Mr. Goldman

Shai Goldman, a venture partner at 500 Startups, recently announced another sign of the seed stage fund's growing interest in New York City--besides poaching a Silicon Alley stalwart like Mr. Goldman, of course. This February, the firm plans on opening a coworking office at 28th Street and Park Avenue in the Flatiron, not far from General Assembly.

500 Startups is known for its global focus. The only physical space the firm had up until New York was a corporate office in Mountain View, "which is where we run our accelerator throughout the year," Mr. Goldman told Betabeat by phone. But 500 Startups opted for a different route here. 

"We didn’t want to do an accelerator in New York at this time," he said, "We don’t really see a gap in the market." If you classify accelerators as a three-t0-four month program with some equity or cash component, Mr. Goldman explained, "There’s actually more accelerators in New York than there are in the Bay Area."  He estimated that there are six in Bay Area and eight or nine in New York.

Considering the expected shake out in the accelerator market, coworking seems like a safe choice. 500 Startups will charge $500 per desk per month with room 40 people. He estimated that the space will house four to five existing portfolio companies and another five or so outside startups.

The intent of the office is to bolster an offline community to go with its online platform called Dashboard.io. Paul Singh, one of 500 Startups cofounders, also happens to be a hacker and built the forum where 1,000 portfolio founders and 200 mentors communicate daily. Mr. Goldman described it as a cross between Quora and Facebook, with conversation threads and a place to ask questions outside one's area of expertise. Mentors also use the scheduling function to book virtual office hours.

"The heart of our organization is really this community where they’re actively engaged in a daily basis," said Mr. Goldman. "It’s pretty unique. I don't really know of any VC fund that has the same dashboard function, as we call it. I know First Round Capital has more of a Wiki style, but there are no mentors that are part of that. It’s part of our value add."

He hopes a physical space will augment that. "We just feel that New York is really a landing spot for folks, for example, from Toronto, Montreal, through Europe, from the Middle East and Israel. If they’re gonna open an office in the U.S., it’s most likely gonna be in New York," he said. "We want to do more in those regions I mentioned," he added. So as companies mature and want to set up operations or a salesforce in New York, they can pick up a desk or two. Same goes for the firm's 200 mentors around the globe. "They'll have a place to come and do their work and also hold office hours."

Mr. Goldman, who moved to 500 Startups from Silicon Valley Bank last fall, said the VC firm functions more like a startup in terms of increasing head count in different geographies and establishing structure as you grow. "We’re moving quickly and doing a lot of new things and testing different ideas. I’ve never actually worked for a startup," he said.

Mr. McClure, ringleader. (Photo: flickr.com/joi)

Goodness, the early-stage scene in New York City sure is getting crowded. Pretty soon investors are going to have to start throwing them 'bows if they want to get past their competitors and reach the most promising founding teams for so much as a hi-how-are-you chat.

The news today, via TechCrunch: Dave McClure's 500 Startups has just announced the addition of two "amazing geeks" to the team: Shai Goldman here in New York, and Pankaj Jain in India. They'll be venture partners, focused on making deals in their respective locations. 

The announcement on the company's blog explains the move:

Why India and New York? They’re both teeming with vibrant growth and change, not just in technology and business, but also in culture, fashion, sports, music, and media. This growth has been matched recently by a tremendous burst of innovation in tech startups, and people using this technology to solve real everyday problems.

500 Startups already has "~50-75 investments" here in town, ranging from MakerBot to DailyWorth, as well as a whole passel of mentors.

We hope this means Mr. McClure will be spending more time in New York City, the true spiritual home for anyone who drops so many f-bombs.

Mr. Diamond giving his candidate speech from the heart at New Work City.

About 60 of 200 registered attendees gathered at New Work City last night to hear two-minute speeches by the candidates for an open New York Tech Meetup board seat. Meetup and NYTM founder Scott Heiferman stood in the audience in a red hoodie, board member Esther Dyson settled on the window ledge in a #newsfoo t-shirt, and scene staple Gary Sharma wandered about with his sponsored tie (Pivotal Labs and Inkba) as 15 candidates gave their vision of what should change about the largest meetup in New York, which last year incorporated as a nonprofit 501c(6), giving it the power to lobby government, among other things.

