It’s no surprise that VCs here are as proud of New York’s tech scene as they are of its breakfast traditions. Ben Sun, cofounder of Primary Venture Partners, recounted a familiar tale of starting his first company, a social media platform called Community Connect, in New York in the 1990s to the consternation of his friends in banking. “There was great talent here,” Sun said. “They just didn’t want to work in startups.” 

That dynamic has obviously shifted, spurred by a reconfiguration of the workforce following the 2008 financial crisis and the emergence of bona fide successes, such as MongoDB, Datadog, and a crop of flashy direct-to-consumer companies.

Silicon Valley still had its impenetrable bench of tech behemoths and deep networks of investors who could put together deals while dropping off their kids at school in Hillsborough. But Sun, who started Primary in 2013, said that New York became a “beachhead” for firms like his to find startups not only in their own city, but other parts of the country like Texas, Chicago, and Miami that Sand Hill Road was overlooking. “We were finding those deals because the Bay Area guys were busy in their own backyards,” Sun said. 

The LPs, or investors in venture firms, followed, looking for exposure to the growing ecosystem as unicorns proliferated. “They were overexposed in San Francisco,” said Heather Hartnett, the CEO and general partner at Human Ventures. “That breeds a lot more for the venture capital funds out here.” And as Ben Lerer, the managing partner at Lerer Hippeau, said, LPs typically look for multiple New York funds at different stages. “The ecosystem is fully developed,” he said. 

After taking a hit with the pandemic, San Francisco has seen a resurgence with the rise of OpenAI, fueling an AI feeding frenzy in which the top companies are still concentrated in the Bay Area. But even the ability of legacy Silicon Valley venture firms to corner the hottest deals is eroding, with Joshua Kushner’s Thrive Capital elbowing its way to the front of the recent OpenAI funding rounds. “[Thrive] did an amazing job of having won really good deals not having that connectivity,” Sun said. 

But, as Radian Capital’s Jordan Bettman pointed out, Kushner doesn’t position Thrive as a New York outfit, but as a global one. It reflects the flattening across venture capital, especially among growth-stage firms that set up offices worldwide. “They don’t care about geography,” said Bettman. 

The future of venture in New York—and beyond—is hazy. We’re still seeing a reckoning from the heady days of COVID, with firms struggling to raise money at anywhere close to the heights of 2021 and 2022. Lerer predicted the industry will continue to bifurcate between the 25 to 30 funds that look like Thrive and Andreessen Horowitz, functioning more like “asset gatherers,” and smaller ones that specialize. “Where you go to die is somewhere floating in the middle, manage a few billion dollars, and don’t do anything particularly well,” he said. 

That makes early-stage deals even more competitive. “Backing the 50th horse in some AI race is not a good choice unless you have some sort of inside information,” said Rob Biederman, the managing partner at Asymmetric. 

New York’s tech scene may be fully developed, but that just means firms have to keep innovating as deals grow more crowded and dollars harder to find. Even Apollo had to borrow from San Francisco to reinvent a classic: Its bagels are made with sourdough. 

Leo Schwartz
Twitter: @leomschwartz
Email: leo.schwartz@fortune.com
Submit a deal for the Term Sheet newsletter here.

Nina Ajemian curated the deals section of today’s newsletter. Subscribe here.

VENTURE DEALS

- Innovaccer, a San Francisco-based healthcare data AI platform, raised $275 million in Series F funding from B Capital Group, Banner Health, Danaher Ventures, and others.

- Labviva, a Boston-based AI procurement platform for the life sciences industry, raised $25 million in Series B funding. 53 Stations led the round and was joined by existing investors Biospring Partners, B Capital Group, and Glasswing Ventures.

- Ndustrial, a Raleigh, N.C.-based energy intensity optimization AI platform, raised $19.5 million in Series B funding. ABB and GS Energy led the round and were joined by Southwire and existing investors Clean Energy Ventures and ENGIE New Ventures.

PRIVATE EQUITY

- GCM, a portfolio company of Avista Healthcare Partners, acquired the assets of Precision Swiss Products, a Milpitas, Calif.-based machining solutions provider. Financial terms were not disclosed.

- New Mountain Capital agreed to acquire Machinify, a Palo Alto-based healthcare payments AI-powered software provider. Financial terms were not disclosed.

EXITS

- Branford Castle Partners acquired Eastern Dental Management, an Avenel, N.J.-based dental services provider, from Staple Street Capital. Financial terms were not disclosed.

OTHER

- Constellation agreed to acquire Calpine, a Houston-based natural gas and geothermal resources electricity developer, for $16.4 billion in cash and stock.

- N-Power Medicine acquired Syapse, a San Francisco-based medicine solutions provider for oncology communities. Financial terms were not disclosed.

IPOS 

- Metsera, a New York City-based obesity treatment developer, filed to go public on the Nasdaq. ARCH Venture Partners, Population Health Partners, FMR, GV, MC Longevity, Newpath Partners, and SoftBank back the company.

PEOPLE

- Zeeza Cole joined Avid Ventures as a Partner in January 2025. Previously Zeeza was a Principal at Bain Capital Ventures. Additionally, Tali Miller has been promoted to Partner. Tali is a Founding Investor at Avid Ventures and has been with the firm since 2020.