InSiteNY, a local venture capital think tank of sorts, offers a look at early-stage technology investment in New York and Silicon Valley, and its findings confirm several of the buzz phrases floating around Manhattan tech circles.
First up, starting a company just isn’t as expensive as it used to be (a couple years ago).
Although the industry in 2009 is at approximately the same level as it was in 2004 by number of transactions, total dollars invested across the two regions is $615 million lower. On a per transaction basis, this equates to a decline in average transaction size from $8.2 million in 2004 to $8.0 million in 2009 in Silicon Valley, and an even greater decline from $7.3 million to $5.9 million in New York over the same period. This may be indicative of the media/ IT services-oriented nature of New York startups versus a more diversified (and capital-intensive) startup ecosystem out west.
And next, venture capital is gaining steam amid the slow economic recovery:
The current recovery – smoothing for a burst of investment activity in the Bay Area during Q2’10 – appears to be more robust than the one earlier in the 2000s.
The report also points out that ongoing fretting about the possibility of a bubble in technology investment may temper the exuberance seen in previous bull markets. If we are indeed more sober now than we were a few years ago, maybe we can also avoid a painful crash.
Number of transactions in New York and Silicon Valley over the years:
Dollars invested in New York and Silicon Valley over the years: