If you’re a fledgling startup in New York City, you’re in luck. New York City happens to be a great place to get early-stage funding. So far this year, New York City VCs have funneled money into twice as many Series A rounds as later stage rounds—120 to 61, respectively.
The Bay Area, by comparison, has invested in 301 Series A rounds and 262 later stage rounds. Among consumer Web startups, the disparity was even greater in New York City, with VCs pumping money into 40 early stage deals and only 15 growth stage deals, according to data from NVCA.
“The NYC tech community is incredibly active and diverse, and there's plenty of early-stage capital and talent available,” said TechStars CEO David Cohen. “TechStars is all about community engagement - so we saw NYC as a natural fit.”
While New York City hasn't traditionally been seen as a titan of tech, the city has a lot to offer tech startups.
“One of the key advantages of NYC is the diversity of people and industries that populate the city. In Silicon Valley, it seems like everybody is either working on a tech startup or working at a tech startup,” said Mark Wachen, who heads the NYC branch of DreamIt Ventures. “The NYC tech scene is exploding, but the city is rich with other industries like media, finance, and fashion. Let's not overlook the cultural diversity in New York; from art, to music, to broadway, food - any cultural experience you desire is here. All of this is healthy for developing products and companies because the collaboration is coming from multiple corners rather than only from people in the tech scene”
With Vator Splash NY coming up on Wednesday (don't forget to register), we thought we'd do a bit of poking around to find out what the NYC accelerator scene looks like. Here's what we came up with:
Entrepreneurs Roundtable Accelerator
Founded in 2007, ERA is a pretty broad accelerator that accepts everything from finance and adtech to media and fashion. The only requirement is that the startup must be a tech company with a strong technology component, and it must be able to take advantage of New York City as a starting point. Startups work with ERA for three months and receives $40,000 (ERA doesn’t vary the amount per founder), as well as office space and mentorship. In exchange, ERA receives 8% of your company’s common stock.
With locations in NYC, Boulder, Boston, Seattle, and San Antonio, and backed by over 75 venture capital firms, TechStars boasts an acceptance rate lower than that of the Ivy Leagues. The accelerator receives thousands of applications each year and selects only 10 companies per location. Some of the companies that have come out of TechStars include Foodzie, OnSwipe, Nestio, SendGrid, and Wander, among others. Startups who are accepted into the TechStars program can receive up to $118k in funding ($18K in seed funding plus an optional $100K convertible debt note). TechStars companies raise an average of $1 million in outside venture capital after leaving the TechStars program.
“TechStars saw NYC as a natural extension to its current offices in Boulder, Boston, and Seattle. It was an obvious market that fit our goals, and we had strong connections there to great mentors and investors who are helping it be successful,” said David Cohen.
Founded in 2009, First Growth differs from other accelerators in that it doesn’t provide seed funding and it doesn’t take equity from participating companies. Accepted applicants are offered mentorship, introduction, networking opportunities, and more. First Growth even has a Broadway star who coaches entrepreneurs on their presentation skills. But First Growth isn’t a money-making entity. The coalition of VCs, angels, entrepreneurs, and bankers benefit by expanding their own networks.
With locations in Austin, Philadelphia, and New York City, DreamIt Ventures accepts rolling applications for tech startups, although they don’t necessarily have to be in IT, software, or the Web. DreamIt also accepts startups in the physical sciences, medical devices, and other areas. A few notable companies that have already come out of DreamIt include TopFloor, SeatGeek, and Parse.ly, among others. Startups can receive $5000 plus $5000 for each founder (up to $25K), along with office space and mentorship during the three-month program.
“Since NYC is so condense - with everything a short subway ride or walk away - it's convenient for investors, executives, mentors, and other visitors to spend time with the companies participating in accelerator programs,” said Mark Wachen. “Also, companies in NYC accelerators have an advantage accessing market feedback quickly and easily because of the industry and professional diversity right around the corner.”
Self-described “collaborative learning advocates, forward-thinking envelope-pushers, and capri-pant enthusiasts,” GA offers guidance and mentorship to startups working at the intersection of technology, business, and design. Some notable graduates include Yipit, Yougift, Twilio, Fashism, and Dwolla, among others. Like First Growth, General Assembly does not offer funding, but startups in NYC can apply for work space. Rather than one-on-one mentorship, GA provides classes and “long-form courses” in NYC, San Francisco, Boston, Berlin, Sydney, Melbourne, London, and Philadelphia.
Claiming to be the largest accelerator in the world, The Founder’s Institute has helped launch 650 startups in 37 cities across five continents, and it’s aiming to be even bigger. FI’s ultimate goal is to launch 1,000 companies per year across 50 cities worldwide. You don’t even have to have an idea in the pipeline to apply to Founder’s Institute. The accelerator has made a name for itself in the entrepreneur world through its Predictive Admissions Test, which is designed to identify entrepreneurial personality traits. Founder’s Institute does not offer funding, but rather charges accepted companies $1,100 as a course fee for the 16-week program. All startups also contribute 3.5% of their company into the shared Graduate Liquidity Pool, which allows them to earn returns when their peers are successful.
So should you consider putting down roots in NYC? Certain types of startups are guaranteed to find a nice little niche.
"Certainly startups in media, entertainment, advertising, fashion, and finance will have distinct advantages in NYC," said Wachen. "However, considering the growth of the tech scene in NYC virtually any tech-enabled startup could be successful. All of the elements needed in a great startup ecosystem are here."
Image source: tripadvisor.com
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