Annex 8B. New York’s Innovation Ecosystem to Support Start-Ups

from 2000 to 2010. Investments did not select any particular activity, but were more broad-based across sectors, including telecom, information and communication technology, and health. By 2013, the region ranked third among the seven Portuguese regions in the Regional Competitiveness Index. Significant improvements have been made in infrastructure, and the younger workforce is more qualified, creative, and flexible. The region is home to several universities and internationally reputed research institutes.

Source: World Bank staff synthesis based on European Regional Development Fund project good practices.

Annex 8B. New York’s Innovation Ecosystem to Support Start-Ups

Over the past 15 years, New York City has developed a thriving digital technology entrepreneurship ecosystem. Today it is the second largest of its kind in the United States, after Silicon Valley, with $4.5 billion in venture capital investments in start-ups as of 2014. The ecosystem has created more than 2,200 tech companies, directly employing more than 50,000 people (about 1 percent of the city’s workforce) and generating more than $18.1 billion in successful start-up exits.

The rapid growth of tech start-ups in New York has changed the city’s economics and competitiveness in three main ways. First, the tech start-up sector has generated new business models in several subsectors, most related to local New York industries and addressing challenges in the city, urban living, and local needs. Second, the tech start-ups have generated new direct employment and crowded in larger technology companies, such as Google, which has opened a large R&D lab in New York. Third, the tech start-ups have regenerated neighborhoods in New York. As start-ups have become more successful and attracted more mature industries, rents and economic development have increased in areas such as the Meatpacking District in Manhattan and Dumbo and the Navy Yard in Brooklyn. The tech sector has become the largest office leasing sector in the city.

The New York City government has been heavily involved in the development of the city’s successful innovation ecosystem, deliberately taking an ecosystem approach to address four main areas of weakness it had identified in the city’s tech innovation: lack of technology-specialized talent; insufficient sources of seed capital for start-ups; lack of physical space for entrepreneurs; and a limited and uncoordinated community of tech-led innovators and entrepreneurs. In addressing all these areas, the government’s philosophy has been to act as an enabler and to build the market.

Following the success of the past decade, the New York City government today maintains a strong policy focus on keeping affordable space available, maintaining urban amenities, ensuring that the different needs of scale-up enterprises (not just