A new chapter of growth: A close-up on NYC’s startup scene
If you think back, it wasn’t long ago that the media was constantly comparing New York’s startup ecosystem with that of the reigning tech universe Silicon Valley. And then, somehow, the hype abated.
On a recent trip to NYC, I wanted to better understand the state of things. Had a tech scene that’s witnessed boom and bust once more lost its stride?
A few days of observing things up close and speaking with founders on the ground and I had better found the answer. New York’s tech has not faltered, but rather matured, having begun a new chapter of more stable growth. In fact, New York currently boasts 6,300 startups, with tech jobs growing at a rate of 30 percent over the last decade.
The first takeaway from my visit, then, was that NYC, for an entrepreneur, is still the place to be. But I was also reminded of how the seemingly limitless opportunity and energy of the city, the places and people you’ll feel you have to know, can be ironically daunting and deterring.
For that reason, my colleague Peter Andringa and I put together a guide for entrepreneurs looking to explore NYC’s startup scene.
The layout of NYC’s startup scene
From Staten Island up to the Bronx, thousands of tech companies vie for their place, both industry titans and early-stage startups. While behemoths such as Amazon, Google, and Microsoft have staked out territory in the Financial District, Chelsea Market, and 42nd & 5th Avenue (respectively), corporations like Barclays, SAP and Verizon are sponsoring innovation programs.
Startup success stories, meanwhile, abound. Grubhub has outlasted other food delivery platforms with 9.18 million active diners, and DADA.nyc has developed a leading platform for artist and collectors. Real-estate startups such as Landis and cyber-security startups like Axonius are also thriving in their industries.
Other noteworthy success stories includeJet.com, WeWork, MongoDB, Flatiron Health, and Oscar. As opposed to finding themselves crushed beneath the weight of Fortune 500 businesses, these startups thrive off their success – partnering with big businesses, hiring exiting talent, and developing products that enhance what their much larger competitors offer. Within this system, smaller companies also grow up, go public, and enrich employees that then reinvest their earnings into new startups.
When mapping out the ecosystem geographically, the long-time heart of the scene – the few blocks around 23rd Street commonly referred to as Silicon Alley – is home to more FinTech and AdTech startups. In comparison, Brooklyn has attracted cutting-edge UrbanTech, PlantTech, and CreativeTech startups.
Queens is known for FoodTech and Biotech companies; Harlem and the Bronx host numerous social good enterprises; and Chelsea is known for its fashion tech companies.
If you’re interested in attending events in the city, take a look at Eventbrite, Meetup, Gary’s Guide, founded by Gary Sharma, and Startup Digest. Built in NYC is also an institution in the city, and Digital.NYC, which was earlier launched by Carleen Pan as a part of Gust, is also very popular.
The coworking culture
Out of necessity, coworking spaces have become a built-in part of the NYC tech culture, but also a secret to its success.
For the millions of designers and entrepreneurs looking to carve out their niche it can be difficult to afford New York’s office space when starting out. But, with around 80 coworking spaces of all sizes and costs, the opportunities for synergy and networking, not to mention state-of-the-art facilities and amenities, are ample.
I visited many spaces across the city, and among the noteworthy standouts was Rise New York. Part of Barclay’s open innovation program, Rise draws FinTech startups to Flatiron. Over in Soho, I was able to visit The Farm Soho which for its part, offers a sense of belonging in a sometimes lonely city. Galvanize, a popular space that regularly hosts events, is located nearby.
Spark Labs’ two New York locations – one in Union Square and the other Bryant Park – draw strength and energy from its 30-large network of innovative tech spaces across the world. In addition to this WeWork – now an institution among startup cultures globally – as well as the impressive Verizon-sponsored 5G-enabled Open Innovation lab known as Alley, both merit a visit.
City government initiatives and support
Remarkably, NYC’s tech ecosystem is mostly self-sustaining, and its multitudes of tech companies are in the fortunate situation of not always needing support from the city government.
NYCx offers grants to entrepreneurs tackling local problems in low-resource communities, while ex-Mayor Michael Bloomberg donated $200 million to help bring to life Cornell Tech campus, which has a Startup Studio led by BoxGroup Managing Partner David Tisch.
EDC, which is the Economic Development Corporation in New York, is a non-profit that historically has supported real estate projects, although it is increasing spending time in tech. In many cases it serves as the welcome point for international organizations that are looking to expand into NYC. EDC’s Mark Thomas has played a key role in the startup community.
Connectors serve as the backbone of the NYC startup ecosystem. And whether you can someday meet them, or maybe just follow them on Twitter, it’s good to know who’s who.
Among this group is Alex Fair, who for quite some time has been making waves in the HealthTech field and most recently founded MedStartr. Another, Kelcey Gosserand, used to help run the Galvanize coworking space, is the former Associate Director of Startup Institute’s NYC office, and has since founded the blockchain community Trellis. Fellow ex-member of the Startup Institute’s family, John Lynn, co-founded the Studio Project and co-organizes Accelerator Awesome. Lucas Seyhun oversees The Farm Soho.
Matt Harrigan and Nelson Schubart, Company’s CEO and Director of Venture Operations, respectively, have helped build one of the first vertical, multi-tenant tech campuses at scale in New York. Company.co was earlier known as Grand Central Tech. The Founder Institute accelerator is led in New York by Managing Director Kevin Siskar.
Matt Hooper, previously the head of the FinTech incubator Rise New York, now hosts the TV show Live! From Tomorrow, a tech-centered variety show. Rise’s current accelerator lead is Ben Shaw.
Meanwhile, the founder of The Worldwide Supply Chain Federation Brian Laung Aoaeh and his meetup are working to build the supply chain networks of the future. Eddie Cullen of Bronx.tech, Cate Ambrose of LAVCA, Laurie DeJong of LDJ Productions and Brian Frumberg of VentureOut are three other regarded known founders.
The reality is that even without government assistance investment opportunities shouldn’t top the list of an enterprising business’ worries – in 2016 alone, 421 NYC-based tech startups were able to raise $9.5 billion in funding.
In addition to 30 startup accelerators and incubators offering niche market funding, 2017 venture capital investment quadrupled the $2.6 billion raised in 2012. VC seed and series A investors like Union Square Ventures, Lerer Hippeau Ventures, Greycroft Partners, Social Starts, Thrive Capital, First Round Capital, Bain Capital, Work-Bench, Metaprop, Great Oaks Venture Capital, and Techstars have NYC’s venture capital totals trailing only those of the Bay Area.
All that’s to say investment opportunities – like the plethora of coworking spaces, the startup scene’s dynamic connectors, and the countless big and small businesses forming the city’s symbiotic system – constitute yet another enormous advantage for those looking to launch in New York.
In the last ten years, the NYC tech scene has gone from burgeoning to booming. Continually invigorated by its core tech verticals – fintech, adtech and media – promising areas including healthcare, real estate, nonprofits, and fashion have now also taken shape.
Of course, the sheer speed and scale of NYC’s tech scene will be overwhelming, and even the longest guide’s lists can only scratch the surface. But the NYC tech scene has grown up, startups are finding billion dollar exits, and the potential available for those entrepreneurs ready to brave NYC’s enormity is as great as ever.
This article was Co-Authored by Peter Andringa
Disclosure: This article includes a client of an Espacio portfolio company