New York’s “starting” to beat California when it comes to the tech industry.
New York City startups saw a 22% increase in funding applications during the first few months of 2015, according to Gust, a digital funding and sourcing platform.
For the first time, the surge placed the state slightly ahead of California as the top spot for new companies looking for investors with 17.7% of the nation’s share vs the Golden State’s 17.6% share.
The two most popular categories for startups are internet web services and consumer product and services, the report said.
Experts predict this trend toward the East Coast will continue as tech companies big and small demonstrate that New York engenders success.
“The value in California is still far ahead overall, however New York is increasing very rapidly and it’s outpaced what California has in startup creation,” said Kurt Becker, a dean at NYU Polytechnic School of Engineering.
Gust, which tracks more than 300,000 startups and 50,000 investors worldwide, has been collecting and analyzing data on funding applications for 11 years.
Justin Cina, the company’s marketing director, said the city and state has made a large investment in its tech ecosystem especially with its digital one-stop hub digital.nyc, which launched in October, and the governor’s Start-Up New York program, which provides tax credits to startups that operate near college campuses
The city’s site, which is powered by Gust, allows entrepreneurs to promote their businesses and connect with investors 24/7. Cina said that quick access to funding is key.
“If people are the engine, capital is the gasoline. The bigger your war chest, the more likely you will succeed,” he said.
Becker said unlike the dot-com bubble burst in the early 2000s, startups have been more careful with extra funding and have yielded better results which in turn generates more buzz from investors.
“Anyone who invests, they do a lot of due diligence and want to make sure the company doesn’t die in the ‘valley of death.'”
Minerva Tantoco, the city’s Chief Technology Officer, said the attraction for the investors is New York’s tech diversity. Big Apple entrepreneurs are creating apps, hardware and software that benefit other industries such as business, fashion, and entertainment.
“There’s no better place to scale than New York City. We’ve got all of those techs here,” she said.
The tech sector has emerged as one of the leading industries in the city, accounting for 291,000 jobs and $30 billion in wages annually, according to the mayor’s office.
Kristen Titus, the founding director of city’s Tech Talent Pipeline project, added that financial institutions worldwide are sending their dollars to the Big Apple, where highly skilled companies, such as Etsy and Tumblr, have set up shop.
“We have a lot more models of reference for success,” she said.
Tim Novikoff, the CEO of Fly Labs, a Manhattan-based company that specializes in video, agreed. The native New Yorker said he hasn’t had a problem raising funds because it’s easy to make connections, both online and in person at meetups and other tech related events.
“The New York City scene is well-suited to startups that are related to industries that are already here,” he said.
The experts predicted that the New York’s surge over California will continue to grow, especially since the city and state continue to invest in the industry. Major projects such as the Cornell tech campus that is slated to open on Roosevelt Island in 2017, and improved broadband access for New Yorkers, are welcoming signs for the powers that be, according to Becker.
“[New York] is the financial capital of the United States, if not the world,” he said. “If you combine this with the robust talent and infrastructure you have the ingredients for success.”