In terms of venture capital dollars, it’s still hard to beat Silicon Valley. The latest figures have Bay Area companies gobbling up about 15 percent of the world’s venture capital. Factor in San Jose and Los Angeles and that share climbs to nearly one-third of the all the money raised by private companies in 2015.
By contrast, New York City companies raised just 5 percent — despite being eight times as populous as San Francisco and the headquarters of many of the world’s largest banks. And yet, that’s proving to be something of a double-edged sword.
Despite bountiful jobs at many of the world’s most covetable companies, almost half of San Francisco’s residents believe the city is headed in the wrong direction. Many San Franciscans have gone on the record, writing open letters, that even the good jobs can’t cover rent, and saying that maybe it wouldn’t be such a bad thing if the proverbial tech bubble was to let out a little air.
New York City, on the other hand, is in the midst of boom. Though housing is by no means inexpensive, it’s a lot cheaper than San Francisco. New York is also adding jobs and growing wages faster than almost any time in its history, despite a mayor who almost everyone assumed to be less-business friendly than his predecessor. Here are three reasons why I’m confident New York is the best city in the world to start a business (and it’s only going to get better).
In terms of raw dollars, Silicon Valley attracts significantly more, but New York’s share of the pie is actually growing considerably faster. The main driver behind that growth is New York’s successful self-fashioning as the capital of so-called “hyphen tech” — the numerous sub-sections of startups that align themselves with various industries: fintech, fashiontech, mediatech, and so forth.
There is no energy like New York energy.
These companies benefit from proximity to industry players — my company’s position as a middle-man between major retailers and the brands that sell to them is a perfect example of this competitive advantage. New York City has the corporate headquarters for Bloomingdale’s, Macy’s, Coach, Ann Taylor and countless other global fashion companies. This ability to live and work in the same city as major players makes it easier to build super-specialized products.
A major advantage of New York City’s tech scene is its greater diversity. While far from perfect, New York City companies are considerably more diverse than their Silicon Valley counterparts. Forty percent of the city’s tech employees are women and a fifth are people of color. This isn’t simply the doing of the city’s diverse population; part of the reason New York has more diverse tech workers is because the companies here offer more different kinds of jobs than they do out west. This also is one area that may only just be beginning to pay dividends; according to McKinsey, diverse companies are 35 percent more likely to generate industry-beating returns once they go public.
There is no energy like New York energy. The city itself serves as a fuel for rebels, creatives and free-thinkers, giving them the drive it takes to build interesting, great companies. New York City has a greater student population, more cultural offerings and a greater expat community than any other American city, making it easier to attract almost any kind of talent (and developers are rapidly coming around).
The best non-American startups almost exclusively use New York City as their American or North American headquarters, bringing in talented workers with international resumes and perspectives. The abundance of people and ideas creates an energy you don’t really get in the Valley. It fuels innovation and gives us the wherewithal to tackle those 60-hour work weeks.
New York’s first European settlers were scouts for the Dutch East India Company, and the British fought tooth and nail to keep it during the American Revolution because of its attractiveness as a major port and place to do businesses. The most prominent Founding Father from New York, Alexander Hamilton, was America’s first banker. New York City wealth funded the Panama Canal and the Marshall Plan. As New York’s tech community continues to grow, it’s not inconceivable that its prowess as an incubator for rapidly growing companies could someday rival San Francisco.
It’s not that fanciful, Michael Bloomberg projects that New York’s new engineering school could produce as many as 400 new companies in its first 30 years, to say nothing of the fact that the city already has more college students than Boston has people. In the meanwhile, anyone who’s ever ridden the subway knows that New Yorkers know how to get stuff done while we wait.