New York City : Transforming a City into a Tech Innovation Leader
To better understand the new model of start-up innovation ecosystems, where new start-ups are flourishing in the heart of the city instead of occupying suburban areas or remote technology parks, and its potential economic impact, the working paper presents the evolution of the start-up ecosystem in New York City.
Over the last 8 years, New York City has become one of the largest and most vibrant tech startup ecosystems in the world. Today, the city is widely seen as a leading startup hub worldwide. However, this was not something one can have anticipated just ten years ago. The financial crisis shocked the city, providing the circumstances for the transformation of the New York startup scene. By 2015, New York accounted for nearly a 6 billion dollars venture capital investment in startups and had over 14,500 startups.
New York represents a new model of startup ecosystems that is emerging in cities worldwide. Different to silicon valley’s suburban ecosystem, New York’s is urban in nature and well integrated into the local economy and industry base. New York is the prime example of the new urban startup ecosystem model. The incredible transformation of the city’s start-up scene provides a few key insights on the characteristics and potential impact of the urban ecosystem model:
- Urban ecosystems can create new business and foster growth. For this to happen, the ecosystem needs to be linked to the local industry base.
- Urban ecosystems can generate “new” jobs, as opposed to “old” jobs that are being replaced by technology. These new jobs are the jobs of the future, emerging from new business models propelled from start-ups and innovation.
- Urban ecosystems can attract resources for local innovation. As the start-up ecosystem grows, it attracts out-of-the-city “innovation leaders” — for example, R&D institutions and innovation leading companies. This reinforces the innovation process of the ecosystem, further diversifying the local economy and providing another source for competitiveness.
- Urban ecosystems can transform urban environments. Start-up support infrastructure (such as co-working spaces, accelerators and incubators) and entrepreneurs’ communities can change the economic and social dynamics of entire neighborhoods.
Although New York remains distinguished in many ways as a city, many of the challenges it faced when developing the tech ecosystem are similar to those confronted by many other cities. These include: (a) lack of technical talents, (b) lack of available seed finance, (c) limited affordable space for entrepreneurs, and (d) a small and decentralized community. The policies to support the ecosystem from the city provide valuable lessons to policymakers with similar goals in their economies.