The flow of venture capital to Long Island companies slowed in the second quarter, with funding going to a restaurant loyalty card and an artificial intelligence system for options trading, according to data provider Crunchbase Inc.
After a first quarter highlighted by a $20 million funding round to Farmingdale biotechnology company Codagenix Inc., there were two funding rounds in the second quarter: $1.5 million for Foodie Card Inc. and an undisclosed bootstrap round for Neuratrade LLC, according to San Francisco-based Crunchbase.
The economic slowdown and safety measures prompted by the COVID-19 pandemic cut venture capital to a trickle, said Neil Kaufman, managing partner at Hauppauge law firm Kaufman & Associates LLC and chairman emeritus of the Long Island Capital Alliance.
"The venture capital investment market has obviously slowed," he said. "It's difficult to do due diligence and meet people and develop relationships."
Jared Katz, CEO of Foodie Card, said the Syosset company is developing a mobile app for Apple's iOs devices and plans to follow that with an Android app, but is biding its time before using the funding to mount a major expansion into New York City.
Leading the two-year-old company's first funding round was Ruttenberg Gordon Investments, which supplements its Chicago real estate portfolio with venture capital stakes in startups like Blue Apron, Quip and Snapchat.
Foodie Card members pay a $29.99 annual fee and then are entitled to a 10% discount at about 700 restaurants, including roughly 600 on Long Island. The company donates 5% of each card sold on Long Island to Island Harvest food bank in Hauppauge.
Katz said the company was adding about 300 restaurants a month early in the year, "but then COVID hit." Ultimately, he said, the goal is to roll the program out nationwide with local charities in each market.
In addition to the $20 million round for Codagenix, two Long Island companies received venture capital rounds in the first quarter ended March, according to Crunchbase: Stony Brook battery startup StorEn Technologies attracted $1.1 million in a crowdfunding campaign and Roslyn-based Sino-Global Shipping America Ltd. took in $1 million.
Long Island companies had reaped $23.6 million in venture capital by late July 2020. That compares with $34.9 million for all of 2019, according to Crunchbase.
Jorehll Aguilar, founder and CEO of Neuratrade LLC, said he financed his own bootstrap round as he refines an algorithm for daytrading options.
Options are contracts that give the buyer the right to buy or sell the underlying asset such as a stock at a particular price. The derivatives can be highly volatile, magnifying moves in the underlying asset.
Aguilar, a Stony Brook University graduate majoring in computer science and art history, said he was inspired by East Setauket-based Renaissance Technologies LLC, one of the most successful hedge funds in history, in founding Neuratrade.
Renaissance was a pioneer in developing computer algorithms that could trade commodities and stocks without human intervention.
Aguilar said he began developing his system about a year and a half ago as a college assignment.
"Our main strategy uses machine learning and artificial intelligence," he said. "I think I'm onto something here."
Eventually, Aguilar said, he would like to create an investment vehicle like a hedge fund, but allow low-net-worth investors to participate. Traditional hedge funds limit their pool of investors to institutions or high-net-worth individuals, often insiders.
"I don't see a reason these funds should keep all the money," he said.
To gain traction, Aguilar said he is seeking a co-founder and outside investors.