Venture Capital

Charles Bonello of Grand Central Tech: On New York's Startup Scene

by trusted insight posted 6years ago 1879 views
Charles Bonello, Co-Founder and Managing Director, Grand Central Tech (GCT): New York is the single best place in the world to start and build a company. I wouldn't be at Grand Central Tech investing in our city’s tech economy unless I knew that to be true.
Choosing startup life invariably injects an element of risk into a career, often quantifiable by lower upfront pay and less visibility into future job prospects. However, the upside can be equally attractive, especially in New York, where the startup community is expanding rapidly, second only to the Bay Area in volume of funding and new company creation.
The opportunity the city offers startup founders is what inspired Charlie Bonello to leave finance for his own entrepreneurial ambition: to create New York’s newest flagship tech accelerator. Joining his co-founder Matt Harrigan, the pair of Regis High School alumni have achieved their vision with Grand Central Tech (GCT). Housed in Facebook’s one-time New York headquarters, GCT’s inaugural class of startup entrepreneurs are completing their first year with the incubator. We took some time to talk to Charles about the New York ecosystem as he and the GCT team recruit a new class for the accelerator’s yearlong program, unique among accelerators in that they take no equity nor do they charge rent.
Before co-founding GCT, Charles ran the venture debt practice at Three Point Capital and co-founded River Twice Capital, a global hedge fund started in 2010, where he was an Analyst and Portfolio Manager. He began his career at Fred Alger Management as a Research Associate, where he covered the consumer sector. A Brooklyn native, he lives with his fiancee in downtown Manhattan.
Why did you guys do this? What’s behind GCT’s approach?
We’re working to build bridges between the corporate world and the startup community for the mutual benefit of both by creating a single point of density of the best technology companies in New York. The current macroeconomic environment is one where venture is proving to be one of few avenues where investors can potentially realize significant returns. So if the demand pool of people who want to be entrepreneurs and the pool of investors looking to invest in venture in continues to grow, then it’s in everyone’s interest to connect that demand to a supply of addressable, important, and lucrative problems to solve.
If we can bridge the gap between startups and corporations, as we’ve started to do with our inaugural class, then we can also begin to:
1.) Genuinely create a way in which corporate employees can engage with startups and enrich their own careers without departing from their existing roles,
2.) Create smarter startups tuned towards problems with real customers/buyers, and
3.) Engender smarter corporations better able to appreciate and react not only to emerging trends but to the emerging professional landscape as a whole.
What makes you different from other accelerators?
It’s as if it’s now just a matter of course that some percentage of a startup’s equity, often secured at a brutal valuation and/or in exchange for what are, by definition, the “unguaranteeable” benefits of participating in an accelerator program, is a required ticket for entry into the startup “big leagues.” By dropping the equity requirement while still providing an overabundance of top-flight resources to help our companies succeed, we’re able to attract the absolute best startups in NYC.
And by providing space in our building for them to grow at no cost, we’re providing clarity to the typically stressful question of real estate needs as they relate to variable and unknowable company growth rates. Office rents aren’t cheap anywhere, especially in New York or in San Francisco. Every dollar that goes to rent is one that isn’t going to talent or marketing, and that’s just a suck on your balance sheet. GCT Companies get a full year of free, dedicated, premium space in the heart of the city.
Another major criticism of tech on either coast, and startups specifically, is that the benefits are constrained to a narrow band of the population. While there's a host of moral issues around this, we like to think about it through the prism of talent. We strive to create an environment that is welcoming of all and embraces diversity.
Towards that end, we've undertaken an effort to build an inclusive and diverse tech culture. You can see that in the selection of our first class for which we received ~500 applications. Of those, we chose 18 companies. And of those founders, 42% are women; when you add in veterans and underrepresented minorities, that's another 30%.
Who is involved? How does that provide you with a competitive advantage?
Grand Central Tech has assembled an innovative group of resources, mentors, and partners to ensure our companies receive the best advice from the broadest and richest range of inputs. What’s truly unique is our founding class of corporate partners, among the world’s most recognized and respected corporate leaders: Microsoft, L’Oreal USA, Google, JP Morgan Chase, IBM, Goldman Sachs, Intuit, and PepsiCo Americas Beverages.
They represent a unique competitive advantage in this marketplace by giving our startup founders an unprecedented level of access to key decision makers, sales channels, potential funding, mentoring and software platforms. Given their caliber, this type of access is a major advantage for GCT companies in the future as well as the current class, 100% of which will be staying in the building in our coworking spaces after “graduating” from our accelerator at the end of May. Our partners also play a key role in supporting GCT's efforts by working with us on recruiting our next class, helping in the selection process and offering their deep support to the GCT team.
For GCT itself, their support and networks also means incredible help to build the epicenter of the NY tech ecosystem in a wholesome way: with a deep commitment to creating a diverse and inclusive environment, vast industry expertise in evaluating opportunities, and tremendous lift in supporting our internship programs with local schools to help educate the next generation of tech talent.
What is the state of play in NYC accelerator programs versus elsewhere?
The last several years have seen major strides in the size and quality of NY’s engineering and entrepreneurial talent pools, as well as the explosion of VC and angel dollars available to entrepreneurs. Tightening the connection between emerging companies and established ones is an integral part of continuing the development of our local tech ecosystem, and one that we’re proud to play a part of. Combine that with a diverse population, unparalleled access from an infrastructure and travel perspective at the crossroads of global commerce, and New York offers a robust competitive advantage that you can't find elsewhere.
How do you choose GCT startups? What makes a great founder in your experience?
We want to work with the very best technology companies, irrespective of size or stage and our selection criteria reflects this. The key categories we focus on are:  
1.) The Team: What makes them uniquely qualified to undertake this challenge; 2.) The Scope and Importance of this idea: Is it "Important" and lucrative? 3.) Traction: What's the best proxy for how they've progressed? Funds raised? Customers? Product? And the following two, we do not compromise on: 4.) Engineering Talent: We strongly believe that each company should be building new technology rather than cobbling together existing ones. This is perhaps one of the major drivers of value creation. 5.) Community Fit: We are making a long term investment of time and resources into these companies, and we want to make sure they buy into the community.
Any founder bears two key responsibilities in my mind. The first is recognizing that you’ve lured individuals away from other opportunities. The second is the responsibility of creating a team with the domain expertise, technical talent, and hunger to relentlessly attack the challenges of your market. I’d also add that this includes creating a culture that continuously motivates your team to perform at the highest levels, and which in turn, attracts other great people.
Thanks a lot to Charlie Bonello for his time with us.