media and advertising.

“I’m not here to say that New York will measure up to Silicon Valley, but that’s no exaggeration – it could be,” he says.

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