New York is different than Berlin – and what about its start-up scene?
A ‘melting pot‘ full of ideas, on the one hand …
When we think of New York, we think of a city where everything is possible. But does this also hold true in the age of digital revolution? What differentiates the local founder scene of New York from other innovation ecosystems?
A look at the steadily growing number of start-ups seems to confirm the Big Apple cliché: Many young companies with different sectoral focuses and disruptive ideas are founded in New York. Additionally, there are start-ups that move their headquarters to the city. Consumers in New York are considered to be demanding, fast-paced, open-minded and willing to take risks − all reasons that make the city a perfect litmus test for market entries into the US. That’s one side of the coin. And the other?
A certain ‘groundedness’ of investors, on the other hand
Similar to San Francisco, London, Paris or Berlin; New York has a great potential for venture capital. However, high-flying ideas meet investors who show a certain ‘groundedness’. They want to see substance, not only hype. Due to the relative ‘groundedness’ of local investors, the fast-paced business environment and the high cost of living, only start-ups with real future potential can survive. What really New York distinguishes from other start-up hubs is the close cooperation between academic institutions, government agencies and corporates. Thus, enabled by this trinity, business ideas can be tested more easily for feasibility and marketability while programs can be implemented within a narrow time frame. Further, an open local and federal policy allows for flexible visa arrangements. As a consequence, New York has plenty to offer for start-ups in for all strategic focus areas: access to talent, funding, partnerships and markets. Or to describe it with the words of a seasoned entrepreneur and good friend: “You will hardly find a city like New York with its density of demanding customers, investors, and talent in one place. Entrepreneurs and organizations have no choice than to be innovative and forward-thinking”.
Greater openness towards groundbreaking ideas
What also speaks for New York is a generally greater openness towards new digital ideas than in other US cities. This is, among others, reflected in a wide spectrum of funding possibilities for young entrepreneurs. The range of funding sources includes, for example, venture capital firms, business angels, private equity, incubators and crowdfunding. According to the Wall Street Journal and the German Private Equity and Venture Capital Association (BVK), in 2015, less than a billion USD of venture capital was invested in Germany and about 15 billion USD in Europe. In comparison, nearly 75 billion USD of venture capital was invested in the US during the same year. Only a few German companies were able to pass the 1-billion-dollar mark. German start-ups could tap into new opportunities for growth and development by starting or expanding their business in New York – especially since there is an acknowledged “culture of failure”. Mistakes are seen as an opportunity and an important part of learning.
With a little help from my friends
Established companies can offer European start-ups their support when entering markets in New York and the US to support the local start-up scene, corporates must show a strong commitment and have an extensive network of contacts within the ecosystem and provide start-ups with valuable business knowledge so that founders can benefit from well-versed advisory and insights. Furthermore, it is important to offer innovative approaches gained from close connections between supporters and the start-up community. One good example is the “Entrepreneurs Roundtable Accelerator” in New York which aims to create “perfect matches” of start-ups and mentors, thus providing win-win situations for both parties. Corporates get a unique opportunity to advance, grow and manage their internal innovation processes, cultures; and more importantly foster new talent, co-develop innovative solutions, acquire sales partners, and enter new markets.
Learning from each other, exchanging ideas, sharing knowledge – for mutual interest
New York corporates and entrepreneurs put a strong focus on programs that are designed to strengthen collaboration and the lively exchange of experiences, knowledge and ideas. Here are some of these approaches we apply at EY:
- Partnerships of entrepreneurs, corporates and academic institutions, which focus on “big bets” with high potential in areas such as Robotics, FinTech, Analytics, Virtual Reality, Smart Cities, Blockchain and IoT
- Ambassador programs that go beyond business units, sectors, ranks and geographies
- Networking events within the framework of entrepreneur community networks.
These are only a few examples of the many possibilities to promote and support promising start-ups. It is crucial to create fruitful connections between corporates with wide-spun networks and founders with groundbreaking digital ideas. EY is successfully running a broad portfolio of initiatives, programs and formats that aim to build partnerships between established big companies, investors and innovators – in New York, Berlin and promising locations all around the world.
is a Consultant for Strategy and Performance Improvement at EY in New York. After graduating in Business Administration in Frankfurt, Germany, he moved to the USA to pursue his MBA. He worked at Siemens for 3years and joined EY in 2011. Anand is founder of the EY Innovation Ambassador Program and is strongly involved in New York’s start-up scene.
Start-ups that made it in New York
Case Study: Moven
Moven is a mobile-first experience platform that is changing the way people engage with their banks. Through their innovative flexible software platform, the founders of Moven have been able to launch both a direct-to-consumer app in the U.S. as well as to partner with global financial institutions to white-label their app.
Through its U.S. direct-to-consumer model, Moven is changing the game in money management by allowing people to not only track and manage their money, but also to understand it. With Moven, users gain a new banking experience that combines banking tools with financial management features, turning banking into an effortless and fun experience. It is geared toward helping users take control of their finances by learning how to master the money game.
Moven has also expanded internationally through an enterprise offering. A white label version of the software is available in New Zealand and Canada, with more international markets on the way. Through this model, Moven partners with global financial institutions to transform banking from products and balance sheets to insights and advice. In May of this year, Moven partnered with TD Canada Trust to launch MySpend which cracked the Play Store’s Top 10 charts.
Case Study: FeedbackNow
The start-up FeedbackNow supports service professionals in implementing and marketing excellent service offerings. The core of its solution is a real-time customer satisfaction barometer that generates customer feedback at the point of sales. The feedback is made accessible in real time via an app and an online platform. With its solution, FeedbackNow responds to the need to close gaps occurring in online surveys that result from a dominance of negative feedback, time lag and low return rates. After the great success in Europe, FeedbackNow is operating in New York City and Los Angeles since the beginning of 2016. The start-up’s aim is to increase customer loyalty and employee motivation of US companies.