City is second in the nation to tech start up acquisitions: Report
The Big Apple is becoming a bigger player in the tech world, attracting a who's who of names to the city.
Last year, there were more than 100 acquisitions of up-and-coming tech companies in the city, amounting to $8.3 billion in transactions, ranking New York second in the nation behind Silicon Valley, according to a report issued by PrivCo, a financial research analyst group.
Sam Hamadeh, PrivCo's CEO, said big-name New York-based firms such as IBM and AOL are pumping billions of dollars into Gotham's economy, which fuels the fire for newcomers.
"When you have 100 private tech companies [acquired] in New York, that money mostly goes back to people who want to do more startups," he said.
Under most acquisitions, a major firm would purchase stock of a smaller firm or buy out the company and include it as a subsidiary. In a lot of cases, the smaller company would keep its identity and staff and stay in New York, according to Hamadeh.
One of the largest business transactions last year was the purchase of New York-based social media tracker Buddy Media for $684 million by Sales Force, a San Francisco-based software company.
CB Insights, another group that tracks trends in the tech world, said New York leads the nation with the acquisition of Internet-based companies such as Buddy Media.
Anand Sanwal, the co-founder of CB Insights, said New York has more venture capital firms that are looking to invest in the up-and-coming tech companies than Silicon Valley and Boston, the cities which his company ranked first and third respectively in tech acquisitions last year.
Between 2005 and 2010, the number of tech-related jobs in New York went up 30% to 120,000, according to the mayor's office.
"Boston doesn't have the momentum that New York has," Sanwal said.
He added that the city is also home to many other industries that are looking to enhance their businesses with the Internet - such as fashion, media and advertising - and that also creates an incentive for tech companies to take a shot.
Big business isn't the only one looking to enrich the technology industry.
Mayor Michael Bloom-berg constantly touts the growth of tech companies and has come up with several initiatives to incubate business over the last couple of years.
Aside from the creation of the Cornell engineering school on Roosevelt Island, the Economic Development Corporation set up an entrepreneurship program aimed at mentoring business leaders in the tech industry, and start-up talent competitions.
"These reports are another example of the tremendous growth taking place within New York City's technology sector," the EDC said in a statement about PrivCo's and CB Insights' surveys.
Hamadeh agreed, stating that the more people get behind the tech world, the stronger it becomes.
"The true proof of success is when you see these companies get sold," he said.
These are the top 5 New York area-based acquirers of private tech companies in 2012:
1. IBM (5 companies)
2. AOL (4 companies)
3. IAC (3 companies)
4. The Blackstone Group (2 companies)
5. PricewaterhouseCoopers (2 companies)