For all the back-patting going on around here over Silicon Alley’s ascendence, you would be excused for thinking that New York finally erased Silicon Valley’s lead in rich computer nerds per capita.
Not quite yet, writes Richard Florida, pop geographer and high priest of gentrification-accommodating urban development. Atlantic Cities published his ranking of the top 20 venture capital destinations based on a unique calculation–the amount of VC money and number of VC deals as a proportion of each city’s population.
Though other cities are attracting more and more startup companies, it’s still a blowout when you compare San Jose and San Francisco to the rest of the country. There are over $216 million and $159 million in funding and 22.6 and 17.2 investment deals per 100,000 people in each city, respectively. (There’s no info on the time period during which these investments were made, so the sober academics among us will take this data with a grain–or two–of salt.)
New York trails the pack, coming in 18th place with $12 million and two deals per 100,000. The numbers are not so much an indication that venture capital is a small part of the economy of the city so much as it points to tech startup money concentrated in the hands of a small number of people. Even Provo, Utah, has bigger VC flow. That city came in ninth place with $30.7 million in VC cash.
The study illustrates why we should be generally uneasy toward the hype around Silicon Alley: the tech industry’s foothold in Manhattan, is still just that, a small, scrappy outpost of a business with deeper roots elsewhere. While Bloomberg is busy fan-dancing for the tech-startup-venture-capital monolith, New York should keep trying to attract as diverse a cobble of industries as possible, not just the one sector that has so come into vogue (Anyone else disturbed by the term “Silicon Prairie”?)
There’s an important history to remember here. Throughout the 20th century, cities across the country were ravaged by the end of manufacturing in the U.S. The cities that faired worst were company towns like Cleveland and Detroit. Cities like New York, whose largest industry well into second half the century–garment manufacturing–accounted for just 10 percent of the city’s economy, weathered the transition much better.
Yet no lessons were taken when the financial services industry set up shop in New York in the 1970s. Before the start of the economic downturn, 44 percent of the city’s wages were earned by people in financial services. And what a humdinger that was when the Recession hit and New York’s unemployment bloomed to over 10 percent.
Florida’s assessment is, in a way, good news: New York’s economy hasn’t been flattened by the influx of VC money. Not yet.