New York City is a haven for entrepreneurs. With access to every amenity imaginable, the city encourages all types of business owners to flock to its boroughs.
While the media focuses on Wall Street, entrepreneurs are quietly flourishing in the city’s high-tech renaissance.
NYC Too Dependent on Wall Street
Since 2001, Mayor Bloomberg has expressed his concerns that New York City’s economy is too dependent on Wall Street. He encouraged the city to expand its economy.
His concerns went unanswered until 2012 when the city’s high-tech businesses really started to show their positive impact on the economy.
These high-tech companies bring money from outside the city and provide high-paying jobs. The average salary for a worker at a high-tech company was $118,600 in 2012, compared to $65,400 for all other industries, excluding securities.
Catching Up to Silicon Valley
New York City remains second in the tech-sector behind Silicon Valley, but the last few years have shown that the high-tech companies can flourish there.
The city’s high-tech renaissance is much more sustainable now than in the 1990s, when tech companies boomed and then busted. Other industries are much more entwined with high-tech businesses this time, fueled by the rapid growth and increasing dependence on mobile platforms.
The New York State Comptroller released a report in April 2014 recognizing that New York City is at the heart of the high-tech renaissance as technology becomes more valuable in business, entertainment and people’s everyday lives.
Over 7,000 high-tech businesses of all sizes, from large international firms to small one-person startups, have found a home in New York City. Job growth in high-tech businesses increased 33 percent, while job growth in other industries only increased eight percent.
In the third quarter of 2013, over 100,000 people were employed by the over 7,000 high-tech companies in New York City. This is almost the same number of people employed by high-tech companies in 2001 before the dotcom crash.
Expansion Throughout the City
Initially, high-tech companies clustered in Midtown South, but have expanded into Long Island City, Downtown Brooklyn and Lower Manhattan.
New York City wants this growth to continue, so the city is considering initiatives to encourage more high-tech growth. Venture capital firms are also investing in the high-tech renaissance. In 2013, high-tech companies received. $1.3 billion in capital.
Signs of Things to Come
In 2013, Yahoo purchased Tumblr, a New York City high-tech startup, for $1.1 billion. This made Tumblr the first New York City-based startup to break through the billion-dollar glass ceiling.
As of 2016, almost a dozen other New York City high-tech startups are valued at over one billion dollars. The best-known of these are Etsy, Buzzfeed and FanDuel.
Winners and Losers
As in any renaissance, while the winners outnumber the losers, some highly-visible New York City high-tech companies went broke or were acquired by other companies for measly amounts of money.
Quirky and Fab.com died in 2015, even after significant investments. Gilt Groupe sold for only $250 million in early 2016, and this amount was less than the founders initially invested in the company.
What separates the winners from the losers in New York City’s high-tech renaissance? The three keys of success are easy access to customers fundraising and recruitment.
New York City offers entrepreneurs all of these. While Silicon Valley is still the high-tech startup haven, New York City high-tech startups have more early funding than startups on the west coast.
High Tech Startup Central
Forbes Magazine named 15 New York City high-tech startups to watch in 2016. These up-and-coming companies vary in size and niche, but all are benefitting from New York City’s high-tech renaissance.
Some of the top high-tech companies to watch include AppNexus, DigitalOcean, DWNLD, Fundera and StartApp.
AppNexus is an ad-tech company that transformed digital advertising, and at the end of 2015 it was valued at over one billion dollars.
DigitalOcean is attempting to compete with Amazon in the cloud hosting sector, and its popularity is increasing with web designers. DWNLD is a unique service that turns any website into an app.
Fundera fills a hole in the financing market for small and medium businesses by providing “alternative, non-bank loans to SMBs at competitive rates.” Inc. named StartApp the “fastest growing private company in New York.” This company aids advertisers in getting their ads on mobile apps.
New York City’s high-tech renaissance is quiet but powerful. The city’s high tech companies have entwined themselves with other industries by taking advantage of increasing dependence on mobile platforms, making them much more sustainable than the boom-and-bust high-tech companies that called New York City home in the 1990s.
Although Silicon Valley is still the high-tech haven, several billion-dollar companies have emerged from New York City, making the city a contender in the high-tech marketplace.
New companies continue to emerge, and New York City’s high-tech renaissance will continue to create jobs that decrease dependence on Wall Street while helping the city’s economy to flourish.