Author: Diegane Dione (DiDi) - www.dionesystems.

com
New York City Council Technology Committee
WAYS TO BOOST NYC SMALL BUSINESS TECH SECTOR
New York Venture Capitalist investing 90% of their money outside of NY: According to ChubbyBrain,
which aggregates startup and investor information, some 47 New York venture capital firms funded startups
with more than $2 billion in the first half of 2009. But only 10% of that money went to New York City-
based startups, while the biggest chunk went to California-based companies.
http://www.businessinsider.com/chart-of-the-day-new-york-vcs-spend-90-of-their-money-out-of-town-
2009-8
Why are New York startups only getting 10%? Why are startups in New York less attractive than the ones
in California? This is a fundamental question that needs to be answered in order to establish the right
environment for tech startups to strive in NYC.

Based on my experience as an entrepreneur, there is no sufficient infrastructure in place at the NYC

government level and throughout the NYC academic community to incubate startups from cradle to the
point there are ready for VC funding. The entrepreneurial spirit is not fully institutionalized among the New
York City communities like in California where the government-industry-academic relationship is more
intertwined. Even though NYC has launched a few seed funds to help fill the gap, my understanding is that
the number of startups they fund is very limited, around 1 or 2 funding per quarter, which makes this
initiative not impactful.

Recommendations:
1. In order to significantly increase the probability of NYC based technology companies, the NYC
government needs to take a much bigger role in providing seed funding to startups:
ƒ This could be called an NYC-SBIR program
ƒ Apply a model similar to the Science & Technology Division of DHS which evaluates a 1,000
proposals, then funds a 100 projects which might lead to two or three commercial successes.
ƒ This would require an annual budget of $7.5 million to $15 million a year to fund a 100 projects
(or $75K to $150K per project that last 6 to 12 months).
ƒ Establish seed funds at local universities, community colleges and business incubators, which
will be managed by independent review committees composed of academia, industry and
government representatives. These seed funds should have an investment philosophy aligned
with the curriculum of the academic departments.
ƒ The funding could be targeted towards technologies that address:
o Efficiency of government
o Improvement of Urban Areas Living Conditions
o Industries which are under-represented in NYC
2. Currently the New York City Investment Fund (NYCIF) objective is to only co-invest. My
recommendation is to have NYCIF or newly created fund to have the ability to a lead investor in NYC
based technology startups.
3. Technology startups offering solutions specifically targeted towards city agencies have a hard time in
NYC. Currently going through the NYC agencies purchasing process is very difficult because the
procurement process was not designed for the acquisition of new technologies or to buy with startups
with emerging technologies due to the risk averseness of the procurement rules.
ƒ Provide the New York City agencies separate budget that will allow them to Beta Test and
validate leading edge technologies.
ƒ Establish an Inter-Agency Technology Assessment Committee that will include members of the
academic and business communities, which will review emerging technologies and decide which
ones deserve to be Beta Tested.

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