Beyond the pizza and the social scene, New York’s startup support network is booming. There are more tech companies starting, more investors scouting for tech companies, more rockstar startups—Foursquare, Etsy, Kickstarter, Tumblr, to name a few—and more developers teaching themselves the lightweight coding skills that power much of the consumer internet. There have also been some high-profile exits, including GroupMe’s $85 million sale to Skype and Hunch’s $80 million acquisition by eBay, both in the last six months.
New York also embodies a camaraderie and enthusiasm that derives from being a relatively unproven startup hub still forging an identity.
RRE Ventures principal Tom Loverro, who recently moved back to New York after four years at a startup in Silicon Valley and a stint in Chicago, was impressed by the Raise Cache techie fashion show. “The New York Tech Scene has not only arrived, but it is different and it is defining its own trajectory,” he wrote in a blog post. “It is characteristically and unabashedly New York. The event itself was a fashion show. It was young and full of 21-35 year old urbanites.”
Kirill Sheynkman, who heads up the U.S. arm of RTP Ventures, a
$750 $700 million fund based in Russia, was more cynical. “It’s great to have that attitude, but it’s [like] a high school football team,” he said. “What was the line from Bill and Ted’s Excellent Adventure? ‘San Dimas High School football rules!’”
Mr. Sheynkman spent most of his career in Silicon Valley as a former entrepreneur in residence at Sequoia Capital and venture partner at Greycroft before he moved to New York and became enamored of the city.
Traditionally there have been three reasons for starting a company in the Valley, he said. “For a long time the VCs in the Valley would only invest in local companies. That has changed,” he said. ”The old saying of, ‘I’m not going to invest anything unless I can drive to the board meeting’ … was in the days before we had Skype and iChat and Go To Meeting. Now you have weekly status meetings on video and they’re just as great as being there. It was a little bit of an attitude. ‘You have to come to us and not us come to you.’”
The second argument is that when a company gets started, the top priority is hiring the right people. While there is more techie talent in Silicon Valley, he said, there is also a higher concentration of startups and significantly more established tech companies to suck that talent up. “Prices are higher in the Valley than they are in New York,” he said. “Although New York isn’t cheap in terms of hiring people.”
Indeed, the number of recurring tech events on Meetup.com has wildly accelerated: Startup Lunch, 193 members; Dumbo Tech Breakfast, 783 members; UWS Startup Meetup, 240 members; the New York Technology Bathhouse Meetup, 31 members; the Wall Street to Startups Meetup, 98 members.
And yet, “there’s still a lot of learning that I think New York has to do,” Mr. Sheynkman said. “A lot of the companies are in love with doing a startup for the sake of doing a startup. They’re MBAs that think instead of a career at Goldman, we’re going to do a startup company!” We imagined him rolling his eyes on the other end of the line. “You know, you actually might want to do your thing at Goldman Sachs, it might actually be better for you.”
By way of disclaimer, he added: “I’m a New Yorker, I’m never leaving Manhattan. I love the city. Let’s make sure we mention that.“
“I get the impression that there tend to be proportionally more folks in New York that are trying to start companies but have no fucking clue what they’re doing,” Fitocracy CEO Brian Wang told Betabeat by Gchat. He and his cofounder, Dick Talens, are subletting their apartment in Clinton Hill while they complete a session at 500 Startups. “Granted, I don’t think I have a fucking clue either.”
At any rate, he plans to head back east when the program is over. “We’re pretty set on returning to New York,” he said. “Both Dick and I enjoy New York City as a place to live immensely. Honestly, that’s 95 percent of the reason. The other five percent for me, is probably the hope and expectation that the New York City scene will continue to grow and mature and that we can call ourselves an important part of that.”
CORRECTION: An earlier version of this article identified Tom Loverro as a partner at RRE Ventures; that is incorrect. He is a principal. Betabeat regrets the error.