• by Matt Straz , October 29, 2012

In the world of startups, the term “mafia” has come to positively describe a group of people who have built a successful company and then continued to work together to create a new wave of startups. As Sarah Lacy, founder and editor-in-chief of PandoDaily, the Silicon Valley-based publisher, recently put it: “In the case of the strongest and most enduring mafias, the sum of these distributed but connected ventures — influenced by heavy lessons from a shared past — wind up being larger than the original company that spawned it all.”

There have been numerous examples of Valley-based mafias, including Pay Pal and Netscape. New York also has its startup mafias. One notable mafia is Lerer Ventures, the New York startup investment firm founded by key leaders from The Huffington Post.  Ken Lerer, Eric Hippeau, Jonah Peretti and others have invested in an astounding 80+ startups in the last few years since selling The Huffington Post for $315 million to AOL.

Just like a real mafia, New York’s startup scene has been built by multiple families over the years. For example, Real Media, the ad tech company founded by Dave Morgan, Gil Beyda, Mark Pinney and others has made a major contribution to New York’s ecosystem. After Real Media was merged with 24/7 in 2001, Dave Morgan left to found Tacoda, the behavioral targeting company. Gil and Mark joined Dave and, six years later, Tacoda was sold to AOL for $275 million. This exit provided New York entrepreneurs with the essential seed corn they needed to create and fund a number of additional companies, including:

Simulmedia. After Tacoda, Dave Morgan founded another company, Simulmedia, aimed at changing the way television advertising is targeted and bought, applying technology and analytics to the massive TV ad market.

Invite Media and Demdex. Following Tacoda, Gil Beyda went on to found Genacast Ventures. Investments included Invite Media, which was sold to Google, and Demdex, which sold to Adobe.

Fab, Tapad, and Shelby.tv. A prolific angel investor, Dave Morgan has invested in some promising New York startups, including some that are outside the realm of ad tech. Fab is an ecommerce site that recently raised $105 million from venture firms like Andreessen Horowitz.

Pictela. Dave also provided the initial investment in Pictela, the brand content company that I co-founded that was acquired by AOL.  After I left AOL last year I founded Namely, a talent management platform, Dave was once again one of my first investors.

The result of all of this investment activity has been impressive. Over the past five years, the Real Media team has founded or invested in companies that have collectively exited for approximately half a billion dollars. Much of this has been plowed right back into more New York startups, starting the cycle all over again.

Mafias like Real Media and Lerer Ventures are an essential element to building the kind of vibrant startup environments that New York now enjoys