Welcome to Silicon Alley
Tech start-ups meet funding in the Big Apple
By Ryan S. Silva, CPA, CFE, CVA
Start-up technology entrepreneurs and investors need to take a close look at New York City’s Silicon Alley, if they haven’t already.
There’s a reason the name sounds so similar to the much-better-known Silicon Valley on the opposite coast. Both are geographic centers of tech innovation, but in addition to all of the young brainpower in early-stage technology development to be found in the Alley, this tech hub is as much about access to all of the nearby capital markets.
It’s this confluence of techies, investors and elbow-rubbing proximity to such famous neighbors as Kickstarter, Spotify, Vimeo, Tumblr and Etsy that’s making exciting things happen here.
Where the money is
Silicon Alley was initially centered in the Flatiron District of Manhattan. But as the industry has grown, it has expanded to other areas of Manhattan and elsewhere in the New York metro area, including a section of Brooklyn.
It’s not the Valley yet, but Silicon Alley is drawing the interest of a growing number of the nation’s idea-rich and cash-starved tech entrepreneurs and software engineers. While the opposite coast gets all of the attention for its famous tech region, the talent and capital mingle here like lovelorn strangers sipping, well, Manhattans in the Big Apple’s dazzling nightlife. It’s just a short walk, cab ride or subway train trip to your next pitch meeting.
New York City employs some 100,000 tech workers at nearly 7,000 high-tech companies, according to a 2013 report from the state comptroller, the most current figures available. There are an impressive number of angel investors and venture capital firms that have taken notice of this growing, concentrated tech hub, and their pockets are deeper than they’ve been in quite some time.
It’s a relationship made in deal-making heaven, and more than $3 billion in deals was finalized with venture capital money in 450 technology transactions in 2013. Partly as a result, the job growth rate in the tech sector was four times that of any other job category in the city, according to that same comptroller’s report.
A lifestyle decision
In addition to the investment community, the city itself is a draw for the tech crowd. There are few more desirable places in the world in which to live and work when young than in New York City. It perhaps says more about the steep real estate prices in the San Francisco Bay Area than the affordability of Manhattan, but many entrepreneurs establish roots in the Alley for its cost effectiveness. They find that it can be less expensive to get started here than it would be to move across the country.
That’s due, in large part, to the exciting and creative ways that workspaces are being carved out for the sector. Entire buildings are being converted to serve as shared spaces, forming hives of small tech companies supporting one another and creating spaces where likeminded entrepreneurs can work and network together in common areas under soaring ceilings with a view of bustling sidewalks and iconic skylines. And in these brainy spaces, creative young minds are disrupting legacy businesses in health care technology, biotechnology, gaming, advertising, and software and hardware development of all kinds.
New York City’s arts, culture and reputation for get-it-done commerce are putting Silicon Alley squarely on the map. It’s now a logical landing site for young tech entrepreneurs and software engineers with big ideas — and the money people who can add much-needed fuel to those ideas.
Ryan S. Silva, CPA, CFE, CVA is a Manager at Wiss & Co. LLP. Reach him at Rsilva@wiss.com.