OVER THE LAST YEAR, our team at Endeavor Insight studied the rapid growth of New York City’s information technology industry. We define tech companies as those developing an information technology or those whose businesses are Internet-enabled, excluding financial tech, green tech, and life sciences companies. Our goal was to identify lessons that leaders in other cities can use to support the growth of their own tech sectors. In the process, we created one of the largest datasets on a single entrepreneurship ecosystem in the world. It combines data from AngelList, CrunchBase, and LinkedIn with nearly 700 interviews with local tech entrepreneurs. In total, these founders dedicated more than a month of their time to this project. Our analysis reveals three key findings.
New York City has become the largest truly urban center for tech companies and the second-largest tech hub in the world. Tech companies led by local entrepreneurs directly employ 53,000 people, over 1% of New York City’s workforce. Between 2003 and 2013, the New York City tech sector grew twice as fast as Silicon Valley’s in terms of dollars invested, with its companies raising more than $3.1 billion in funding in 2013. Unlike many other urban tech hubs, most of the growth of the New York City tech sector has come in the last decade. Venture funding for tech companies in New York City increased by 240% from 2003 to 2013, and more than 85% of the sector’s current companies and 86% of its current jobs were created during this time.
DEBUNKING NYC STARTUP MYTHS
Many people believe that tech founders are young, technical experts who studied at a prominent local university. We analyzed data on the age and educational history of New York City tech founders, and found that these myths do not tell the full story of the city’s founders or the sector’s success. The average New York City tech founder is thirty-one years old when she founds her company and founders are just as likely to have studied a non-technical subject in university as a technical one. Founders also tend to be highly mobile, with nearly 90% graduating from universities outside of New York City.
REINVESTMENT SPURS NYC TECH’S SUCCESS
Connections between successful founders and new entrepreneurs are a critical driver of the sector’s growth. Data from over 2,500 companies shows that top-performing tech entrepreneurs are more likely than their peers to start new companies, encourage their employees to do the same, mentor, angel invest, and inspire new entrepreneurs. In turn, new founders who are connected to or influenced by these top-performing founders are more likely to be successful than other local tech entrepreneurs. The development of this network of top-performing New York City tech founders has initiated a virtuous cycle of reinvestment that continues to fuel the sector’s growth.