Startups Should Capitalize with a New York State of Mind
One might think the Bay Area is the go-to place for any tech startup seeking to get a foothold in the U.S. market. But for some startups–particularly in areas like marketing analytics, financial services, real estate or construction—New York is a more logical launchpad of choice.
Ottawa-based contextere is one startup that discovered the value of building a presence in NYC. It started when the developer of IIoT (Industrial Internet of Things) software that combines AI and augmented reality to create intelligent personal agents for maintenance and installation workers, was accepted into BMW North America’s URBAN-X smart city accelerator program in Brooklyn.
CEO Gabe Batstone quickly discovered that New York City made perfect sense given the tens of thousands of blue-collar workers involved in inspecting bridges and pipelines, operating sewage plants and countless other infrastructure needs. “Add to that the proximity from eastern Canada and it makes it easier to get things done.”
More recently, contextere was accepted into the Canadian Technology Accelerators (CTA) program, which meant a move to Manhattan’s Grand Central Tech (GCT) urban tech hub on Madison Avenue. Founded in 2014, GCT is the largest innovation hub in New York City and provides critical resources for transformational startups to achieve scale. After completing the three-month program, Batstone says they decided to set up residence there.
“In San Francisco, it’s very much about disruption and solving global issues like world hunger. The culture in New York is more about adding value and solving problems on the B2B side. They’re open to new ideas and willing to take chances to see if things work.”
New York also ranks among the top five cities in the world for many infrastructure components, such as bridges and sanitation, he adds. “That was definitely more appealing to us.”
Given the size and scope of New York’s infrastructure, Batstone says there is enough in the city to keep them busy for the foreseeable future. contextere is currently in the final stages of a deal with NYC Housing Authority that will begin in the fall.
Saskatoon-based myComply is a developer of an app that allows general contractors to digitally verify if all subcontractors and onsite workers on construction sites are compliant and properly trained. From the outset, New York was their targeted base for U.S. expansion, says Lee Evans, CEO and co-founder. “It was the biggest market with the biggest need so we said let’s put a flag in the sand and build a case study.”
Now myComply is operating in 30 states. “The other 29 happened organically from where we started,” he says.
Vuk Magdelinic, CEO of Overbond in Toronto, developers of an AI-driven capital markets analytics solution, officially launched in 2016, and has been focusing its efforts on gaining a foothold in New York, as it represents the home base for east coast capital market activity.
“We have had contact with a lot of clients there since the beginning. By mid-2017 deployments and conversations intensified, so we knew it would be important to have a presence on Wall Street. For us, it was a no-brainer. In crossing the border we could immediately leverage a lot of business connections we had already established.”
He agrees with other startups in saying that the New York culture has its own unique attributes. “In Canada, business decisions around innovation tend to be more communal. They want to see if others are doing it because they don’t want to be first. It’s almost the opposite in New York. There, people want to be first to apply something new and innovative to their business. They want to have that kind of edge, so the speed of cycles is accelerated.”
The strategic power of New York as an entry point has not gone unnoticed by MaRS. Last November it announced a partnership with Grand Central Tech called MaRS@GCT that is specifically focused on helping Canadian technology ventures with market-ready solutions expand their reach.
According to the announcement of the deal, New York City has twice the number of corporations than other metropolitan areas in the U.S. and the third highest density of venture Also, New York Metro funding increased by 57 per cent in Q3 2017, exceeding funding totals to San Francisco. Funding in Silicon Valley decreased by 46 per cent during the same time period (PwC, CB Insights MoneyTree Report Q3 2017).
It all makes for the perfect recipe for scalability success, Batstone says. “If you can make it as a startup in New York, like the song says, you can make it anywhere.”
