Riding The NYC Tech Wave That It Helped Start, Primary Raises $425 Million Across Two New Funds

In April, Ben Sun and Brad Svrluga set out to raise $425 million for Primary, their seed stage venture capital firm that focuses on New York City-based startups. Even as the market for raising dry powder began to contract, Primary closed the full sum within 90 days. “It was by far the simplest process we’ve had,” Svrluga says.

At its annual Primary NYC Summit on Wednesday, the firm announced a $275 million seed fund, its fourth such vehicle, and a $150 million fund to take larger positions in its most successful portfolio companies. In the last two years, a number of its portfolio companies have reached billion-dollar valuations, including identity verification startup Alloy, IT support company Electric and Chief, a digital rolodex for women executives. Meanwhile, Sun debuted on Forbes‘ Midas List earlier this year.

The momentum belies the difficulty Sun and Svrluga, cofounders and general partners of the firm, experienced as they attempted to raise their first fund in 2014. Riffing with peer VCs on the concept of a seed stage fund for the city’s sleepy tech scene, Sun recalls a prominent Midas List investor telling him: “That’s insane.” The initial $60 million vehicle took the pair two years to secure.

In the eight years since it kicked off, Primary has built out a deep bench of operational staff and hosted community events to support its New York startups—a playbook that took a while to catch on. “We bought into Brad and Ben’s vision of what they wanted to build, but really at the time, it was kind of just a vision,” says Abe Finkelstein of Vintage Investment Partners, who has been a limited partner in Primary since its second fund in 2018. Today, Primary’s team has nearly 50 people and the firm hosts some 250 events a year, from intimate seminars to large conferences. “They’re executing well beyond what I expected,” Finkelstein says, adding that the size of Primary’s team is already comparable to many larger, more established firms.

Primary’s new funds will continue to follow the same playbook, only at a larger scale than before. “This is not a time to peel back and change course, because what we’ve been doing is working too well,” Svrluga says. “This is a time to double down on that strategy and go for broke.”

The firm has reached an inflection point, graduating beyond the ranks of emerging funds with unproven track records, says Christy Richardson, chief investment officer for The Sobrato Organization—the family office of billionaire real estate mogul John A. Sobrato—which was a new backer in the latest fund. “During the bull market, a lot of people were very focused on closing the next deal. I think Primary was equally focused on building a durable franchise,” she says.

Primary’s strategy has afforded it staying power in New York as more investors, founders and employees come flooding into the city’s tech ecosystem. “I think every firm will have a New York office in the next 18 months,” a prominent Silicon Valley investor told Forbes anonymously last November. At the time, leading firms such as Andreessen Horowitz, Greylock and Redpoint had begun to plant flags in the city. Since then, more vaunted Sand Hill Road veterans including Sequoia and Index Ventures have also set up New York offices.

Svrluga says he welcomes the growing presence of traditionally West Coast-based firms in New York. Still, he believes that the years Primary spent getting entrenched in the city will help to maintain its edge in getting into the best companies early—to date, 92% of the seed startups it has backed have gone on to raise a Series A financing round .

“The reality is we’re going to have great work done by those venerable firms who know what they’re doing,” he says. “The reality too, though, is I think they are almost entirely coming to New York in a bit of a toe dip sort of way—there’s not going to be any mistaking where the center of gravity for those firms is.”

On the other hand, Svrluga predicts, tech’s overall center of gravity could shift further yet towards New York. “I think there’s a lot of people who are tired by sitting in a restaurant in San Francisco where on the left somebody’s bragging about their term sheet, on the right somebody’s talking about their new option grant and behind them, somebody’s talking about how long before their company goes public,” he says. If Silicon Valley’s bet that software is eating the world holds true, Svrluga posits, then software will drive every industry, providing an outsized boon to New York’s diverse economy from financial services to media and advertising.

“I’m not here to say New York is going to be equal to Silicon Valley, but it’s not a far-fetched thing—it could be,” he says.