Partnership Fund for NYC Expects a Spring of FinTech, Life Sciences, & More

3/18/13Follow @jpruth

Amid the stoic grey marble and granite of the financial district, Maria Gotsch, CEO of the Partnership Fund for New York City, thinks about new ways to foster growth among the city’s innovators in life sciences, digital health, financial technology, and other sectors.

She runs the $110 million private fund that puts money towards projects, nonprofits, and companies that are expected to create jobs in the city.

The Partnership Fund typically invests up to $5 million in companies including, Gotsch says, a loan early this month for 3-D printing company Shapeways, which is fleshing out a Long Island City production facility. “As that technology becomes more accessible, the first people using it are early adopters in the design community,” she says. “There is obviously a big design community in New York.”

That is one recent example of the ways the Partnership Fund tries to nurture startups that plant their roots in New York. Gotsch hopes to see the production expertise in 3-D printing tied more closely with designers in the city. Digital manufacturing through 3-D printing, she says, is expanding into multiple businesses and markets such as creating dental implants and experimenting with orthopedic implants.

The Partnership Fund’s investments are funded by the corporate sector with the capital held by the New York City Partnership Foundation, the New York City Investment Fund, and the New York Small Business Ventures Funds.

Another company in the Partnership Fund’s portfolio is True Office. The company, which developed a platform that brings gamification to workplace compliance training, in January closed a $3 million Series A round that the Partnership Fund participated in.

Gotsch says part of the Partnership Fund’s strategy is to invest in innovation that needs a bit of a boost to get firmly established locally. “We were early investors in [New York’s] digital media sector and invested in that sector for about 10 years,” she says. “We stopped investing in it three years ago because our work was done.”

The Partnership Fund shifted its attention, she says, once the ecosystem for digital media in the city proved to be healthy. “There are a lot of entrepreneurs, companies are getting founded, and money is coming in from outside of New York to fund those things,” Gotsch says.

Now the focus for the Partnership Fund includes financial technology, digital health, and life sciences, though it still puts money into other types of companies and initiatives.

New York’s colleges and universities can be leveraged to a greater degree, Gotsch says, in such areas as biomedical research for life sciences. She says New York ranks at or near the top among the nation’s innovation centers such as Boston/Cambridge, Seattle, the San Francisco Bay, and San Diego in terms of the strength of science.

Gotsch bases that assessment on National Institute of Health grants for biomedical research awarded to local efforts, Nobel-prize winning scientists, Howard Hughes Medical Institute investigators, and patents issued to innovators in the city. “New York, on each of those metrics, is either No. 1, 2, or 3,” she says.

Ideas that can be commercialized may be born at local academic institutions, she says, but the city loses many of those potential startups to other hubs in the country. In some ways, she jokes, it’s like venture capitalists from California are standing in front of New York’s life sciences research institutions with three things: a bag of cash, a CEO, and a moving van.

“There are lots of spinoffs but they go somewhere else,” she says. “We’re just trying to keep what’s ours.”

In an effort to stave off that trend, the Partnership Fund puts money toward groups such as NYC Tech Connect, an initiative that works with New York’s City Council to nurture entrepreneurs and their tech startups. Other programs backed by the Partnership Fund include the Digital Health Accelerator, established in 2012 for new technology for the health sector, and the FinTech Innovation Lab, which puts tech entrepreneurs in touch with the city’s financial institutions.

Final picks for the next FinTech Innovation Lab are being made now, Gotsch says. The program starts in April with a demo day to be held in July. The Digital Health Accelerator, she says, will begin the application process for its next round in April or May.

New York may have a reputation largely for digital media and e-commerce but Gotsch says she sees potential for more diverse ideas to emerge in the city—with more funding. The challenge, she says, is overcoming limited availability of early stage capital for life science companies in New York.

“Returns haven’t been there so there’s been a scaling back generally but it’s exacerbated in New York because we don’t have the depth [in early stage funding] here,” she says. “A lot of the funds in the city are mid-to later-stage funds.”

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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