Ok. That heading is not quite true. Silicon Valley is still seen as the place to go but venture capital is flowing into New York start-ups at a record pace. New York City companies received almost $6 billion in funding 2015; a dramatic 62% increase from 2014.
According to an article in the Wall Street Journal "New York is now the leading place on the East Coast for tech-venture investments” said David Silverman, a partner at PricewaterhouseCoopers.
“During the fourth quarter of 2015, the largest funding amounts were $95 million to Vroom Inc., an online used-car retailer; $75 million to Peloton Interactive Inc., a home cycling-class company; and $66 million to Wheels up Partners LLC, a membership-only private aircraft company.”
The article cites a growing talent pool and an army of young developers but one area it could have discussed further is the availability of seasoned financial professionals. In the last decade Wall Street has shed jobs at a pace that’s been unprecedented in recent memory. Morgan Stanley’s announcement last December that it would lay off 25% of the staff in its fixed income division is just the continuation of a shift that has fundamentally changed the financial landscape of the city: you can now hang out with former ‘masters of the universe’ at the ‘Meet up’ next door. Not that anything is wrong with that. Actually such connectivity has proven to be a boon for the start-up space. The financial experience of this older and now available group not only allows start-ups to avoid mistakes this group has seen before but strengthens their talent bench and mellows the venture funds into writing the check. This talent is not only being leveraged by tech start-ups but also by the wave of ‘fin-tech’ companies in the city. We spoke to a former colleague in finance this week about her job at such a start-up and she mentioned that all the financial connections her new boss asked her to contact were people she worked with in her former life... that immediately paves the way to get the deal done.
New York as a business hub has never been more exciting. Change is underway. Notably, in both directions. Yes, the start-up space is absorbing some seasoned talent but established firms are also paying attention to the growth of this space and trying to capture some of its magic: Have you seen Citibank’s new ‘We Work’ style floor plan?
Happy New Year!! Let’s beat the 2015 venture funding record.