The Love/Hate Relationship Between Startups and New York City

union square The Love/Hate Relationship Between Startups and New York CityFor all the talk about how the Silicon Alley tech scene is exploding, New York can be a scary place for a young startup. Rent is high, beer is expensive and the fierce competition over sparse technical talent means founders had better keep their developers close.

And yet in the past two years, the city has turned out some of the coolest startups in the country: Foursquare, Kickstarter, Tumblr, Etsy and bit.ly among them. The city’s economic development arm has ramped up its efforts to bolster the local tech scene, the new TechStars incubator is a local answer to the Valley’s Y Combinator, and even Google is starting to pay more attention to the city. The money to New York startups is flowing, to the point that some investors wish some companies would go under already.

Entrepreneurs Rowan Wernham and Edward Talbot moved to New York from New Zealand five months ago to continue growing Snapr, which aims to link the disparate photo sharing mobile apps into a photo and location-based social network.

There were four main reasons Mr. Wernham chose New York over San Francisco:

  • New York seemed hotter on location-based services because of Foursquare.
  • Some of his favorite companies, like Tumblr, are here.
  • New York’s tech scene is energized, growing and collaborative, whereas San Francisco’s is established and competitive.
  • It’s New York City.

“We thought it might be easier to join an ‘emergent’ tech scene rather than an ‘institutionalized’ one like in the Valley,” Mr. Wernham wrote in an email. “Since we don’t have huge track records working for massive companies or previous venture successes (and of course we are foreigners!) we thought we might have a hard time in SF where there were already stacks of ex-Google people, Y Combinator companies, etc.”

The pair have already found an American lawyer who specializes in New Zealand transfers, gotten hooked up with free office space, made inroads through Hashable and rubbed elbows thanks to Meetup.com, as Mr. Wernham wrote in a blog post today about tips on moving to New York as a startup.

They’ve also found seed funds and VCs to be abundant, the food to be delicious, transportation to be easy, and investors much more receptive to the way social media companies grow (read: monetize your product only after it gets traction).

At the same time, Mr. Wernham and Mr. Talbot have had to travel in and out of the country every three months to maintain their visas, which is unsustainable. Even with free desk space, rent is still expensive for the two entrepreneurs. And they weren’t able to bring their employees with them.

“The rest of our team is based in New Zealand, safe from the ravages of the intense demand for tech talent in NY,” Mr. Wernham wrote.

David Albert and Nick Bergson-Shilcock, founders of HireHive, a website for employers and jobseekers, returned to New York after a summer at Y Combinator. Y Combinator startups The Fridge and MessageParty also returned to New York after the incubator’s summer 2010 session.

The growth in New York was too attractive to pass up, Mr. Albert and Mr. Bergson-Shilcock told The Wall Street Journal.

“I don’t think anyone would say the Valley isn’t still the cream-of-the-crop startup Mecca,” Mr. Albert said. “But things are changing for the better in New York, and it’s just an awesome city.”

ajeffries [at] observer.com | @adrjeffries

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