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 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 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 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.