The other bold-faced names, as far as New York tech goes, were among the candidates: Eric Friedman, head of business development at Foursquare; Shai Goldman, a 10-year veteran of Silicon Alley Bank who moved to New York a year or so ago; and David Tisch, the most talked about candidate of those who couldn't make it, as he had a prior commitment out of town.

NYTM held its first election for the board last year, when proto-blogger Anil Dash and NYU computer science professor Evan Korth were elected. A few things were different this time. Last year, speeches took place at the Skirball Center in front of the usual 800-some audience instead of the cozy New Work City Soho digs; there were also no women running last year, while this year there are four; and only one board member will be elected, rather than two. "This ties us directly to our membership and holds us accountable," NYTM board chairman Andrew Rasiej told the audience.

Whitney Hess, a user experience designer and NWC resident, almost ran for a seat last year before she realized she had massively overscheduled herself. She was the last candidate to step up to the mic last night, a prepared speech on her iPad, and proceeded to thoroughly critique the NYTM user experience from entry to afterparty, including the hated "hovering" until tickets become available "like a Justin Bieber concert."

Other candidates talked about improving the experience of attendees, broadening NYTM's role as an advocacy group, and making the meetup more welcoming to hackers and new members from the outer boroughs and other communities.

First up to the mic was Ben Kessler of CrowdTap--"you guys might know me as @kessler on Twitter"--followed by longtime NYTM volunteer Brandon Diamond, who dumped his script to the floor in favor of speaking from the heart, promising to bring more hackers into the organization if elected. Mr. Friedman's platform was "always be helping," which he illustrated with a quick survey of who was hiring and who was looking for work. Other highlights included the cosmopolitan Jalak Jobanputra, whose resume includes "NYC 1.0, 2.0 and 3.0.," stints in venture capital, government and finance. "It's my goal to evangelize New York as the top tech hub in the world," she said, promising to make NYTM's voice heard in the White House.

Jonathan Askin, a tech law professor at Brooklyn Law School, emphasized NYTM's power to advocate. "We haven't stepped up," he said. "We haven't engaged the government to the extent that we should." Google, Amazon and Facebook are directing government policy on tech, he said, and that doesn't represent the interest of startups.

Murat Aktihangolu, director of Entrepreneurs Roundtable, spoke passionately about making New York more welcoming for startups; Mr. Goldman had a three-point plan: making it easier to move to New York, making sure entrepreneurs have a voice on policy, and reforming the image of New York as a two-trick pony (web and mobile) and getting some attention for cleantech and biotech.

Other candidates who showed up to give a speech included Gregory Schnese of Kikin, Jack Welde, Jesse Landry, June Cohen of TED Media, Luke Haseloff, Matthew Knell and Wei Zhao.

Audience members showed a bias toward the candidates "who showed up." "You just don't like David Tisch," one attendee chastised his friend. "These are community board members," the other pointed out. "Tisch would be better as a board member, don't you think?"

After the talks, the group swigged the Brooklyn Lager and Blue Moon and gobbled their way through several boxes of excellent pizza, talking enthusiastically about New York tech. "I think New York is the best place to start a company!" Mr. Aktihangolu said. New York is an "emerging market," founder Mattan Griffel explained excitedly. Many of the attendees had been to their first NYTM in 2004, 2005, 2006, when the scene was much dinkier, they told Betabeat. Now, Vanity Fair and "The Dylan Ratigan Show" are on the Meetup's press list, managing director Jessica Lawrence told Betabeat. "We should get Betabeat, New York Tech Meetup, Entrepreneurs Roundtable and some cool startups and go to Silicon Valley and recruit!" schemed Mr. Sharma. An entrepreneur in the conversation, Seth Bannon of Amicus, was working on a similar idea (currently in stealth mode), inspired by Paul Graham's recent visit.

