As 2017 begins, New York City continues to mature as a tech hub, well positioned for growth in terms of talent, funding and tech jobs. And while Silicon Valley has long served as the nation’s forerunner when it comes to the tech industry, the new year will assuredly bring a new wave of innovation to the East.
We sat down with five New York tech influencers to talk all things startups, and they provided their informed predictions on the state of tech in New York City, along with the biggest challenges the industry will face in 2017.
Avani Patel, Head of Harvard Business School Startup Studio in NYC; Founder and CEO at TrendSeeder
Built In: Should we continue to see the same type of growth in 2017 that we saw in 2016?
Avani Patel: I don't think so. I think valuations and funding rounds are a bit out of control and it will be difficult for companies to hit investor expectations based on these funding rounds. You may see more acquisitions because companies may not be able to continue to fundraise.
BI: How will New York City continue to strengthen its tech community in 2017?
AP: I do believe NYC will continue to strengthen its tech community. There are more and more people and institutions supporting the tech community in NYC from TechNYC to the HBS Startup Studio in NYC. I also think the major industries in NYC (like media, fashion, finance etc) are taking notice of the tech community and realize they need to innovate.
BI: Is there one particular sector you think is set to boom?
AP: I do think that healthcare tech and AR/VR will continue to be hot.
BI: Any other thoughts, observations, or reflections?
AP: I do think that more companies, especially those in the consumer space should consider alternative investments. The VC model is not optimal for these types of companies because the growth curves and time frame associated with consumer companies are very different from technology companies. There are different pools of capital that may be better equipped to work with these types of companies.
Sutian Dong, Partner at Female Founders Fund
Built In: Should we continue to see the same type of growth in 2017 that we saw in 2016?
Sutian Dong: The NYC community continues to grow in both breadth and depth. I believe funding in 2017 will continue at the same pace, especially given the anticipated volume of the IPO market and the acquisitive appetite of large tech companies over the last couple of years.
BI: How will New York City continue to strengthen its tech community in 2017?
SD: New York City has been especially strong in attracting a relatively diverse set of investors. The number of female investors — across institutional funds, corporate VC, and other early-stage investment vehicles continues to grow. Jessica Peltz, partner at KBS Ventures, and I have tracking growth of this community since 2015, and we have seen it evolve from less than 50 female investors in early 2015 to almost 150 now.
BI: Is there one particular sector you think is set to boom?
SD: We're particularly bullish on the growth of next-gen tools and platforms to support the retail and e-commerce industries in NYC. We are investors in companies like Reaction Commerce, which is an open-source e-commerce platform designed for modern retailers, and see other companies being created to address the needs of brands to upgrade to next-gen platforms that are designed for the omnichannel world.
Carissa Flocken, CEO at Entrypoint VR
Built In: How will New York City continue to strengthen its tech community in 2017?
Carissa Flocken: One of the ways NYC will continue to strengthen its tech community will be by figuring out how best to harness the unique potential of VR. How do you tell a story in VR differently than you would in a normal video? How do you harness the interactivity? We think that the live theater community is going to be especially important in this, as they have a lot of experience with the idea of responding to the audience and subtly directing attention. That’s part of the reason we came to New York. We feel the artistic community and potential client base of publishers and advertisers are well suited to pioneering new ideas and applications in VR.
Built In: Is there one particular sector you think is set to boom?
CF: We're betting big on the WebVR industry booming in 2017 because we believe the future of VR is on the web. WebVR allows for immersive VR-esque experiences over a browser and reaches people where they already are — on their twitter feed, on facebook, and in online communities. WebVR is easy, fast, and accessible, since it’s reached by URL. This boom allows innovative WebVR companies to define where WebVR lives (anywhere users already are, not on a specific aggregated website), how it looks, and how people interact with responsive 360 videos.
Jessica Peltz, Partner at KBS Ventures
Built In: Should we continue to see the same type of growth in 2017 that we saw in 2016?
Jessica Peltz: I believe we’re going to continue to see a shift in the buyer profile of non-tech companies (aka – brands) continuing to acquire startups. According to Pitchbook in 2016 non-tech companies spent north of $10B buying venture-backed US startups — that was almost double the previous year. Last year some of the biggest exits come from brands – Unilever/DSC, Walmart/Jett, GM/Cruise, that’s a trend we believe will continue as brands look to accelerate growth, identify new revenue streams, and understand new business models.
Built In: How do you think the local startup community will be different in 2017?
JP: 2017 is going to be a big year for AI and VR in NYC, there are several initiatives rolling out that will continue to gain momentum to accelerate growth and foster talent in those sectors. NYU Tandon’s new AI Nexlub Lab, NYCEDC and MOME announced a $6MM joint effort to launch a new VR lab, NYC still has so much room to grow — there’s a lot to look forward to!
Built In: Is there one particular sector you think is set to boom?
JP: VR and AI – specifically how we may begin to see new, unexpected talent join the tech and advertising community- e.g. screenplay writers, TV writers, theater directors, authors, etc. taking new roles in the form of character development (AI), and experiential directors for VR.
Matt Harrigan, Co-founder and Managing Director at Grand Central Tech
Built In: How do you think the local startup community will be different in 2017?
MH: Entrepreneurs should prepare themselves for scrutiny. While investment dollars and market opportunities in the tech sector are still plentiful, the era of adoration and adulation of the world of startups seems to be drawing to a close. This is as much a result of high-profile flops like Theranos as it is by the sheer volume of startup activity. Tech is becoming a mature economic sector, even in New York City. Private companies are the new normal. It shouldn't be a surprise then that more will be expected from, and asked of, tech companies and the entrepreneurs who power them. In other words, startups and entrepreneurship is evolving from being the belle of the ball to being the ball.
Built In: Are there any big problems that New York tech (or certain verticals within New York tech) needs to tackle?
MH: I think "pursuing big problems" is the big problem that New York tech, and tech in general needs to tackle. We need to support and incentivize entrepreneurs to pursue addressing big, hard problems. This is starting to happen organically. The new generation of entrepreneurs seems more enamored with Elon Musk than your pure, software tech giants. Their mindset is predisposed to solve meaningful problems and challenges first, and creating moments for revenue generation second.
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