Home to the New York Stock Exchange, NASDAQ, Wall Street, and some of the world’s largest and most iconic finance firms, New York City has long been an epicenter of financial activity. But with the rise of fintech, it seemed for a while as though that would not remain the case. New York City had a new competitor: California’s Silicon Valley.
As fintech startups began looking for homes, many went to the world’s technology capital in San Francisco. But this year, it looks as though New York City has the opportunity to take the fintech title from Silicon Valley. Incubators, accelerators, and more fintech companies than ever are making New York City their new home. I want to spend more time looking at the investment based on top venture investors and split that out by geography.
Figure 1: Most active fintech venture funds from Q2 2018-2019
New York City’s Technology Credentials
The former mayor of New York City Mike Bloomberg recognized the potential of technology to transform the city in the future, and in 2011, began efforts to help the city reach this goal. Now, that goal has nearly been reached. In last year’s survey by Savills, New York City claimed the top spot as the world’s global technology leader, while California’s San Francisco and home of Silicon Valley came in second.
While San Francisco has long been recognized as a leading source of tech talent and growth, New York City is currently ranked as the largest tech talent pool in the world, with nearly 330,000 tech workers, beating out San Francisco’s 310,000. And just as important, New York City boasts the most computer science graduates, at around 7,631 every year, likely due to a staggering 100 academic institutions found throughout the city. One number that stood out to me was that deal and capital totals in New York City had risen by 256 percent and 439 percent respectively, compared to 2008 levels, in nominal terms, with nearly 1,000 deals amounting to just under $9.4 billion raised.
Figure 2: Deal and Capital Totals Through 2017
New York has even beaten out London to be the most attractive financial center in the world. What makes this growth interesting is that it comes even as the traditional brick-and-mortar locations of top financial companies continue to disappear. Though employment has shrunk by nearly 30,000 jobs in the traditional financial sector since 2000, New York City’s position as the world’s financial center continues to solidify as hundreds of fintech companies head east to establish new offices. In the graph below you can see the growth in venture capital activity based on headquarters.
Figure 3: Growth in Venture Capital Activity Based on Headquarters
NYC Fintech Incubators
As more and more startups leave Silicon Valley for the global financial market of New York City, incubators are increasingly common. An incubator is essentially a business whose purpose is to help other businesses, providing support ranging from funding to legal advice, to office space.
In the past, as much as 93 percent of incubators have overwhelmingly been small nonprofit businesses. But that has begun to change. More and more corporate giants see the value of putting money in fintech startups, and many of them are establishing offices dedicated solely to these incubator side businesses. As these big business incubators start taking up real estate and office space in big cities, places like New York City are transforming into incubator hubs and places of significant innovation and development.
Nex Cubed and New York City
One such incubator and investor, Nex Cubed, has begun the move to establish operations in New York City, launching its FinTech Accelerator there this year. To head the accelerator, Nex Cubed hired Mike Ma to serve as managing director. Ma has a long record of success in industries ranging from marketing and sales to advertising and technology. He has developed advertising campaigns and helped run product strategy with well-established multi-billion-dollar companies, as well as founded and advised new startups. Nex Cubed anticipates continued success with him heading the new FinTech Accelerator, a semi-remote, 16-week-long program aimed at pairing founders of fintech companies with advisors and experts in the fintech industry. Kelsey Morgan Pasqualichio has been so helpful as we stand up new verticals in different regions so thank you, Kelsey!
Nex Cubed has selected seven different fintech startup companies to participate in the accelerator: A.I. Capital Research, DeFiner, Earn.re, Destiny, InnoDT, Vestalyze, and Sixpence. But this is just the Spring 2020 FinTech Accelerator. If you own or are otherwise involved in a fintech startup that you believe would be a good fit for this program, you can apply to participate in the upcoming Fall 2020 FinTech Accelerator, opening for applications in June 2020. One key reason for choosing FinTech can be seen in the data from Crunchbase that goes over the top ten industry clusters.
Figure 4: Top Ten Industry Clusters in New York
For more information about Nex Cubed’s FinTech Accelerator program in New York City or to apply to be a participant yourself, visit Nex Cubed’s dedicated fintech website at https://nex3.com/fintech/. I have also been talking to a lot of founders about their experience with engineering being based on our New York even if your headquarters is not there. If anyone has any data please share it.