The rise of the New York tech scene is the most significant development in the American startup world since the tech bubble burst in 2001.
Ten years ago Silicon Valley was America’s only real startup technology hub, with minor outposts in Boston, Seattle, Houston, and New York. Now the American startup scene has a large, vibrant home on the East Coast.
New York is now leading the way in early-stage growth and fast becoming the home base for consumer-facing technology startups from across the globe.
Sure, the Big Apple still pales in size to Silicon Valley. But the gap is rapidly closing. New York was once only the fourth largest US market for startups. Now it is second and home to over 3,000 startups, as billboards across the city proudly proclaim.
What is causing this rapid growth and is it sustainable?
The cause of New York’s startup growth is the confluence of interested money, effective politics, and symbiotic blending of common interests. The Big Apple finally managed to harness the vast assets and capital available because of its status as the world’s financial capital and put that to good use creating companies. By most metrics, there is no wealthier area in the world than the greater tri-state of New York, New Jersey, and Connecticut. Now companies are finally able to harness all that capital – both from institutional funds and angel investors – to thrive and create a sustainable startup market.
The city was also able, through effective politics driven by a tech-friendly City Hall run by visionary billionaire Michael Bloomberg, to steer politics towards effective startup creation. Many of the city’s most effective startup-engines, including incubators like NYC Alley, are products of both private endeavor and public policy. Several of the most ambitious public-private partnerships of the last decade, including the new Cornell-Technion Entrepreneurial University partnership, will spur startup growth in the city for decades.
At the root of the tri-state’s startup growth is its focus on smaller, expansion-oriented, consumer-facing companies that can leverage the tri-state’s vast population of individual private investors and take advantage of its strong mix of media and advertising. My own company, Pervasive Group Inc., leveraged relationships with the New York Angels, the Tech Launch accelerator, and investors across the tri-state to raise its angel round and fund the MMGuardian™ Parental Control solution for Android smartphones.
MMGuardian is a parental control application designed to give parents a comprehensive solution to smartphone dangers facing kids, particularly cyber-bullying, texting while driving, and harassment via calls, texts, and apps. We were aptly suited to take advantage of the Big Apple’s exciting media environment and large networks of concerned, active investors looking to support companies they believe in.
Best of all, New York’s startup growth is very sustainable because the networks created, policies put in place, and relationships built over the last decade will not go away. Specifically, the tri-state’s strongest angel groups–including New York Angels, Jumpstart, and Delaware Crossing–will continue to expand and to build relationships with companies worldwide, including transplants from regions as diverse as Silicon Valley and Israel. And the Big Apple’s venture scene, which remains small but is growing rapidly, will continue to expand and supplement its influential angel networks.
New York was once known as the financial capital of the world, the place where money moved. It still is, but now the Big Apple can add something more – as a city that does not just move money and companies but one that creates them.
Paul Grossinger is a New York City entrepreneur and angel investor. He is the Co-founder of Pervasive Group Inc. and invests with the New York Angels.