Voting for the board seat opened at midnight, and will close December 20. As NYTM adjusts to its new nonprofit status, board members are figuring out their duties (candidates we asked weren't quite sure what they would be doing if elected). Board members serve three year terms.

Mr. Goldman

Oh no, did you forget to send Silicon Valley Bank an anniversary card? The financial firm is celebrating the 10th anniversary of its New York office this week and they're using the occasion to tout the New York branch's new emphasis on pre-funded early stage startups.

Earlier this year, they shipped Shai Goldman out from Palo Alto to bring its long-standing SVB Accelerator program out to New York. While the bank always served tech companies, Mr. Goldman beefed up its offering to startups that haven't yet raised angel or venture financing with sponsorships of General Assembly and TechStars, live networking events, and banking services that work with a Ramen diet.

With all the new programming and clients, SVB is gonna need some more space. Its Fifth Avenue outpost is relocating this year to an office double the size.

The wizard Martocci casts a spell over Twitter (via Steve Spillman)

When the news broke yesterday evening that Skype acquired hometown start-up GroupMe, New York's digerati took the party to Twitter. Indeed the acquisition and its hefty price tag, which Betabeat's sources pegged between $50 million and $100 million, caused such a stir among a certain swath of tech circles that "GroupMe" even made into a New York City Twitter trending topic last night--albeit below penetrating questions plaguing tweeters such as, "Chris Brown OR Justin Bieber."

The deal was the first major exit for Lerer Ventures, Thrive Capital and BoxGroup's David Tisch, so much of the tweeting action consisted of ebullient pats on the back. But a few notes of skepticism arose from the din. In case you were too busy watching Libyan rebels end a 40-year dictatorship, here's what you missed.

Betaworks co-founder Andy Weissman couldn't help getting a little nostalgic, tweeting out:

"Fact: @jaredhecht and @smart named the original @GroupMe entity after a Disco Biscuits song, which I spelled wrong in our term sheet w/ them"

Followed by the even more humble:

"Other fact: I wouldnt originally take a meeting with @jaredhecht and @smart because, I wrote them, I wasn't "feeling" the product yet."

Lerer Ventures Jordan Cooper decided success was no time for humility, asking:

"@aweissman what Made you change your mind ?? ;)"

To which Mr. Weissman dutifully replied, albeit sans emoticon:

"@jordancooper a little birdy named Jordan"

Bnter's Lauren Leto pulled a pattern out of the M&A landscape, noting:

"the tradition of "any company @mattlanger is part of gets bought" continues."

Brew PR's Brooke Hammerling also noticed a pattern: the companies she represents have been pretty much killing it:

"Amazing to see the inner operations of such amazing teams. 1st, PayPal buys @Zong, now Skype buys @GroupMe. #humbled cc @BrewPR"

Silicon Valley Bank's Shai Goldman saw the deal as a boost for the city's new tech economy:

"GroupMe acq is great for NYC tech scene 1) Founders are now experienced successful entrepreneurs 2) Founders will likely be angel investors"

Although he agonized over how the valuation might sway other starry-eyed local start-ups:

"Groupme $85M acquisition is going to provide a false sense of value to other startups "I'm a 1 year old mobile startup, so I'm worth x"

Poornima Vijayashanker, who left Mint after the company was acquired to launch BizeeBee, concurred:

"@shaig yeah that's very true! hype is an interesting phenomenon. being a startup u have to know what ur worth, when to sell & whom to sell 2"

Lean Start-up Machine founder Trevor Owens wondered whether the acquisition changed venture capitalist Mark Suster's mind about GroupMe's business proposition:

"@msuster what do you think of groupme now?"

Mr. Suster tweeted out that it hadn't:

"@to2 same as I always did. Great product. Well marketed. Group texting on its own not a company"

Mr. Owens wanted to know more:

"@msuster would love to know your thoughts on how/when features can become a business"

But while Mr. Suster promised a blog post on the subject, ff ventures' John Frankel jumped into the fray:

"@to2 Features become a product when they generate revenues. They then become a business when revenues exceed costs. cc @msuster"

Brooklyn techie Jonathan Wegener thoughtfully contemplated his own role in closing the deal:

"I like to think the acquisition happened because I decided to wear my @groupme shirt today."

