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The Big Apples burgeoning IT sector, led by fields that leverage the Web and mobile technologies, have put New York City in a position to take advantage of the growing IT market for years to come, and has emerged as a national leader in the technology space, second only to Silicon Valley, according to a report by the Center for an Urban Future. However, there are a number of important challenges to address, including the citys dearth of top-flight engineering talent, the report noted.
The study indicates a remarkable turnaround for a city that was considered a second-rate tech center half a decade ago. Today, New York boasts thousands of tech startups across the five boroughs, drawing investment from venture capital firms across the globe and bringing high-paying jobs to the citynot to mention some of the best and brightest minds.
In 2006, I wouldnt have put New York anywhere on the map [of leading tech hubs], Vivek Wadhwa, a national expert on tech entrepreneurship said in the report. Now, it is literally No. 2. If there is any second to Silicon Valley, its now New York, not Boston.
Of the seven leading technology regions in the U.S., New York was the only one to see an increase in the number of venture capital deals between 2007 and 2011. In that period, venture capital (VC) deals grew by 32 percent in New York City, while they fell 10 percent in Silicon Valley, according to a MoneyTree report published by PricewaterhouseCoopers and the National Venture Capital Association that was featured in the report. The reports digital startup index identifies 486 tech startups formed in the city since 2007 that have received some investment from angels, VC firms or other private investors.
Startup accelerator programs like TechStars New York have also fueled growth. According to David Tisch, managing director of the program, there were about 1,600 applicants to its most recent program, which started in March 2012, nearly triple the 600 applicants TechStars had for its initial New York program in January 2011.
Its not being hyperbolic to say that the early-stage business formation in the tech sector in New York has exploded, Thatcher Bell, a principal at Manhattan-based VC firm DFJ Gotham Ventures said in the report.
One major challenge to the citys continued growth in the tech sector is finding qualified employees. The report concluded that the most immediate and effective remedy for the citys engineering-talent gap would be to streamline the visa process and dramatically raise the federal cap on highly qualified immigrants.
The consistent challenge for the companies we work with at any stage of development is finding good tech talent, Thatcher Bell of DFJ Gotham Ventures said in the report. The hunger for developers and technological talent is totally insatiable.
Based on an extensive data analysis and interviews, the report documents the size and scope of the sector, details the growth that has taken place in the past few years, assesses what factors have fostered this rapid expansion, analyzes which tech subsectors in New York are strongest and offers the most potential for future growth, and identifies critical challenges that should be addressed if the city is to keep the momentum going.