“We’ve seen angel investors pull back from some of the other investments we’ve made or been involved in,” said Maria Gotsch, president and CEO of the New York City Investment Fund, who Mr. Davis described as “a big champion” of organizing the fund. “We’re trying to diversify the city’s economy, and you gotta get the money so [these start-up companies] can start from somewhere and propel that tech sector; otherwise, they’ll never get off the ground.”
Two hundred thousand dollars is a tiny fund (venture capitalists typically make first-round bets for small start-ups with $500,000 to $1 million). But in the world of Web 2.0, many start-ups can get off the ground with a shoestring budget. They work from home (or at their other jobs); use free, open-source software; and generate revenue from online ads to make up the difference. It’s not 1999. But with a promising idea, seed companies in New York will at least have a chance.
But first, they have to impress Mr. Davis, who will ultimately decide which companies the investment committee will consider funding.
Mr. Davis, 42, is a trusted and known figure in the start-up community. In 1995, he founded Thinking Media, an online marketing firm that pioneered client-side tracking of pages and advertisements. In 1999, he co-founded Sonata, a wireless company that provided location-based services and marketing to cell phones (he saw the potential in an App Store for the iPhone before Apple’s latest toy was even invented). Mr. Davis also co-founded Petal Computing, a firm that developed software that allows a group of PCs to perform like a mainframe, which helps reduce hardware costs for big finance and pharmaceutical firms.
Mr. Davis currently lives in the Upper West Side. He is rarely in NYC Seed’s official offices in Brooklyn because he’s usually out meeting with one of its 200 applicants. “I try to sit down with anybody that has a viable idea that looks reasonable,” he explained. Mr. Davis will write a memo for each company he thinks has a chance to grow and will present it to the investment committee.
Mr. Davis won’t discuss specific applicants. But he told The Observer that certain ideas intrigue him based on Internet market trends and useful new ideas.
“A very interesting area is perishable information,” he said. “How do you start organizing it and mining it?” For example, new micro-blogging sites like Twitter offer small bursts of information from all kinds of experts. “If someone is able to capture that information and organize it, it can be much more valuable. Like, live video. That’s valuable, but it can just go away and disappear if someone doesn’t find a way to organize it.”
So which other ideas seem interesting (and profitable)? Location-based, mobile content, like applications for iPhones and BlackBerrys, and social media and trend-tracking for advertisers, marketing companies and brands interest Mr. Davis. So does new, Web-based software for old-school industries—for instance, new methods for doctors and dentist offices to organize appointments and billing.
Mr. Davis is optimistic about what new start-ups will be able to do with NYC Seed’s funds. But, he adds, “it’s a dual agenda. The agenda is not just, yes you have to get a return. You’re running a fund. But there’s other community-centered, entrepreneurial-centered things to get done that we’ve never had a platform for before in the city. Somebody has to get things started.” Seems like Mr. Davis is about to start up the start-ups.