For decades, New York City was considered as the financial hub of the country. While startups were more common in Boston and Silicon Valley, the times are now changing. The scenario for startups is changing rapidly in NYC, where activity has successfully surpassed that in Boston in the current year. The city is growing out of its financial-capital status, fast becoming a hub for some major technology startups in recent years, such as Foursquare and Etsy.
According to a study conducted by Startup Genome, a research company based in San Francisco, New York ranked as the fourth city with the most startup activities in the world this year, followed by Boston, which was considered to be the primary hub of entrepreneurs in the East Coast. While NYC cannot compete with the Silicon Valley when it comes to tech startups, the growth rate is still quite staggering.
There are many reasons why most of the tech companies are planning their startup in NYC today instead of packing their bags for the West Coast, as was the norm a few years back. On the contrary, there are several tech companies that are relocating themselves from Silicon Valley to New York City. NYC offers a much wider market to these tech companies that can be reached more easily. The client base of most tech companies of Silicon Valley is already located in NYC which makes it more convenient for these companies to open shop there.
This incredible growth of startups in NYC is fueled by a number of factors; the willingness of New York based VC firms to invest in tech startups, the success of some early startups, the presence of some noticeable startup accelerator programs backed by venture capitalists, a much larger talent pool of skilled engineers, and the government’s encouragement for tech innovation startups in New York City. People also find the not-so-consuming nature of the tech industry in New York City an added advantage to their situation.
One of the major reasons why tech startups were so rare in NYC in the past was the lack of financing for these projects. Today, while tech financing has fallen down in all other areas, it has shown a 32% increase in NYC from 2007-2011, with almost 500 startups getting financing from capitalist firms based in NYC, whereas firms based outside the city, some even from the West Coast, are providing finance to startups in the city. A total of $2.75 billion was invested in tech startups in NYC through venture funding last year which, although nowhere near Silicon Valley, was the highest investment in the tech sector in Manhattan after the 2001 dot-com burst.
A changing dynamic that is driving more startups in the city is the presence of a highly skilled workforce of qualified high-tech employees that are now present here. NYC has one of the biggest talent pools of management, sales and marketing, and other operational workforce personnel. For technology firms that are planning to operate in the financial, media, e-commerce and fashion industry, New York is among the top places to consider a startup business. Most of the businesses operating today in NYC find it a city that is perfect to operate in niches.
It’s vibrant environment of makes New York City an attractive spot for startup activities. New York never sleeps; there is always life in the city regardless of the time. With a startup, there is no 9-5 schedule that can be followed. You can be working well into the night, and in NYC, there will always be other businesses that will be operating right along with you. Leaving your office at 2 a.m. will not make you feel uncomfortable in any way.
For startup businesses, an attractive feature of NYC is the number of ways in which you can operate there at low operating costs. Finding co-working spaces in NYC is much easier which can help you cut back your costs while giving you much more chances of collaboration with other entrepreneurs.
The concept of co-working spaces, derived from open-source software, allow several independent workers, freelancers, entrepreneurs or startup businesses to share a working space even though they are not working for a single employer. Usually that means sharing a physical space such as an office and conference halls, equipment, and other facilities, which makes it affordable for these individuals to run their business while creating value.
However, cost is not the only advantage of having a co-working environment. The concept that belies this setup is to build professional connections that can help you to collaborate and share knowledge with others. It is a way of community building for those who operate in a somewhat similar scenario, allowing them to move out of the isolation that comes with home-based office setups. This sharing of ideas and values, and networking can be quite helpful for problem-solving and creating referrals.
Another element which encourages startups in NYC is the presence of startup accelerators in the city. Startup or seed accelerators are privately held startup incubators that provide startup businesses with several services to hone their skills in return for equity. TechStars, which is one of the best startup accelerators, provides initial funding, mentorship and training to tech startup teams in New York City. My startup company, iFunding, is currently renting office space at TechStars, and it has certainly opened many doors of opportunities for us.
All these factors make NYC an ideal place to start a business in the current times. In the coming years, the tech industry is expected to grow to some astounding levels with a large number of tech startups being carried out in the city. ‘The Silicon Alley’ is precisely gearing up for a competition with the Silicon Valley somewhere in the future.