As someone who has spent their whole career in and around startups in NYC, I think it boils down to a handful of things:
- The dot-com bubble in the early 2000s left a bad hangover, but also built up a set of young people with tech experience and lots of ideas who enjoyed working for non-traditional companies
- Those people often went to go start their own companies (disclaimer: I am one of those people). In the early 2000s, though, it was tough to find top tier VCs who were willing to invest in NYC. I remember in 2004 meeting a VC who said they would love to invest at a great valuation if we committed to moving the company to boston or the bay area
- Consequently, the selection criteria for NYC companies who got VC funding were often those with strong revenue streams, which led towards less sexy, less "moonshot" companies to those that sold products for actual money.
- The other driving criteria was those where geography was an advantage, which also led to financial services/enterprises or advertising
- As those businesses grew, expanded, raised more capital, it drove more VC money to NYC, which created more air in the room for more startups.
It's really a very straightforward evolution. As far as why Seattle "flails", I think it's even simpler - Seattle has a population of 650k people. A handful of large companies, Microsoft, Amazon, etc. can take a huge percentage of the engineering talent, and there's neither the educational base of graduates that the bay area or boston offers nor NYC's base of large corporations to sell to.
I've spent 6 years now in the Bay area and before that 5 years in NYC all with startups. When I left NYC the biggest difference between the areas (other then easy Bay area money) was that most startups in NYC seemed to be started by business people while out west they are mostly started by tech people.
My time at 3 startups while in NYC were mostly the same. The founders and exec team looking at the engineers like a dime a dozen work force that they could easily replace. When I moved out west it was a shock that engineers were held with high regard.
Things may have changed but that's the main reason I felt was holding NYC back.
Just made the jump myself, my experience with NYC was similar.
Also, NYC has like 3 big VCs: Union Square Ventures, Union Square Ventures and Union Square Ventures.
So you really just have to stop pretending and get in front of Silicon Valley VC firms that all have a variety of different interests and objectives. They also don't want to talk to anybody not in SV.
I don't think your perspective is valid anymore - in the mid-2000s USV was the only game in town, but today there's probably 5-10 good size NYC-based VCs focusing on tech, tons of little firms (<$100m funds), and many other SV firms with a NYC presence, and then the whole second order of NYC investors in PE or funded from a vertical perspective (like real estate investments, etc.).
Yeah, a lot of big bay-area and boston funds now have NYC offices too. General Catalyst - mentioned as being based in Cambridge in the article has an office on Lafayette street in NYC now with a couple of partners in it. This has changed the funding game more than the homegrown VC's (USV, as an example).
Just look at the funding numbers between different areas. NYC still pales from an infrastructure perspective and general mentality of paying it forward, compared to SV.
Oh sure, I'm not trying to compare NYC vs. SV directly, SV is clearly an order of magnitude larger. I was just comparing fundraising in NYC today vs. 10 years ago, and it's lightyears different. I can tell you from working with VCs, the whole attitude towards nyc startups is very different.
As far as the general mentality of paying it forward goes, I've got a healthy sense of cynicism towards that (maybe it's the new yorker in me). I find successful individuals are equally supportive here as in the bay area, but in NYC there's a lot less of the ridiculous hustler optimism that technology can cure all ills, and fewer ridiculous startups get funded out here.
But sure, yes, SV is much bigger than NYC, that's not in doubt.
NYC definitely has a "money up front" attitude, but the enterprise ecosystem is really taking off here in part because there are so many customers, but also because of the great community builders like http://www.work-bench.com/
- The dot-com bubble in the early 2000s left a bad hangover, but also built up a set of young people with tech experience and lots of ideas who enjoyed working for non-traditional companies
- Those people often went to go start their own companies (disclaimer: I am one of those people). In the early 2000s, though, it was tough to find top tier VCs who were willing to invest in NYC. I remember in 2004 meeting a VC who said they would love to invest at a great valuation if we committed to moving the company to boston or the bay area
- Consequently, the selection criteria for NYC companies who got VC funding were often those with strong revenue streams, which led towards less sexy, less "moonshot" companies to those that sold products for actual money.
- The other driving criteria was those where geography was an advantage, which also led to financial services/enterprises or advertising
- As those businesses grew, expanded, raised more capital, it drove more VC money to NYC, which created more air in the room for more startups.
It's really a very straightforward evolution. As far as why Seattle "flails", I think it's even simpler - Seattle has a population of 650k people. A handful of large companies, Microsoft, Amazon, etc. can take a huge percentage of the engineering talent, and there's neither the educational base of graduates that the bay area or boston offers nor NYC's base of large corporations to sell to.