Monday, 27 June 2011

Does NYC exceed Silicon Valley in Venture Funding?

Let's look at the statistics first according to Q1 2011 Venture Capital Report

- As for the Share of Total Venture Capital by State(including Internet, healthcare and energy sector): Transaction: CA39% MA12% NY10% / $ Amount: CA52% MA10% NY6%. California still dominate the market, followed by Massachusetts and New York.

- When it comes to VC investment in Internet business, while CA still dominate with 42% of # of transaction, NY follows CA with 15% share (MA is next with 8% share).

- As for the VC Internet business investments by the cities; San Francisco 49 deals | $315M; New York 39 deals | $218M; Chicago 12 deals | $491M(Large funding to Groupon); Palo Alto 12 deals | $189M; Redwood City 4 deals | $82M; Mountain View 8 deals | $78M; San Mateo, CA; 7 deals | $72M; Seattle, WA 9 deals | $54M; Indianapolis, IN 1 deals | $54M; Los Angeles, CA; 5 deals | $50M. NYC is ranked 2nd although still lags behind Silicon Valley as the whole. It is also notable that City of San Francisco is the largest Internet VC capital destination Vs. cities in Silicon Valley.

- As for the VC transaction on Healthcare business by states (P21), CA37%, MA19% NC2%, PA5%, NJ2%. NY is not even in the list. The fact that Top cities are Redwood City, Cambridge MA, Mountain View and Palo Alto, Healthcare VC investment tend to go to the cities in suburb.

- As for the VC transaction on Green & Clean Tech by states (P29), CA42% MA9% MO3% CO4%. Again NY is not even in the Top 5. Top cities are suburban cities such as Oakland, Santa Clara, Irvine, San Leandro and Sunnyvale.

To summarize, top VC funding destination cities are:

  • San Francisco 72 deals | $533M
  • Chicago 12 deals | $491M (Internet business only)
  • New York 61 deals | $383M
  • Santa Clara 7 deals | $379M
  • Palo Alto 23 deals | $322M
  • Mountain View 20 deals | $222M
  • Redwood City 14 deals | $215M
  • Oakland 3 deals | $211M
  • Irvine 3 deals | $196M
  • San Jose 11 deals | $193M
  • Austin 20 deals | $184M
  • Sunnyvale 10 deals | $170M
  • Cambridge 19 deals | $163M
  • San Leandro 1 deals | $135M
  • Waltham 12 deals | $114M
  • Seattle 19 deals | $82M
  • Houston 5 deals | $81M
  • Dallas 4 deals | $15M

Based on above number, we can conclude that:

- NYC is the 2nd largest city for VC funding, preceded by San Francisco.

- However,compared to Silicon Valley as whole, NY VC funding is probably around 1/4(25%).

- VC Funding on NYC is predominantly (approx. 60%) on Internet business.

- Even in Internet VC funding, NY share is around 1/3 of that of Silicon Valley.

My theory on booming NYC internet start up scene is (and it also explain surging popularity of startup in San Francisco Vs Valley):

- The more and more internet start up business are based on consumer service, social media and advertising based, NYC has good talent pool in industories such as mass media, publishing, advertising and fashion.

- Due to financial crisis, top notch talent has moved from financial industry to internet start up business.

- Young hipster engineers for consumer business prefers to live and walk in walkable, urban environment (Vs. middle age engineers' preference on family and education friendly suburban setting).

- Old money from Wall Street, PE and HF gained risk appetite and funding more on startups.

Lastly, here are some interesting article about booming internet start up scene in NYC, all published in early 2010.

- How Tech Start-ups Like Foursquare and Meetup Are Trying to Overthrow Old Media and Build a Better New York -- New York Magazine

- Tech Start-Ups Eligible for New York City-Sponsored Fund -

New York Isn’t Silicon Valley, and That’s Why They Like It -

Hope it helps!

P.S. NYC mayor Mike Bloomberg is very aggressive in turning NYC into Digital City. Here is his Road Map

Saturday, 30 April 2011

Short Term Investment Opportunity - Second Mortgage with 10% interest and 25% on Capital Gain

- Seeking investor who can provide $600,000 ofsecond mortgage.
- Great opportunity to participate in the shortsale flip transaction --- results in 6 month.
- Guaranteed 10% interest and 25% of capital gain--- projected annualized return of 19% to 49% 
- Secure investment with minimum $700,000 inequity.