GroupMe community manager (and friend of Betabeat) Steve Spilllman couldn't help but see the romance:

"What a big day- first the Kardashian wedding and now comes news that groupme is marrying skype."

Meanwhile, David Tisch was more preoccupied with how GroupMe's Pat Nakajima figured into the $50 million plus figure:

"Wondering what the price for @nakajima was in the @groupme deal…"

According to Mr. Nakajima some imposter tweeting under the totally fake Twitter account @PatNakajima, he may have made a killing:

"I got a sweet deal. 47 signed Taylor Swift CDs!"

Entrepreneur and former VC Steve Cheney was already thinking about the road ahead, tweeting just the word "Skype!" followed by:

"Next stop: monetization."

But the GroupMe team were too busy belting their hearts out at karaoke to hear him, at least according to Ms. Hammerling's tweet:

"This is happening. Cc @GroupMe@BrewPR@nakajima@PatNakajima"

Hopefully somebody snuck in Steve Martocci's bottle of Johnnie Walker blue.

Disclosure.

TURNTABLE SPINOFFS. Also apparently associated with New Work City, an official site vending Turntable merch has a splash page up at shopturntable.com; no store yet, but here's a peak. The site is endorsed by TT, as we understand, unlike rolling.fm--which looks like one of those straight-up knock-off situations.

WALKBACKS. Gawker made some changes to its redesign last week--"a little less boxed-in," as Nick Denton tweeted--giving readers the ability to opt out of the two-pane configuration which many found intolerable at first. Gawker has been tweaking the redesign since its debut earlier this year and subsequent pageview nosedive, and pageviews are climbing back up. Bad news for digerati Rex Sorgatz, who put his money where his mouth was back in February in a public bet with Mr. Denton: "I’m on the record that I think the redesigns will fail. And I’m now officially opening the betting pool. I think Denton is going to be forced to pull back on this," he wrote. "I keep getting traffic alerts telling me that @gawker sites are breaking records. That traffic bet with @nicknotned is looking silly now," Tony Haile tweeted this morning, and he's a man who should know--he's the general manager at Chartbeat.

“I can’t tell you the whole idea.” The Internet entrepreneur on the other end of the phone sounded panicky. “It’s going to sound ludicrous and ambitious, more ludicrous and ambitious than most.”

The voice belonged to a 27-year-old Stanford law student—“just about the oldest you can be where I cannot remember not having a computer”—who was in New York last week to talk to people about his new concept for a website.

He gave a few vague descriptors that could apply to half the start-ups in New York.

“I definitely don’t want it in the newspaper,” he said. “I’m worried that even little sign posts toward what I want to build are dangerous.”

When he had the idea in April, he talked about it to anyone who would listen. “I definitely went manic--which has never happened before--when it came into my head, for about 10 days, which were incredibly productive and I wound up talking to a senior engineer at Google and some very well respected people at Stanford,” he said. “I would not sleep. I’d get to bed at like 3:30 and wake up at 6:30 and the entire time I’m just thinking about how to build this thing that was in my head that I think would make the world a better place... I was pacing and talking to everyone I could about it.”

The mania lasted about ten days, followed by four days of crippling depression. His girlfriend seemed to be the only one who noticed. “The fact that I seemed to be taking along some very, very smart people with me was both exciting and in retrospect, a little bit disconcerting,” he said.

“But it is a big idea, and that’s the language of start-ups," he continued. "The language of start-ups is a sort of manic language, it’s, ‘I’m going to change the world,’ which for normal people is like, ‘Whoa, that sounds grandiose,’ and you sound a little bit crazy. In start-up world, it’s like, ‘Can I give you some money for that?’”

