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LI firms raise nearly $39M in VC funding, running ahead of 2016

WorkMarket garnered the largest venture round on Long

WorkMarket garnered the largest venture round on Long Island in 2017 -- $25 million. Members of Team One are seen here on Oct. 19, 2017, in WorkMarket's Huntington office. Credit: Heather Walsh

Long Island companies are on pace in 2017 to eclipse the $41.26 million in venture capital raised last year, based on data through mid-October.

The region’s companies raised $38.79 million as of Oct. 16, about $2.5 million short of the total for all of 2016, according to data from PitchBook, a Seattle-based private and public markets researcher.

Mark Lesko, executive dean at the Hofstra University Center for Entrepreneurship, said venture funding for Long Island companies is building even though the region remains a backwater compared to the top venture capital magnets.

“We’re far behind New York City, Boston and Silicon Valley in the aggregate,” he said. Still, “at the end of the day, it seems like the interest among venture capital firms in Long Island is steadily increasing, and that’s something the region can build on.”

Through Sept. 30, the Boston region attracted $6.2 billion in venture capital, the San Francisco area (not including the San Jose and Santa Clara parts of Silicon Valley) got $17.4 billion and the New York City metropolitan area (including Long Island) received $9.3 billion, according to data from PitchBook and the National Venture Capital Association.

The major metropolitan areas tend to attract not only venture capital, but companies as well.

The largest venture round included in Long Island’s 2017 tally — $25 million — went to WorkMarket, a company that retains operations in Huntington village but has moved its headquarters to Manhattan.

The company, whose customers include Walgreen Co., The New York Times and Yahoo! (now part of a Verizon Communications Inc. subsidiary called Oath), makes cloud software to help companies manage their employees and freelance workers.

Stephen DeWitt, chief executive of WorkMarket, said the 7-year-old company will remain in Huntington, where it was founded and 20 of its 158 employees still are based.

“Long Island works for us,” he said. “It’s our heritage.”

Investors in WorkMarket include high-profile venture capital firms Union Square Ventures, Spark Capital and SoftBank Group Corp., and DeWitt said the company has opened an office in Toronto as part of an expansion into Canada.

The second largest Long Island venture round recorded so far in 2017 went to ASET Therapeutics LLC, which is based at the Long Island High Techonology Incubator at Stony Brook University. ASET, which is developing tools to screen cancer patients and enable targeted treatments, announced a $7.1 million funding round in March. The company was founded by David Epstein, the former chief scientific officer at OSI Pharmaceuticals, which was established on Long Island but moved to Illinois after being acquired by a Japanese company.

Long Island’s largest venture funding round in 2016 went to Bookwitty, a Valley Stream-based social network for book lovers. The online platform makes money by helping readers around the world create communities and discover works beyond the bestseller lists, and then selling books to them.

Leading the $10 million round was Beirut-based Leap Ventures.

This year, three of the 11 funding rounds through Oct. 16 went to Huntington companies, including WorkMarket, according to PitchBook. That compares to 20 funding rounds in 2016, with two each going to companies in Lloyd Harbor, Valley Stream, Hauppauge and Stony Brook.

The New York City metro area’s largest venture funding rounds for the third quarter went to WeWork, a shared-office-space provider ($3 billion), and Peloton, a maker of stationary bicycles equipped with video screens for on-demand fitness classes ($325 million).

Though the venture capital spigot flow remains inconsistent, Lesko said that all the region needs is a single “unicorn” like or Alphabet’s Google to alter the landscape.

“All you need is one big success story,” he said.

Correction: The name of WorkMarket was incorrect in an earlier version of this article.

Top 5 venture capital investments in LI firms so far in 2017

$25 million: WorkMarket, Manhattan and Huntington

$7.1 million: ASET Therapeutics LLC, Stony Brook

$2.25 million: Calendre, East Rockaway

$1.04 million: eGifter, Hungtington

$1.02 million: Sweet’tauk Lemonade, Montauk

Source: PitchBook

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