- We are seeking a investor who can provide$600,000 second mortgage on 2610 Wooldridge Austin Tx 78703, super primelocation luxury proprety in exclusive Pemberton Heights.
- Current lender approved of short sales purchaseat $1.6 milllion, property value is at around $2.3 - $2.4 million, minium$700,000 equity.
The lender has commited to issue $1.0 million offirst mortgage thus we are seeking $600,000 second mortgage. 
- Second mortgag amount is $600,000 for 10%interest.  Interest ($5000 a month) will accrued to the principal amountand paid at the time of sales or refinancing ($630,000).  The balloonperiod is 6 month.
- In addition, at the completion of resale orrefinance of the property, investor will receive 25% of gross profit. Gross profit is calculated as 90% of resale price (or appraisal value) minus$1.6 million.
- Funding target date is May 10 2011.
- Expected annualized return of 19% to 49% (seebelow chart).
Profit Analysis for Investor

-      - Property Address:  2610 Wooldridge AustinTx 78703
-      -  5,258 SQF luxury house on double sized lot 0.65acre(28 226 sqf or 2622m2)
-      -  4 bed / 5 bath / 4 living rooms
-      - Property Condition property is very goodcondition but needs minor touch up (see attached photos).
-      - Located in Pemberton Heights, the mostprestigeous neighborhood in Austin Tx.
-      - Property Value: $2.3 - $2.4 million (seeattached comps)
-       - The most recent two comparable sales inPemberton have is 2422 Wooldridge which sold for $400/sq ft. 1406 Wooldridge ispending at 418 a ft.
-       -  2610 Wooldridge is on a 2/3 acre lot (.67 acres)which is a double lot (only one on Wooldrige with access from 2 streets). Theproperty at 2618 Wooldridge, the modern house was listed at $400/sq ft andthere is a smaller house, 6 Green Lane which is 3300 square feet and is listedfor $500/ft. 
-       -  Based on above analysis, we believe the fairmarket value of 2610 Wooldridge is between $2.3 million and $2.4 million.
-      -  See attached CMA for details.
イメージ 3

-       - David Lawrence, renowed contractor on luxuryhouses (see attached resume), will be handling minor remodeling to make theproperty to top condition within a month of upon the closing. 
-       - David Lawrence will create LLC (name to bedetermined) and this LLC will own the property until it is sold.
-       -  Once the property rennovation is completed, wewill immediately list the property with the goal of completing transactionwithin 3-4 month.
       -  Investor will receive 6 month interest even ifproperty is sold less than 6 month.
If you are interested in investing in this excitingopportunty, please contact me.

Gen Shibayama
Oyster Real Estate Investments Inc.

Saturday, 26 February 2011

America's Happiest Metros? and Business Journal has conducted 2010 Quality Of Life Index on major metropolitan area based on 24 different criteria.

Here are the ranking of 67 metropolitan areas.

 Rank   Metro area   Score 
1 Raleigh        17.23
2 Washington        16.10
3 Minneapolis-St. Paul        15.59
4 Bridgeport-Stamford, Conn.        15.33
5 Salt Lake City        11.57
6 Denver        10.94
7 Seattle        10.65
8 Boston        10.63
9 Austin          9.84
10 San Jose          9.52
11 Atlanta          8.68
12 Portland, Ore.          8.64
13 Omaha          8.36
14 Hartford          8.11
15 Baltimore          7.36
16 Charlotte          7.22
17 San Francisco-Oakland          6.99
18 Albany          6.97
19 Worcester, Mass.          6.39
20 Richmond          6.36
21 Kansas City          6.02
22 Nashville          5.68
23 Columbus          4.67
24 Indianapolis          4.57
25 Philadelphia          4.37
26 Allentown-Bethlehem, Pa.          4.06
27 Oxnard-Thousand Oaks, Calif.          4.01
28 Phoenix          3.48
29 Dallas-Fort Worth          2.93
30 New Haven, Conn.          2.62
31 Virginia Beach-Norfolk          2.59
32 Cincinnati          2.50
33 Sacramento          2.35
34 Rochester, N.Y.          2.29
35 San Diego          2.20
36 Albuquerque          2.14
37 Grand Rapids          2.10
38 Chicago          1.92
39 NewYork City          1.73
40 St. Louis          1.60
41 Honolulu          1.20
42 Orlando          0.87
43 Milwaukee          0.50
44 Jacksonville        (0.27)
45 Louisville        (0.46)
46 Birmingham        (0.52)
47 Houston        (0.68)
48 Pittsburgh        (0.78)
49 Oklahoma City        (1.29)
50 Tucson        (1.63)
51 Tulsa        (1.75)
52 Providence        (2.09)
53 San Antonio        (2.69)
54 Buffalo        (3.04)
55 LasVegas        (3.15)
56 Baton Rouge, La.        (3.23)
57 Detroit        (3.52)
58 Tampa-St. Petersburg        (3.52)
59 Cleveland        (3.86)
60 Dayton        (4.12)
61 Los Angeles        (4.44)
62 Miami-Fort Lauderdale        (4.52)
63 Riverside-San Bernardino, Calif.        (5.66)
64 Memphis        (7.41)
65 New Orleans      (10.92)
66 Fresno, Calif.      (13.85)
67 Bakersfield, Calif.      (14.40)

Gallup-Healthways Well-Being Index is also good indicator.

