NYC jumps ahead of Boston in tech start-ups

New York (above) has elbowed out Boston as the premier East Coast locale for young digital entrepreneurs.
AP Photo (top); David L. Ryan/Globe Staff
New York (above) has elbowed out Boston as the premier East Coast locale for young digital entrepreneurs.

First finance, then sports. What next, the high-tech business, too?

New York has long dominated Boston in the financial industry and on certain sports fields. Now a new study suggests the Big Apple is making a raid on the Hub’s home turf by becoming a hot spot for tech start-ups.

New York ranked fourth, ahead of Boston, in a new study rating regions around the world based on the amount of start-up activity this year. In New York, it found, a growing number of software companies are making money faster and creating jobs quickly.


The study, scheduled to be released Tuesday, was issued by Startup Genome, a San Francisco company that conducts research on start-up businesses, and the giant Spanish telecom Telefonica, a company that acquires a lot of start-ups.

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Not surprisingly, Silicon Valley, home to Facebook Inc. and Apple Inc., came in first in the study. But in an unexpected result, Los Angeles nabbed the number three spot behind the Israeli tech hot spot of Tel Aviv. New York followed at fourth, elbowing out Boston as the premier East Coast locale for young digital entrepreneurs.

“The broader story is that New York was irrelevant five years ago and now it’s incredibly relevant,” said Jeff Bussgang, a general partner at the Boston venture capital firm Flybridge Capital Partners in Boston. “We are big believers in the New York ecosystem.”

The results reflect the growth of New York City as a center for technology start-ups and the city’s intensifying efforts to promote itself as a hub of Internet innovation. Indeed, some of the hottest new social media companies such as Tumblr and Foursquare call Manhattan home, and over the past year Facebook Inc. and Microsoft Research have opened outposts there.

Flybridge Capital opened an office in New York in September and Bussgang said about half of the venture firm’s deals are now with start-ups in New York, including 10gen Inc., a database software start-up that has raised $73.4 million, and 33across Inc., an online advertising company with $24 million in venture funding.


New York’s tech growth has been centered around advertising, media, and financial services, Bussgang said.

“Those industries are globally headquartered in New York, so we’re seeing a lot of entrepreneurs attacking those markets.”

For Boston, the consolation is that the business environment includes more established tech companies and many more types of companies, such as those in the life sciences, said Anand Sanwal, chief executive of CB Insights, a New York investment research firm that tracks the growth of private companies and venture investments.

In fact, over the past year, 10 companies headquartered in Massachusetts have gone public compared with six from New York, according to CB Insights.

In its report on nationwide venture funding in the third quarter of this year, CB Insights found that 11 percent of the 835 deals during the period were with New York firms, while 10 percent went to Massachusetts start-ups.


Still, the Massachusetts companies raised more money than those in New York, attracting 11 percent of the $7.5 billion invested during the period, compared to 7 percent.

The Startup Genome report is the company’s first attempt to map the business environment for start-ups in cities around the world.

It used 54 variables including level of investment, companies’ outputs, and even regional population densities to draw its conclusions for this study, said Bjoern Lasse Herrmann, chief executive Startup Genome.

The majority of its data comes from 50,000 start-ups ­located around the globe that self-reported information through a Startup Genome website,

“The goal of the ranking is to show advantages and disadvantages of different ecosystems,” said Herrmann.

But he admitted the report has gaps.

For instance, researchers did not include the Seattle area, home to Microsoft Corp. and scores of smaller tech companies, because of a lack of time and resources, said Herrmann.

And the survey is heavily skewed toward software start-ups and lacks much information on computer hardware companies, which is a strong suit for the Boston area.

Herrmann said that he did not have access to enough reliable data sources to report on hardware start-ups.

Michael B. Farrell can be reached at