The city’s Economic Development Corporation released a study today that attempts to measure for the first time the amount of innovation going on in New York. That’s an ephemeral concept to try and pin down with hard numbers.
True, there are some big names in the local tech community attached to the report: John Borthwick, Esther Dyson and Alan Patricof. But the city turned to more objective sources for calculating our entrepreneurial economy.
“As we work to promote innovation as a driver of growth in New York City’s economy, it’s important for us and others to know where we stand,” said Mayor Bloomberg. “Innovation is a difficult thing to measure, but the Innovation Index considers factors – like jobs in high-tech sectors, research and development funding, venture capital investments – that together provide a gauge of how well positioned our City is to generate new ideas, new companies and new jobs.”
Measuring input like R&D spending and venture capital alongside outputs like patents, stock prices and workforce, the EDC gleaned this nugget: “Overall, innovation-related activity increased by 12% between 2003 and 2009, a trend that preliminary data and estimates suggest persisted in 2010to reach 14%.”
Take a big gulp of water and let’s try to break down that dry data a bit. Drawing on information from Price Waterhouse Cooper and CB Insights, the city found venture capital investing in New York hit $1.9 billion in 2010, with 64% of that money coming from local firms. More importantly, “Both the number and value of deals grew increased at a significantly higher rate than the rest of the nation from 2003-2010.” Federal grant funding to New York companies more than doubled over the same period. In terms of human capital, the city saw an 8.7 percent increasing in science and engineering workers between 2003 and 2009.
In other words, following the dot-com bust, New York had the best recovery in terms of access to start-up captial, but talent hasn’t kept up with investment. It’s the dynamic driving the recent furor over start-up job fairs and the number of open positions at Union Square Ventures’ portfolio companies in New York.
Answers to these challenges are in the works. A better policy on start-up visas to allow talented immigrants to help fill the talent crunch. Bringing a top tier engineering campus to New York to establish a base of young workers in the sector. No mention was made of tax breaks for start-ups, or subsidies for the costs of incorporation, but these are issues the community needs to get vocal about. All in all this report doesn’t tell us anything we haven’t heard before, but it does provide a yardstick against which to measure future progress.
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