New York: Show Me The Money
Last year was a watershed year for the NYC tech scene. In the spring of 2010, the hottest startup in the country was located here in NYC and was being breathlessly courted by some of the biggest venture capitalists in VC from Silicon Valley and Boston. In June, Andreessen Horowitz became the winner of the Foursquare sweepstakes, and the startup was suddenly $20 million dollars richer. For Foursquare, there were plenty of VCs who were more than eager to show them the money.
Tech companies and startups located outside New York are also investing big money to establish and grow their presence here. Google, for example, became a big landlord in Gotham City with last year’s purchase of an office building for $1.9 billion and now employs more than 2,000 people in NYC. Facebook is expanding its office here and also acquired two Brooklyn-based companies last year: Drop.io and Hot Potato.
More recently, over 25 leading academic institutions, including Stanford, Carnegie Mellon, Columbia, Cornell, IIT Bombay, New York University, and Purdue, responded to the city’s request for proposals to build a world-class engineering school in NYC. Stanford’s proposal, for instance, envisions a first phase of development that would cost $250 million, would be financed by Stanford, the city of New York, and philanthropists, and would eventually enroll 2,200 graduate students and hire 100 faculty members at a Roosevelt Island campus.
Compared to a decade ago, the depth and breadth of startups in NYC has changed dramatically. New York is not just home to online advertising startups anymore, but also leaders in other rapidly growing categories, such as mobile, e-commerce, financial services, and media:
Advertising: AdKeeper, Admeld, AppNexus, Peer39, Pontiflex
Education: Flat World Knowledge, Knewton, 2tor
Financial Services: FolioDynamix, SecondMarket
Mobile: Foursquare, GroupMe
Next-Gen E-commerce: Etsy, Gilt Groupe, Ideeli, Lot18, OpenSky
New Media: Business Insider, BuzzFeed, Huffington Post, Sulia
Publishing/Tools: Aviary, Squarespace, Tumblr, Wix
Video: blip.tv, Boxee, Simulmedia, Tremor Media
Most importantly, investors from across the country, particularly those from Silicon Valley, are investing piles of cash into NYC startups and are spending significant time in our city looking for new deals.
• In 2009, the top 25 funding rounds for venture-backed startups in NYC totaled $394 million. In 2010, the top 25 funding rounds totaled $583 million.
• In 2009, six of the top 25 rounds for NYC startups were led by Silicon Valley-based VCs and totaled $115 million. In 2010, 17 of the top 25 rounds were led by Silicon Valley-based VCs and totaled $415 million.
That last figure is amazing – a tripling of investment dollars in just one year – and a great sign for the continued development and growth of the NYC tech scene. Much of that $415 million, which might have been invested elsewhere, can now be used to fund the development of new products and services here and the hiring of talented people in NYC.
And 2011 is off to a fast start, as well, with several significant funding announcements so far. There is a lot of work ahead of us to keep this momentum going.