The Making of New York City’s Tech Economy

About the Project

Why did New York City, particularly Manhattan, experience such explosive growth in tech start-ups at the outset of a major economic downturn?

Introduction

Background

At the turn of the new century, relatively few tech start-ups were located in New York City. Silicon Valley, New England, LA/Orange County, San Diego and even upstate New York far outstripped the New York metropolitan area in the number of tech start-ups. From 2007 to 2011, however, tech start-ups in NYC grew by 32%, during a severe economic recession when other regions experienced sharp declines.

This rapid growth of tech start-ups in NYC could not be explained by overall economic growth alone, especially given that the NYC financial industry was the epicenter of what at the time was the most serious financial crisis since the Great Depression. So why did New York City, particularly Manhattan, experience such explosive growth in tech start-ups at the outset of a major economic downturn?

To investigate this question, the Cornell Center for the Study of Economy and Society, has embarked upon a groundbreaking study. Our approach connected entrepreneurs to their organizational field, and local state actors into a broader system of development and change. Our aim was to understand the individual role of entrepreneurs, both as actors of change, as well as economic agents receiving signals from their institutional environment.

Our Approach

Our interdisciplinary approach—including teams of sociologists and economists—focused analytic attention on institutions in the making of a knowledge-based regional economy. In explaining the rise of regional centers of knowledge-based economic development, our approach explored the institutional drivers of successful entrepreneurial activity. We conducted basic research on knowledge-based economic development near to the timing of emergence, with a focus on the social mechanisms and institutional processes enabling and promoting this new wave of entrepreneurship.

Preliminary research showed significant evidence of cluster formation in the concentration of tech start-up firms in lower Manhattan. This pattern of cluster formation was consistent with the view that dense networks of like-minded actors and norms of reciprocity are important causal factors in the emergence of trust and cooperation, which we hypothesized enabled and guided the emergence of NYC’s tech start-up economy.

NYC Map

Follow-Up Study

We have launched a follow-up survey of the tech entrepreneurs who participated in the initial stage of this ground breaking study. Our research thus far has shown that social networks and expectations have a great deal to do with the success of NYC’s Tech economy. Our research today is focused on exploring further the different ways and means that social networks and inter-firm cooperation function, how they assist entrepreneurs and strengthen the NYC tech community. We hope to uncover potential solutions and strategies that facilitate a transition to a knowledge-based regional economy. We invite you to watch the video below to understand some of what we have learned.

“We look forward to conducting field research in NYC and sharing our results on why the city has become, comparatively, one of the leading regions in the world for tech start ups and technological innovations.”

Victor Nee, Frank and Rosa Rhodes Professor and Director of the Center for the Study of Economy and Society at Cornell University

From 2007 to 2011 high tech start-ups in NYC grew by 32% during a severe economic recession when other regions experienced sharp declines.

— PricewaterhouseCoopers and the National Venture Capital Association —

Our Supporters

We are grateful to the organizations and leaders who have taken part in our ongoing field research in the New York City metropolitan area. Below is a list of organizations that support our research and took part in the first round interviews.

Supporters

NYCEDCNY Tech MeetupEntrepreneurs Roundtable AcceleratorRRE VenturesThe Wallenberg Foundations
Participating Organizations
  • Etsy
  • Gilt Group
  • Google
  • AppNexus
  • Appinions
  • Shelby.tv
  • Murmur
  • Cornell NYC Tech
  • Mimeo
  • The Flatiron School
  • Enertiv
  • Lendkey
  • Expotv
  • Widetronix
  • GetGlue
  • Mashworks
  • BigHuman

Would you like to offer your support to future projects?

Please Contact Us

  • We are pleased to support research spearheaded by Cornell’s CSES examining the technology sector in cities like New York. In New York City, the growing technology sector continues to diversify and strengthen the City’s economy, creating jobs across a spectrum of related industries and generating critical economic activity and opportunities at all levels throughout the five boroughs. This exciting body of work has the potential to inform policymakers, practitioners, and other stakeholders looking to encourage the growth of tech clusters in cities around the world by suggesting potential strategies and best practices. We look forward to our continued partnership with Professor Nee and CSES, and eagerly await the results of this promising research project.

