Why NYC has emerged as an unexpected hub for technical startups
New York — the city of Broadway, baseball and the mighty ‘za. And to those in tech, it’s the city of consumer and FinTech startups.
I moved to New York from London in 2022 because I believed there was an exciting investment opportunity being overlooked here — early-stage infrastructure software startups. One year later, and I’m a huge believer in NYC as an emerging hub for those more technical companies. Not only home-grown but many of the best technical and developer-focused startups I worked with across Europe and in Israel are setting up shop in the city.
Other Silicon Valley-based funds are starting to see the opportunity, too: Sequoia, Andressen Horowitz, Lightspeed and Index have all opened new NYC offices in the last few months with at least one person focused on early-stage infrastructure start-ups. But as the San Francisco tech scene reaches new heights on the wings of AI, many are still underestimating NYC.
New York has lots of talent
The first reason to be bullish on New York is local founder talent. We’re now in the second generation of scaled infrastructure software businesses in NYC: Proven local companies like DigitalOcean, MongoDB, Datadog, and Spotify (which makes its American headquarters in the city) have paved the way for new exciting companies like Vantage.sh, Oso, and Modal.
The success of the first-gen companies has created a new wave of founders with deep industry experience, alongside a cohort of seasoned angel investors with strategic functional skills (product, sales, marketing, developer relations) and capital to put to work.
As well as a high concentration of software developers, NYC itself is home to 50 companies of the Fortune 500, going up to over 75 when you include nearby Connecticut and New Jersey. From my own experience, the technical leadership at these organizations is stellar, and more than willing to buy from and advise local startups at any stage.
Having access to those larger companies as customers is especially valuable to early-stage infrastructure startups for two reasons:
- They build their early sales and go-to-market playbooks for more traditional enterprise buyers from the beginning which sets them up for scale across the US.
- They have access to local sales/commercial talent that understand how to build these playbooks and have existing customer relationships, so they can grow more quickly early on.
NYC still has challenges to overcome
So is New York the best place to build a technical startup?
There are still challenges — the cost of the city is overwhelmingly expensive for founders to live here and to hire the best commercial and product talent. The most experienced talent comes at a steep premium that matches their abilities. And the cost of living is extremely high, besides. As of October 2023, the average rent for a 1-bedroom apartment in New York, NY is $4,317.
For international founders, immigration is a complex and daunting process — made much easier by talking to friends that have done it already! (h/t Jorge Sancha, Finn Murphy) I’m always happy to share tips from my experience, anything from navigating the O-1 visa to finding a great apartment. DMs open.
And though it’s an exciting ecosystem, the volume of companies building infrastructure products is lower in comparison to a market like SF. For founders this means the number of peers you have to bounce ideas and share problems with is small… This is why I started the DevTool Builder community to bring technical founders and builders together. We’ve grown from 8 founders around a dinner table a year ago to a group of more than 250 today — sign up here to join the next meet-up.
If you’re building or thinking about building an infrastructure software startup in NYC I’d love to meet you — let’s grab a coffee.
