Venture

Armory Square Ventures Raises $31M To Invest In Upstate NY

Upstate New York just got a little greener. Armory Square Ventures just raised a second fund of $31 million to invest in cities and towns in upstate New York, according to an SEC filing Wednesday. The firm, which now manages $50 million in capital between its two funds, will continue to focus investment efforts in Ithaca, Syracuse, Rochester and Buffalo.

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ASV expects to invest checks up to $2 million in 15-20 companies, through the new fund, Somak Chattopadhyay, founder and managing partner at the fund told Crunchbase News.

So far, the early stage fund has made 13 investments in 8 startups, across industries in B2B software, mobile, and technology-enabled services. Its first fund was $16.4 million dollars.

For an early stage fund, ASV has a pattern of doing follow-up rounds. It’s invested in multiple rounds for BentoBox, SquareFoot and ACV.

“We take a concentrated approach to how we work with our companies,” Chattopadhyay said during a phone call. “Both to make sure we write large checks and continue to support each follow-on round.”

Chattopadhyay pointed to ACV Auctions, which works with car dealers within the automotive industry, as an example of that payoff.

He says ACV received a tremendous amount of interest from Silicon Valley but chose to go with Armory Square Ventures for a culture shift.

“This company focuses on automotive dealers, and many Silicon Valley (venture capitalists) are used to taking Uber or Lyft or riding Tesla,” said Chattopadhyay. Automotive dealers are not a part of their general day to day, he added.

In terms of exits, one of ASV’s investments, Agronomic Technology Group, was acquired by Yara for an undisclosed price.

Chattopadhyay explained that some of the key catalysts that existed in Silicon Valley when it was just bubbling up also exist in upstate NYC: university anchors like Cornell or Syracuse, angel investors, serial entrepreneurs, multiple business exits.

The problem, as shown by a survey conducted by Upstate Venture Connect, a nonprofit that wants to boost entrepreneurship in the region, is startups in the upstate New York region still need significant capital to scale adequately.

The survey found that “scalable firms identified $624 million in equity capital requirements for creating over 6,000 new jobs” in the region.

ASV estimates that it’s created 350 jobs since starting.

Most early stage funds in the region, whether university affiliated are not, are capped at $5 million. That said, late-stage capital does exist: Cayuga, a fund associated with Cornell University that focuses on all funding stages, has raised $137 million in its time.

So factoring in costs of living and available capital etc., a $3 to $5 million round in upstate New York is comparable to a $6 to $10 million round in Silicon Valley, Chattopadhyay said.

On the Silicon Valley scale, a fund of this size isn’t unusual. But in upstate New York, $31 million has the power to turn heads, and companies.

Illustration: Li-Anne Dias

Editor’s Note: A previous version of this article said that ASV invested in 13 startups. A correction has been issued, as ASV made 13 investments across 8 startups. 

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