August 26, 2014
This Wednesday, August 27, Tech Cocktail is holding its NYC Mixer & Startup Showcase at the Center for Social Innovation.
If you’re in any way involved in the startup scene – whether investor, founder, employee, or general enthusiast – then you’re aware that one of the top debates that go on in this space is whether it’s better to startup in Silicon Valley or Silicon Alley (New York City). For those getting into this industry or those already in it, one of the most important choices to make is whether to startup (or move your startup) to either of these two ecosystems. While it’s generally agreed that Silicon Valley is the top tech ecosystem in the country (indeed, just two days ago an opinion piece was published in The Wall Street Journal arguing that the Valley hasn’t yet peaked, and will continue to rule the tech economy), the notion that NYC has peaked or slowed down is debatable; for many, the successes of NYC’s tech ecosystem mark only the nascency of its tech economy – an economy that’s still awaiting full employment of its opportunities and resources.
This duality of the NYC tech ecosystem is peculiar – a dual nature in which it serves as both a leading example of what younger startup hubs should aim to become, while also remaining a city ripe for further development, in ways similar to the cities that aspire to emulate it. In many respects, New York City’s tech sector has a sizable presence in the overall economy. Independent of economic/financial numbers, a glance at the monthly New York Tech Meetup alone will convey the influence of the sector; from its attendance overflow remote viewings (because its over 41,000 group members always manage to fill up the 800-person limit at its monthly meetups in NYU’s Skirball Center for the Performing Arts), to the utilization of an actual paid staff and PR agency, the intensity of such operations warrant NYC’s top spot as a tech scene (for reference, the DC Tech Meetup operates under a team of volunteers and has more than 9,200 members).
More importantly, though, is the amount of capital that has flowed into NYC startups and the diversity of the industries represented by those startups. From media (BuzzFeed) and fashion (Gilt Groupe), to consumer-facing (ZocDoc) and financial crowdsourcing (Kickstarter), NYC has bred highly successful startups in a variety of different industries, with proof of large-scale venture funding and successful exits to boot. According to Nick Beim’s analysis of the current status of NYC’s startup ecosystem, $2.6 billion in venture capital was invested in 2013 alone, not mentioning the 27+ successful exits each worth more than $500 million since 2001. The overwhelming breadth of opportunity for investment is often what lures startup founders to relocate to the city; although, even with all this investment coming into the NYC tech ecosystem, it pales in comparison to Silicon Valley.
Earlier this year, the New York Times’s Jenna Worthman attributed NYC’s still-starting tech scene to this apparent deficiency in funding. Despite Yahoo’s major acquisition of Tumblr for $1.1 billion, and the presence of major startups like Fab.com or Vox, Worthman argues that the city has yet to produce a company on the same scale as Google or Facebook – both of which successfully developed in Silicon Valley. According to CB Insights, Silicon Valley startups continue to raise more money across all funding stages, with average and median funding rounds standing at $20.7M and $6.8M respectively across 227 financing deals; NYC’s average and median numbers stand at $8.7M and $3.9M, respectively, across 74 deals. According to Worthman’s article, the ecosystem is still waiting on that one major development that will move the NYC startup scene to the same playing field as the Valley (with a valuation to match those on West).
The disconnect between the outsider and insider perspective on the NYC tech scene is interesting in that it could just as rightly be representative of similar perceptions about other startup ecosystems across the country. While outsiders look to Silicon Alley as an ecosystem they wish to mimic (an ecosystem that has grown to become the second largest in the country), insiders within NYC’s tech scene equally (and just as accurately) believe that the community is still in its early developmental phase. Maybe – just maybe – the one great idea that will push it over the edge can be found at this Wednesday’s Mixer and Startup Showcase.
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