Silicon Alley now Gold St.
New York City’s young tech stars are bracing for nasty weather — it’s starting to rain cash.
Thanks to the absurdly high $1 billion Facebook paid for the social and mobile-app maker Instagram — a company with no revenue and just 13 employees — Gotham’s successful tech firms in the mobile space are bracing for a deluge of big-money buyout offers.
“Fasten your seat belts, the social-mobile land grab of 2012 has officially begun,” said Lou Kerner, an expert on private-company valuations.
Last week, the CEO of one the city’s standout tech firms, David Karp of Tumblr, a blogging 2.0 platform, attended a meeting hosted by Evercore Partners as part of its Disruption Speaker Series, where some of the city’s top startup players discussed valuations.
Tumblr’s backers at Union Square Ventures said the company, which raised $85 million last September, has been heavily courted for an acquisition but has resisted selling out, a source with knowledge of the talks said.
All around New York, bankers and venture capitalists were flipping through their portfolios last week and wondering what Facebook CEO Mark Zuckerberg’s billion-dollar check meant for local startups they advise.
The Instagram sale at least signaled that mobile and social-focused startups were prized commodities for strategic buyers. The sale also meant companies that were flirting with billion-dollar valuations had a new reason to demand such consideration.
Other Big Apple-based startups, like Foursquare and Mobli, already hotly sought-after acquisition targets, can demand even more from suitors.
Moshiko Hogeg, the CEO of Mobli, a mobile social network for sharing photos and videos, has already turned down takeover overtures.
Mobli has seen its user base soar since the Instagram deal with people switching platforms. Sign-ups on Mobli neared 500,000 last week, which was about a 500 percent increase from the average weekly sign-up rate, and now Mobli is approaching 3 million users.
On top of that, Mobli is attracting a celebrity investor base since Leonardo DiCaprio joined a $4 million funding round last year. Tobey Maguire followed his Hollywood comrade by investing in the company this year, Hogeg said.
Perhaps the NYC tech firm with the biggest claim to a $1 billion valuation is Foursquare, co-founded by CEO Dennis Crowley.
“Foursquare, and any other companies, are going to argue Instagram justifies a larger value for them,” a Wall Street analyst said, speaking on condition of anonymity because he advises such companies on merger and acquisitions. “But ultimately we’re only dealing with few acquiring companies who would be willing to pay that much.”