Here is the latest results on most and worst Well-Being Cities among large metropolitan area.

There seems to be surprising similarity to Portfolio's top 20 metro! 

Hope it helps!

Why Invest in Austin Tx Real Estate Market

This is my answer to the following question: "How are things in Austin real estate wise? I've been told it is a great city that has seen some growth within the real estate market?"

Austin Tx enjoyed one of the most stable during Great Recession and is one of the few metropolitan area where economy has been growing. http://alteredstatesofrealty.blo...

Austin's real estate market is quite steady and is one of the least affected market on real estate bubble burst. Here are recent data from FHFA and NAR on Single Family Housing median price.

- FHFA Q4 2010 report, Austin housing appreciated by18.78, but down -1.05% over last 1 year.
- NAR: 2008=188.6 Vs. Q42010=190.3. But down from Q32010=205.0

Having said that, at the peak of real estate boom at around 2007, approx. 20% Austin Tx real estate purchase was by the investors (mostly out of states like Californian). This has pushed up investment properties' value (say Duplex, Triplex and Fourplex) much higher compared to rental income. For example, in prime central Austin location, at the peak of market, gross rental yield is around 6-7% of purchase price (Cap rate of 4-5%). Since recent purchase of investment properties are primarily driven by cash-flow hungry experienced investors, you can get similar property at 10% gross yield or 8% in cap rate. Since mortgage rate is very low, you can enjoy very good cash flow (say 15-20% cash on cash return on 20% down payment).

As for the location of the investment, I would strongly prefer the so called central Austin In below MLS map, I would recommend Area 6, 7 DT, UT, 3, 1B and 4. My rationale is that 1) Austin is quite centralized --- key economic engine such as UT Austin, State Capital and culturally unique neighborhood are located in Central Austin, 2) Central Austin has strong restriction on new development (like rest of Texas, suburb are sprawling). 

As you can see from above link regarding Austin economy, Austin Tx will be continuously one of the fastest growing metropolitan area in terms of GDP and population growth. Therefore , purchasing property in prime central Austin market, I believe, is great short- and long-term investment.

Austin Tx --- real estate / economy related news

While Austin is mid size metropolitan area with 1.6 million in population, the population growth between 2007 and 2009 is the highest in USA.

Chef at Globe Restaurant in San Francisco is leaving for Austin Tx --- REASONS: affordable cost and high quality of living and 2) wanting to own his own restaurant.
Austin Leads Country in Job Growth:  CBS news feature on brisk economy in Austin Tx.

Austin succeeded to bring in 27 out-of-state companies in 2010. Short list is Hanger Orthopedic Group, Facebook, LegalZoom and SunPower.  Tax/regulation heavy California is major target.

Austin apartment rental market is recovering steadily.  Vacancy rate has increast by 3.5 points to 6.5%.  Monthly rent has increased by 2.4% to $805.  Total supply of new units are 3027 while # of households increased by 9340.

Racial mix of Austin neighborhoods between 2005 and 2009.  It is evident that blacks and his panics have been pushed away from  Central Austin including East Austin to exurb.

Austin is ranked No.1 by.Forbes Best Cities for Young Adults
Austin ranked No.7 in highest concentration of Tech Workers.  San Jose 29%, Huntsville 23%, Boulder 22%, Washington DC 13%, Boston 11%, SD11%, Austin 11%, Seattle 10%, San Francisco 10%.

Austin's Tech employee average salary ($93K)
Austin is considered one of the small housing inventory by CoreLogics

Travis County (Austin metro) is ranked 57th most liberal counties in USA.

CNBC ranks Austin 5th as metropolitan area to move to;.

Austin ranked 5th as the best cities for movie making by MovieMagazine.
Austin ranked No.1 as the metropolitan area with the most brisk economy.
Austin ranked No.3 by Forbes best place to invest in real estate.

Austin chosen as one of the 10 cities to move by Kiplinger Magazine. CNCBs Marias interview on Kiplinger Magazine.
Austin’s per-capita consumption power is the highest in USA by Bundle.
Heartland - Anthony Bourdain: No Reservations TravelGuide
Austin is chosen as the metropolitan area where economy is about to recover.  Austin enjoys migration from large US metros such as NYC, LA and SF.
Fastest growing North American Metropolitan Area by National Geographics,