We hung up. He emailed immediately to scrub the record. “I know this is going to sound a little paranoid, but I'd appreciate it if you would not include the quote about ----------- being ----------- and wanting to develop a platform for ----------. Paranoia is also a symptom of start-up fever.”

Bankers Pull a Pivot - Read the Diaries of a Fledgling Founder

Start-up fever! Whether it’s due to The Social Network or the new wave of billion-dollar tech I.P.O.’s, lately it seems like everyone has a start-up. Betabeat first noticed it in our own neighborhood, the tech-tending East Village, home of Foursquare. On a recent weekend, we overheard an entrepreneur talking about pitching investors over brunch on St. Marks and glimpsed another demonstrating his website’s Twitter integration to a friend at Ninth Street Espresso. We tried to eavesdrop on a bearded, 40-ish fellow ranting about his start-up to a friend in Tompkins Square Park around 9 p.m. on a Wednesday and caught the words “convertible note.” The trend has invaded our building as well. The Goldman Sachs engineer on the second floor wants to join a start-up. He asked us about tech events.

The start-up mythology—build fast, get cash, save the world—and the low barrier to entry make it tough to resist. “An all-consuming start-up can be very difficult for a mom of young kids,” New York-based mommy blog mogul Philippa Smith said in an email, but “the lure of creating something that was potentially such a benefit to both local moms and the local business community was too great.” Her start-up, Juice in the City or “the Groupon for moms,” recently announced a $6 million round of funding.

“It’s Foursquare, it’s Etsy, it’s Tumblr,” said Zeb Dropkin, a digital media consultant-turned-start-up entrepreneur currently working on RentHackr.com, a website where New Yorkers admit how much rent they’re really paying. “New York City has real investment now, real cycles. This is the real leagues.”

Roger Wu, who organizes the Stamford Tech Meetup, recently raised money for one of his start-ups. The investors remembered him because of his red New Balances, he told Betabeat. “It’s like Hollywood, where everyone’s an actor,” he said. “Everyone with a little idea they had when they were drinking is going to start a company and be the next Facebook.”

(Betabeat got an email recently from a friend seeking cycling routes: “Is there a HopStop for bicycles? Because if there isn’t let’s start one and get riiiiichhh!”)

Cheryl Yeoh was working as a management consultant for KPMG, an 8:30 a.m. to 8:30 p.m. gig that kept her in Scotch tastings and Michelin stars, when she realized sometime in the middle of April that she needed to do an Internet start-up for something. Anything. The idea was secondary. What mattered was making something amazing that could reach not just hundreds of people or thousands, but millions. “I knew I could do something greater,” she told Betabeat. “Every time I met someone who told me, ‘Oh, I’m a founder of so-and-so,’ or whatever, I don’t care what company it was, every time they said that I thought, oh my gosh, why am I not doing this, I know I can start something, I know I can do something.

“I was obsessed. You can use the word ‘obsession.’”

Ms. Yeoh had a programmer friend. She took him out to lunch and pitched him a few ideas. He picked CityPockets, a website that imports a user’s coupons from daily deal sites like Groupon and sends friendly reminders when they’re about to expire. “We’d come home at 8:30 at night and right away from 9 p.m. I was writing, researching until like 2 a.m.,” she said. “Or I would spend time going to tech events. Some days I would go until 3 or 4 a.m. because I was talking to my mentor in San Francisco. Even though I was physically tired, I was mentally awake. Every morning I would jump out of bed because I was like, I wonder what new features I can think of next... Even my friends were like, ‘Wow, you’re sleeping so little but you look so much more alive!’” She left her job in August, two months after her 27th birthday. “I told my manager, I have to leave,” she said. “I have to do this thing because it’s consuming me.”

She went on. “I had a one-bedroom in Gramercy, lived the high life, had designer coats and bags, traveled multiple times a year. I quit all that. Moved into an apartment in the East Village—Alphabet City, actually—and slept in a living room on a futon kind of separated by curtains Velcroed up to the ceiling. For five months I did that... I wanted to prove that I can live just bare bones, live the life of a scrappy entrepreneur so that I can just fully focus on the product without any distractions whatever.

