Bruce Brodoff Communications
Bruce Brodoff Communications
Giuliani Administration to Reinvest in Successful High-Tech Venture Capital Fund
July 18, 2000

Mayor Rudolph W. Giuliani announced today that the New York City Economic Development Corporation (EDC), on behalf of the City, will reinvest in the Prospect Street NYC Discovery Fund in an effort to further stimulate the growth of the City's technology industries.

"As the first New York City-based venture capital fund to focus on local information technology businesses, the Discovery Fund pioneered Silicon Alley venture capital activity and has invested in some of the City's most promising companies," said Mayor Giuliani. "These companies, such as 24/7 Media,, Multex,, Juno Online Services, and many others have greatly contributed to shaping today's dynamic landscape of Silicon Alley."

The Discovery Fund is a public-private equity investment fund managed by Prospect Street Ventures. Its investors include EDC, Keyspan Energy, Con Edison and the New York Power Authority (NYPA). All of the investors have agreed to reinvest distributions from the initial investment in order to expand the fund. Audited figures for the five years ending December 31, 1999 show that the Discovery Fund and a related co-investment fund together have invested in 17 companies with a market value of $245.8 million, or four times total invested capital of $61.6 million. With this reinvestment, the fund is expected to increase its capitalization from $76 million to more that $175 million.

"The Discovery Fund is a unique and innovative public-private initiative that has successfully facilitated the growth of diverse technology industries building on New York's traditional strengths," said EDC President Michael G. Carey. "While producing strong returns to the investors, the fund has had a tremendous impact on New York City's economy. EDC is very pleased with the fund's performance and we are ready to commit proceeds into another round."

The Fund is a licensed Small Business Investment Company (SBIC) that combines public funding from EDC and the New York Power Authority with private funds from Keyspan Energy, Con Edison, and Prospect Street Ventures. As a Small Business Investment Company, the Discovery Fund achieves two-to-one leverage of its participants' contributions, using funds from the United States Small Business Administration.

Created in 1995 under the direction of Mayor Giuliani, audited figures for the five years ending December 31, 1999 show that the Fund has posted a number of impressive results:

  • An internal rate of return of approximately 72 percent.
  • The 17 portfolio companies, all based in New York City, have attracted nearly $1 billion of total investment from other investors in addition to the Discovery Fund.
  • Several of these companies are now publicly traded, including: 24/7 Media, a leading internet advertising network;, a second-generation web portal;, the leading electronic provider of investment research;, the leading promotional site on the web; and Juno Online Services, the second largest internet service provider after AOL.
  • Collectively, these portfolio companies have retained or created more than 2,000 "new economy" jobs in New York City.

With the success of Internet companies in the New York City metropolitan area, Silicon Alley now has an abundance of new and newly expanded venture capital funds, and continues to grow at an astonishing rate. According to VentureOne, a San Francisco-based market research firm, Silicon Alley venture investments registered an annual growth rate of 205 percent last year, compared with a 145 percent increase in Silicon Valley.

EDC is the City's primary vehicle for economic development services. Using its real estate and financial resources, EDC helps develop businesses and create jobs throughout the five boroughs.

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