Incubators, Accelerators and More: Start-Up Working Space in New York City

I find that New York City is an extremely friendly city for start-ups. It is impressive how New York City has managed to provide start-ups with multiple solutions to its biggest problem: pricey real estate.

In my view, there are essentially three options available for entrepreneurs or young companies with limited financial resources: incubators, accelerators and more or less traditional shared office space.

Incubators:

Incubators are typically programs sponsored by government entities, development organizations, or academic institutions. Most (about 94%, according to www.nbia.org) are run as nonprofit organizations. These programs assist multiple companies at a time by offering various business support resources, such as technical and administrative support, low or no-cost office space, and free or low-cost advice from affiliated partners. Incubators may accept equity in their tenant companies. However, mostly they are subsidized by the governmental or other grants and sponsorships. The primary value of incubators is in targeted business and other advice directed at start-up companies who are selected to be their tenants. There is an application and selection process that can be quite rigorous.

New York City has tens of incubators. Three examples are below:

1. The NYU-Poly incubator, located at 160 Varick Street, (www.poly.edu/business/incubators) was launched in 2009, by NYU-Poly and the City of New York (with financial assistance by the New York City Economic Development Corporation). As of now, it boasts that its tenant-clients have raised $26 million in new capital. Costs to on-site tenants vary depending on whether or not companies are based on NYU-Poly owned IP. Those that are not may give NYU-Poly equity in exchange for space and services. Companies get to stay at the incubator until they have raised their first round of financing or have more than 15 employees.

2. NYC ACRE (Accelerator for a Clean and Renewable Economy) (www.nycacre.com) is a clean-energy incubator of NYU-Poly sponsored by NYSERDA (New York State Energy and Research Development Authority) with a four-year, $1.5 million grant. NYC ACRE provides resources to both physical and virtual tenants, all with a focus on alternative energy and clear technology or a product/service related to a more sustainable urban environment.

3. Pratt Design Incubator for Sustainable Innovation (www.incubator.pratt.edu) has supported the launch of 23 social/environmental companies and assisted 15 others. As of 2010, the incubator reported that its affiliated companies had annual revenue of over $4.2 million and employed over 50 people.

Accelerators:

Accelerators are typically run by a venture-capital firm to grow one or just several companies at a time. Accelerators require an equity share (3-8%) in exchange for their services and at times a small stipend, about $15,000 to $25,000. Unlike in an incubator, selected companies get to spend a very limited amount of time there: about 3-6 months. Like at incubators, accelerators have an application and selection process.

Two examples of NYC-based accelerators are below:

1. NYC Seed (www.nycseed.com) funds technology start-ups. NYC Seed is a partnership between ITAC, New York City Investment Fund, the New York State Foundation for Science, Technology and Innovation and NYU-Poly. NYC Seed invests up to $200,000 in selected companies, with a goal of enabling companies launch their product. NYC SeedStart Media 2011 is a 12-week summer program geared particularly to companies in advertising infrastructure, e-commerce, digital content and mobile technology space. This summer, 10 companies received $20,000 each, office space and time and advice of experienced mentors in exchange for 5% of their equity.

2. ER Accelerator (www.eranyc.com) is an accelerator of the founders of the Entrepreneurship Roundtable. The ER Accelerator typically provides eight companies per 3-month session with $25,000 each, extensive support and advice, free office space, free legal, accounting and other professional services in return for 8% of their equity. The next session is scheduled for winter 2011-12.

Co-working spaces:

Co-working spaces offer a place for entrepreneurs, freelancers and start-ups to collaborate with each other; their primary value is in networking opportunities. There is no application process, although some spaces have a waitlist. Several examples of co-working spaces are below:

1. We Work (wework.com) was listed as the best shared office space by New York Magazine in 2011. There are three locations. At $275 monthly fee, it is hard to beat the bargain. One of the co-founders of We Work is also a co-founder of We Work Labs listed below.

