I sent out this tweet survey and got a lot of responses , so this blog post is to provide the actual answer and the underlying data.
The tldr is that NY Metro tech scene is 50% the size of the Bay Area tech scene, I’m sure you might be surprised or skeptical, just hear me out. 18% of the twitter survey respondents got it right.
The correct answer to the survey really depends on what data you are analyzing and comparing, so really all the twitter survey responses COULD be accurate , it is all about how you slice & dice it.
For the data gathering, I used two publicly available (you need subscriptions) data sources , PitchBook and CB Insights, which are my favorite tools for startup/VC information.
Now this isn’t about NYC vs SF but a bit broader NY Metro vs Bay Area, is captures the full startup scene as comparing distinct cities isn’t comprehensive. Example , there are startups in Palo Alto, Oakland and Jersey City, these are examples of other cities need to be included in a comparison.
I looked at startups and VC firms to measure the tech community. Both the startups and VC firms had to be HQ’d in the respective regions that I’m comparing. I wanted to look at data that was more a leading indicator (early stage companies) as opposed to a lagging indicator (late stage / public companies). I believe that looking at early stage companies will give us a better sense of where these respective markets are headed and the potential they hold.
For the startup side, I reviewed the number of deals, the number of rounds and the aggregate amount of the funding. The time period was Jan 1st 2017 to May 9th 2019. The rounds of financing for the comparison was Seed, Series A and Series B. In terms of sectors, it was comprehensive, so life science, energy , consumer , enterprise , etc was included.
For the VC firms , I looked at funds that were raised between Jan 1st 2016 and May 9 2019. As you may have noticed , I used a slightly longer time period (one additional year) for VC funds, as some VC firms only raise capital once every three years, so wanted to capture all the relevant funds. The funds were both early and growth stage funds, similar to companies , included all funds regardless of sector focus (or geography focus). I also looked at the number of firms, which is distinct from the number of funds, although they are obviously related.
Here is the first piece of the data, which you can see includes some bonus data with expanded time horizons on the funds side.
Here is a visual on the number of VC firms, per PitchBook:
Here is the data on the company side, are you can see there is discrepancy between CB Insights and Pitchbook on the aggregate amount of funding but in terms of number of companies, they are similar.
Here is a visual of number of VC funded companies via PitchBook.
So to summarize, I believe the NYC Metro scene is about half the size of the Bay Area startup scene (18% of the respondents to the twitter survey got that question right). I have never thought that the two metro regions would be equal in size but have mentioned before that I thought NY could be half the size, I’m really surprised it happened this quickly though.
If you have any comments or thoughts, please post or hit me up on twitter @shaig. Thanks for reading this far……
I’m now studying at a Stanford course How To Build Successful Startups, and there was a recent seminar with 3 members of Drapers’ family. And they’ve told that most of the Silicon Valley’s VC money have been brought from Wall St.
Here’s a citation:
And that was the day that the president of Goldman-Sachs came and called on me at Sutter Hill ventures. And I was happy. We were making about, I don’t know, 25, 30% per year growth. Earnings. Life was pretty good. I thought that was kinda the numbers that everybody had and I said to myself, why is this guy coming to see me?
President of this big investment company. And I then found out that Wall Street wasn’t earning this kind of returns and he came out to find out what was in the water out here and why we were doing so well. Then, so that’s the day everything changed. Because what he did, he went back to Wall Street, he got these big trucks and they all came out here full of money.
They loaded Wall Street filled these trucks up and they came out and they dumped them on venture capital companies all over Silicon Valley. And all of a sudden, there’s too much money to make those kinds of returns anymore In fact, venture capital is not where I would, most of you are very young.
E.g. to be 100% objective in NY-SF comparison, at least regarding the amount of money, we should track the origin of funds 🙂
Anyways, thanks for you article!
Wish you all the best!