New York is closer than ever to beating the Bay Area on tech

BY CARA EISENPRESS

The tech ecosystem in the city has for years been second to the Bay Area, where a larger and richer world of technology companies, investors and engineers has been flourishing for decades longer. The odds were long that New York could catch up.

Now, the two cities are running closer to neck and neck than ever before, according to several recent data points and the anecdotes of insiders from both places. They point to New York’s mix of industries and quality of life as reasons for its clear momentum in the rankings.

The newest evidence: There were roughly 50,000 jobs at venturebacked tech companies advertised in each region in the 14 months from January 2022 to March of this year. That’s according to an analysis by Palo Alto, California–based venture capital firm NGP Capital, which manages investments for Finnish telecommunications company Nokia.

The next four U.S. cities—Los Angeles; Boston; Austin, Texas; and Chicago—each had around 30,000 fewer listings than either of the two front-runners. Together, the Bay Area and New York City accounted for half of all listings during the study’s period.

“The fact that New York is on parity with the West Coast is something where I definitely did a double take,” said Upal Basu, partner at NGP Capital, who created the report as a way for the firm to identify promising sectors and geographies for its investments.

NGP’s work on job openings is far from the only recent data point reflecting New York’s strength going into the next several years.

Last year 20.6% of all U.S. venture capital deals occurred in the Bay Area, according to Pitchbook’s most recent Venture Monitor, while 14.7% were in New York. That is the closest the two lines have come since at least 2012, although the Big Apple’s share of the total did drop from an all-time high of 15% in 2021.

Salaries for those working in the industry are also close. In the Bay Area, the average local salary for 2022 was $174,063, according to a report from hired.com; in New York, it was $161,128. The gap between the two narrowed from 2021, as New York salaries increased slightly more quickly than those in California.

During the 14 months measured by NGP, of course, tech hiring has slowed and layoffs have increased. But health care has been the most resilient of the subsectors, with current job openings about 65% of their March 2022 level.

“Health care is very stable,” Basu said. “It doesn’t wax and wane like in other parts of tech. You have hospitals, venture-backed medical devices, and they aren’t as prone to the hype of digital tech.”

In the city, biohealth startups typically raise about 25% of all funding, according to New York City Health Business Leaders.

Big Apple benefits

The other part of the draw to New York, Basu said, is New York itself.

“San Francisco is over-indexed on tech,” Basu said. “New York City has [other sectors such as] government, media and culture, which has balanced it. It’s made New York a more attractive city where venture capitalists and young people want to be.”

Basu said he has heard from job seekers that it’s now harder to get hired at distributed companies Meta Platforms and Uber if the candidate’s preference is to be in New York rather than in the Bay Area.

Longtime city founder and investor Kevin Ryan of AlleyCorp has said for years that New York’s challenge to the Bay Area is material.

In AlleyCorp’s most recent quarterly newsletter, he underlined the vision: “New York is poised to become the premier technology ecosystem and the ideal place to launch the defining companies of the next decade,” it reads. “The city’s vibrant culture, diverse industries and top talent are fueling its growth. With the tech scene’s impressive progress over the past 20 years, we at AlleyCorp believe that New York will play a crucial role in fostering the transformative companies that will drive significant advancements in the coming years.”

The idea behind studying job openings is to get a sense of the direction of each city, Basu said. Still, the gap between them continues to loom by some metrics. The Bay Area has about 25% more companies, 7% more workers and more than double the investment dollars, according to a report on tech talent by CBRE.

The current focus on generative artificial intelligence could slow the city’s gains. Of the largest 20 generative AI startups at both early and later stages of growth, just two are in New York; 11 are in the Bay Area. ■