“I have enough savings in my bank, actually, to continue living in my Gramercy apartment,” she added. “It was more like I made an active choice to go with that lifestyle.” The day she put the curtains up, she recalled, she giggled until her eyes teared.

“In the Bay Area you have more superstars and guys who have done a bunch of start-ups,” said Shai Goldman, a director at Silicon Valley Bank who moved to New York from the Bay Area in January. “The majority of entrepreneurs here, a lot of them are first-time entrepreneurs. It’s almost like a cohort. They’re kind of all learning at the same time, they’re going through the same missteps. It makes it a little more interesting here.

“Every entrepreneur has the opportunity to make a big mark in New York right now.”

The anonymous entrepreneur we spoke to by phone wants to drop out of Stanford and raise money in New York. “I think New York is kind of the Wild West frontier of investing right now. It’s a little bit unstable and it’s a little bit dirty,” he said. Silicon Valley is “this weird system that’s dominated by these monsters” like Facebook and Google, which are buying "crap companies to get the people."

“The mythology is a little tarnished out there,” he said. “The people I know in New York are really excited about the things that happen here in a way that people at Stanford and the Valley certainly aren’t. You know, it’s big business.”

Evidence of the city’s start-up fever can be seen on Meetup.com—the New York-based, dot-com-era start-up that became a hub for local techsters—where the number of recurring tech events has wildly accelerated: Startup Lunch, 104 members; Dumbo Tech Breakfast, 641 members; UWS Startup Meetup, 164 members; the NYC Startup Garage, 208 members; NYC Startup Weekend, 337 members; the NYC Lean Startup Machine, 1,553 members; the New York Technology Bathhouse Meetup, 25 members.

On a recent muggy evening, about 70 mostly 20-something, mostly male guests gathered in clusters on a rooftop in Chelsea for the summer’s first “Find a Cofounder” party, squinting at one another’s name tags as the sun set. Red name tags were for programmers; blue meant you were more of a business guy. The blue name tags ran out by the time Betabeat got a drink.

“So three years ago, there was the New York Tech Meetup, right?” Gary Sharma said, referring to the 18,545-member organization that draws about 800 attendees to its monthly demo nights. Mr. Sharma was a mild-mannered Wall Street marketing consultant before he became “The Guy with the Red Tie,” per his business card and neckwear. He has been attending tech start-up events and cataloguing them in his weekly newsletter, GarysGuide, for the better part of four years. “That was the start-up meetup, pretty much. I like to call it the mothership. As that gets bigger, I started seeing satellite meetups coming out of it. Video 2.0, Web 2.0. Then you started seeing even smaller ones. Travel 2.0, Fashion 2.0. Then more niche ones. Some people started the Hoboken Tech Meetup. You know where Hoboken is?” We did; we’ve been. The Hoboken Tech Meetup has 901 members. Its monthly Monday night meetings always have a wait list.

“I want to start a social-local-mobile meetup called SoLoMo!” Mr. Sharma said. “No, I’m just kidding,” he added quickly.

“I knew nothing about Internet start-ups,” Ben Wolff, a smiley personal stylist who lives in Corona, Queens, admitted to Betabeat as we sat cross-legged on a futon in a corner of the patio. “I knew I needed to make an electronic version of myself. That’s why I started.”

Last year, Mr. Wolff, whose business consists of going through client’s closets and refreshing their wardrobes, wrote out a set of “if this, then that” instructions in a spreadsheet to formalize his process. A few encouraging conversations with friends inspired him to turn it into a start-up. His dream is to make the “Faster Pants algorithm” part of every man’s shopping experience, he said, as soon as he can find someone to code for equity. “I equate this with a high school dance where there’s more girls than boys,” he said, mock-twiddling his thumbs. “I feel like I’m sitting on the wall going, ‘Oh, please dance with me!’”

