New York becoming hot spot for tech startups

New York is becoming more of a hotspot for tech startups.

Silicon Valley might still be the king of technological innovations, but according to a few tech entrepreneurs, New York is turning into the place to be for fledging companies and startups.

"It's a lot easier to build a company in New York than in the Silicon Valley," said Howard Lerman, co-founder and CEO of Yext, a local marketing cloud.

Lerman was one of four tech entrepreneurs to speak at Crain's Real Estate Conference: Reshaping New York. Lerman added that rents in New York are cheaper than some of the ideal locations in Silicon Valley, and he believes "the talent pool is a lot deeper" in New York because there are fewer firms competing for the top engineering talent.

New York's current CRE standing
According to Crain's, the current growth in the tech sector has accounted for roughly 33 percent of the private-sector job growth in New York since 2007.

Kevin Ryan, a founder of DoubleClick, one of New York's first big Internet successes, and Thomas Etergino, chief financial officer for Refinery29, believe that New York's tech entrepreneurs are much more concerned with long-term balance than in the past.

"People that are now starting these companies are ones that have been around and seen several cycles of what these firms can do," Etergino said.

The problems with New York for tech startups
While smaller companies and startups have less difficulty expanding and moving office space, larger companies – with such limited supply available – often struggle to grow their employee bases.

"If you look back two or three years, we had probably about $20 million in annual revenue," said Michael Rubenstein, president of AppNexus. "We now pay almost that much in annual rent, and we have a long-term lease that we need to sign in order to stay in the location we want and to pay the rates we want to be able to pay."

Another major problem the city has is a lack of bandwidth. New York's bandwidth is much less than what's available across the nation and worldwide. According to Crain's, everywhere from Kansas City to South Korea has a stronger connection, which is limiting the expansion of some companies.

New York leases are another obstacle, with many companies needing to commit to a fixed amount of space for 10 years, which is the city's standard leasing term. 

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