    — NYCEDC, Benjamin Branham & Kyle Kimball —

  • NY Tech Meetup is pleased to support the research examining the growth of New York’s technology sector being conducted by Cornell’s CSES. We have been part of the New York technology ecosystem for the past decade, during which time we have witnessed tremendous growth in the tech community as a whole and in our own organization. We believe that research of this type is key to informing and influencing policy and future growth in a way that benefits all of New York’s citizens. We look forward to continuing to work with Cornell and Professor Nee on this project.

    — NY Tech Meetup, Jessica Lawrence —

  • We, at ERA, think the project being conducted by Cornell’s Center for the Study of Economy and Society would be helpful for NYC and we look forward to the research findings and how these findings can be leveraged to improve NY’s start-up ecosystem further by attracting capital, human and technical resources in to the city.

    — Entrepreneur’s Roudtable Accelerator, Murat Aktihanoglu —

  • We are delighted to see CSES’s commitment to understanding the organic development of the technology industry in New York. We believe this market is in an extraordinary period of creativity and collegiality. We are fortunate to have been a part of this community from the beginning and proud to be associated with so many great entrepreneurs, innovators, co-investors management teams, and now academic researchers.

    — RRE Ventures, William Porteous —

Research Center Team

Our project brings together an international team of researchers that includes sociologists, economists, network analysts, and statisticians.

Cornell Researchers

VICTOR NEE

Project Lead

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VICTOR NEE

RESEARCH CENTER

CSES

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RESEARCH CENTER

Would you like more information about this project?

Contact Us

Since the start of 2009, investors have poured over $8 billion into New York-based start ups across 1205 deals. At its current run rate, 2013 will set a five year-high in venture capital deal and funding levels.

— CB Insights —

Ecosystem

The NYC Tech Ecosystem

The NYC Tech Ecosystem can be seen as a complex institution with interacting component parts to connect entrepreneurs and firms, share information among the tech community, and support local startups and entrepreneurs. The financing of this ecosystem involves a complex set of large and small organizations—venture capital funds, angel investors, and incubators, etc.
Legal information and support flow through the ecosystem by way of specialized law firms and internal legal divisions. Engineers and R&D teams throughout the ecosystem are connected through the NY Tech Meetup, General Assembly, Flat Iron School, and the new applied sciences universities. This complex institution, and loose knit network that it supports for startups, is how we define the entrepreneurial ecosystem and is the focus of our NYC research.

Organizations

Economic & Social Institutions
  • Meetup.com
  • NYC EDC
  • NYC Mayor’s Office
  • NY Tech Meetup
Incubators & Accelerator Institutions
  • ER Accelerators
  • General Assembly
  • Techstars NYC
Educational Institutions
  • Cornell Tech NYC
  • Carnegie Mellon
  • Columbia
  • Flat Iron School
  • NYU
Finance & Capital Firms
  • 500 Startups
  • FirstMark Capital
  • First Round Capital
  • Founder Collective
  • Gotham Ventures
  • Lerer Ventures
  • RRE Ventures
  • SoftBank Captial
  • Spark Capital
  • SV Angel
  • Thrive Capital
  • Union Square Ventures
Startup Firms
  • AppNexus
  • Etsy
  • Fab
  • Foursquare
  • Gilt Group
  • Huffington Post
  • Kickstarter
  • Knewton
  • MakerBot
  • OpTier
  • Seamless
  • Shutterfly
  • Tumblr
  • ZocDoc

Of the seven leading technology regions in the United States, New York City was the only one to see an increase in the number of VC deals between 2007 and 2011.

— PricewaterhouseCoopers and the National Venture Capital Association —

Research Notes

Our research team completed conducting field research in the New York City metropolitan area, and will share notes and empirical findings from the field as well as provide information about the vibrant and quickly growing NYC Tech Community.

Complete Blog

New York City’s share of the nation’s private sector employment has reached its highest level in 20 years because of the growth of the tech/information sector.

— Bloomberg Technology Summit —

Contact

Would you like to participate in our project?

We are seeking CEOs and Co-Founders of NYC start up tech firms to participate in our project. The first stage in our research is to sit down with important actors in the tech community over the last 10 years, including the executive teams at NYC high tech start-ups, NY Tech Meetup, VC funds, accelerators, incubators, educational institutions, and governmental organizations. We would be delighted to sit down with your leadership team to discuss why your organization was established in New York City and gain insight from your experiences with setting up a NYC entrepreneurial venture. Your experiences and insights are invaluable to understating the Made in New York City tech start-up.

cses@cornell.edu

332 Uris Hall, Cornell University

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