“You’re a reporter? Reporters did a lot for me!” said Ray Schmitz. A former real-estate broker who made a small name for himself by passing out business cards at the revolving door of Bear Stearns the day the investment bank announced its sale to JPMorgan, he was also seeking dance partners. He had the idea for a website that lets brokers refer business to each other in 2009. “I remember reading a book by Clay Shirky,” he said. “He makes a wonderful point that the Internet may be the biggest change in society since the printing press. It may be even bigger. The start-ups in New York are forging the life of the future for everyone right now. The way we’ll live, work and play tomorrow is being created here today.”

On our way out, Betabeat ran into Aaron Price, the fastidious organizer of the Hoboken Tech Meetup, who was standing in the bathroom line. Things were going well, he said. He was recently named to the nebulous position of “entrepreneur at large” for the early-stage venture capital fund DFJ Gotham, opened a co-working space, and was working on his start-up, makeMania, a website where crafty people show off their D.I.Y. projects.

He exhorted us, as always, to come to the next Hoboken meetup. We promised to try.

Bankers Pull a Pivot - Read the Diaries of a Fledgling Founder

Thanks Shai. Numbers are hard!

This is a guest post by Shai Goldman, a Director at Silicon Valley Bank

Zynga, the biggest casual gaming company in the nation and the maker of popular games titles such as Farmville, CityVille and Mafia Wars, filed for its IPO today.

To summarize quickly,  Zynga is performing extremely well. They were profitable in 2010 and will continue to be profitable in 2011 (based on 2011 Q1 figures). They are looking to raise $1B through the IPO and have $996.7 in cash on the books.

One of the highlights is that top line revenue is growing quickly, from $19.4M in '08 to $121.5M in '09, roughly 600% growth. It jumped another 500% to $597.5M in '10 and their 2011 revenue run rate is $941.7, roughly 150% growth. Although their run rate is $941.7 for 2011, revenue expectations are closer to $1.5B, which would be 250% growth from 2010.

Zynga has raised over $500M from New York City investors such as Union Square Ventures, who own 5.5%. Based on this IPO, it would be safe to assume that Zynga's valuation would allow USV to make back their entire fund $150 million fund from 2008.

Other investors include Foundry (6.1%), KPCB (11%) , IVP (6.1%), DST (5.8%), Avalon (6.1%), Andreessen Horowitz, Softbank, Google, Tiger Global, Reid Hoffman. The CEO of Zynga, Mark Pincus owns 16%.

While the company is performing very well, there are some significant risks to consider. The main issue is that Zynga continue to be very dependent on Facebook for distribution and monitization. Can Zynga find alternative avenues to lessen the dependency on Facebook?

The other challenge is that casual gaming in still a hits-driven business. Can they continue to produce great titles to retain existing players and entice new users to their games? Another challenge is that casual gaming has a very low barrier to entry. There are a lot of competitors who are developing good casual games: Angry Birds (Rovio Mobile), Crowdstar, Pocket Gems, Papaya Mobile, Disney (Playdom - $763M acquisition), EA (Playfish - $400M acquisition, PopCap, Firemint, Chillingo), DeNA (Ngmoco - $400M acquisition).

The evolution of gaming is mobile, which is not Zynga's core strength. Zynga needs to become dominate in the mobile gaming market and develop on platforms such as iOS, Android and Windows Phone 7. While mobile games lessen the dependency on Facebook, there are still gate keepers in the mobile space including Apple, Google, Zong and Boku. Lastly Zynga is only four years old, which is still relatively young to be going IPO. If you look at the history of casual gaming, dominant players have come and gone, just look at the ups and downs of Atari, Sega and Capcom to name a few. The point being that remaining a dominant player in the casual gaming world is challenging and maintaining this level of growth, even tougher.

To summarize, Zynga is legitimate company that diminishes the argument of those who proclaim a tech bubble. The company faces many challenges but what is certain is that gaming is a huge market and Zynga has the opportunity to remain dominant.

Data in this story is taken from Zynga's S-1 filing and acquisition numbers on Crunchbase. This post reflects Shai Goldman's personal views and are not the views of his employer.