The New York Tech Boom

In early 2011, AOL acquired news site The Huffington Post for $315 million. Among the beneficiaries: Lerer Ventures, a venture firm that invested in the company eight years ago. It’s one of many success stories for the New York–based VC, which specializes in investing in seed-stage technology companies that haven’t completed a formal round of financing. The strategy, while risky, exposes the firm to significant upside.

Specifically, Lerer invests in Internet technology, web-based applications and services, mobile, social, and consumer products, e-commerce, publishing technology, and ad technology. “All of that happens to be what New York specializes in as well,” says Eric Hippeau, a managing director with Lerer. “The New York technology world is booming at the moment, and this time around it’s here to stay. There’s a whole infrastructure now that’s in place to support entrepreneurial businesses and technology-based businesses in New York.”

Given Lerer Ventures’ investment strategy, it’s not surprising that the firm has invested in transformative technology players such as Warby Parker, Birchbox, and MakerBot.

Eyewear company Warby Parker has raised $13.7 million to date. Lerer was one of the company’s first investors in 2011; the firm later contributed to the company’s Series A round.

“Warby Parker is a good example of our e-commerce investing,” says Hippeau. “It’s a
company that is in the business of disrupting the eyeglass market. The company allows you to buy prescription eyeglasses online that you choose through a variety of models, all of which are very stylish. That pair will then become your main eyeglasses—and all of that is done for less than $100.”

Lerer was also an early investor in MakerBot Industries (see related “Deal Story,” page 8. Founded in 2009, MakerBot manufacturers 3-D printers that can create prototypes of various shapes and objects. The New York–based company has completed three rounds of financing and has raised approximately
$11 million in funding for VCs.

“We are at the beginning of this revolution where you’ll be able to create products very easily in 3-D on your computer,” says Hippeau, “and then you’ll have kind of a ready-made assembly line that will start making them. You can personalize them, and you can make quantities that are more affordable. We’re not quite there yet, but you can see the very beginning. This is what’s known as the ‘maker’ revolution, where people in America are starting to make things again. And that’s a great thing.”