2. We Work Labs (www.weworklabs.com) is all about establishing relationships. The space provides a low-cost option to entrepreneurs to meet each other and collaborate. We Work Labs opened in April, and already there is a long waitlist to get in. For $250, lucky entrepreneurs who got in get a dedicated desk and other benefits of office space, like internet, printers, conference rooms, etc. Sponsors of We Work Labs provide free services to the tenants, including workshops and open office hours. Angels and VCs regularly come in to meet the start-ups.

3. New Work City (nwc.com) is open to everyone, including startups, freelancers, students, lawyers, designers, etc. It costs $300 for unlimited full membership. NWC is located at Broadway and Canal, and was the host of several past New York Startup Weekends.

4. Hive 55 (hiveat55.com) is a subscription-based low-cost work share space that is all about collaboration. Memberships range from a daily drop-in to unlimited access. There are about 110 members there, mostly media and tech professionals. It is not uncommon for members to hire each other or form teams. There is constant networking going on there, with 2-3 educational or networking events scheduled per week.

5. Select Office Suites (www.selectofficesuites.com) reminds of a city instead the one of the high floors of a building on 23rd street and 7th avenue. It rents offices (also has virtual office and conference room rental) and provides a variety of social events, free or low-cost educations talks and networking often organized by tenants themselves.

6. Sunshine Suites (www.sunshineny.com) provides two locations (Noho and Tribeca) and offers low-cost office or desk space in addition to networking opportunities. This is a great way for many companies to get started in New York City.

7. OfficeLinks (www.officelinks.com) provides more traditional office space to small business that ranges from shared space to different size offices. Five NYC locations offer various pricing. There is also an option to set up a virtual office to start with.

There seem to be many low-cost options available for start-ups in New York City. Coupled with various meetups and presentations directed at young companies, this makes it for a great place to be if you are starting or developing your own company.

New Internet Age is Around the Corner: Soon You May Be Able to Have Your Own Top Level Domain

On June 20, 2011, the Internet Corporation for Assigned Names and Numbers (“ICANN”) approved a new policy that would allow anyone to apply for a new generic Top Level Domain (gTLD). Currently, there are 22 gTLDs, like .com, .org, .net and others. Soon, there may be hundreds. The application period will last from January 12, 2012 through April 12, 2012.

Applications can be made by any business or organization. As an owner of the new gTLD, the applicant will be able to set rules regarding secondary level registrations, and can choose to open the domain to the public or limit it to intra-company use.

In the press release, ICANN’s Peter Dengate Thrush, Chairman of the Board of Directors, was quoted as saying “We have provided a platform for the next generation of creativity and inspiration.” http://www.icann.org/en/announcements/announcement-20jun11-en.htm

This “platform”, however, comes at a high cost. The evaluation fee is estimated at $185,000 per application. Additional fees may apply. Ongoing annual fee is projected to be $20,000. The exorbitant fees will undoubtedly deter many fortune seekers from profiting the way some were able to by registering popular domain names and then offering them for sale. However, such fees will deter small businesses or organizations as well.

The application evaluation process is designed to weed out the cyber squatters. The process will begin once the application acceptance window is closed. An application will need to pass the Administrative Check (2 months), Initial Evaluation (5 months), Pre-delegation (2 months) without any objections or concerns. If there are none, a new gTLD will be registered in nine months. In other cases, it may take up to 20 months to complete.

Brand owners need to be on the lookout for potential trademark infringement if the application is made for the same or confusingly similar name as their brand name. ICANN will publish all applications once the submission window is closed. Then is the time for trademark owners to review submitted applications and file a “legal rights” objection with one of the independent Dispute Resolutions Service Providers within the time period allocated by ICANN. Since ICANN will not send out any notifications, it is the brand owners’ responsibility to monitor the process and to timely file objections. Guidelines, deadlines and other useful information about the process can be found in the Applicant Guidebook, found here: http://www.icann.org/en/topics/new-gtlds/draft-rfp-clean-12nov10-en.pdf.

Additional information about the new gTLD policy and application procedures will be coming in the next six months. However, those interested in acquiring a new gTLD should already start preparing their applications.