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Thursday, May 10, 2012

As Tech Hub, City Is 2nd to Silicon Valley

New York City's buQ.ding .tech-
nology industry is growing rap-
idly by attracting investors and
engineering talent despite spotty
access to a reliable broadband
network, according to a study re-
leased on Wednesday.
The study, "New Tech City,"
conducted by the Center for an
Urban Future, concluded that the tions of mobile technology for
technology industry is growing various industries. New York's
faster in New York City than any- dominant positions in industries
where else in America and that like finance and advertising have
the city riow trails only Silicon made it a natural place for those
Valley a hub for the develop- seeking to invent digital services
ment of new technology compa- in those fields.
nies. The study's authors, Jona- One company the city has
than Bowles and David Giles, spawned is Tumblr, an online
identified 486 technology compa- platform for sharing photos and
nies that had been founded in the other media. Founded in 2007 and
city since 2007 and determined based in the Flatiron district of
that the financial crisis and the Manhattan, Tumbler now has
recession that followed did not more than 100 employees.
slow the industry's growth. Thmblr is one of 10 start-ups in
Mr. Bowles said the technology haye attracted
investors he interviewed agreed more than. $56 million :rrbiri
that in the last few years, New vestors, according to the report.
York had eclipsed the Boston The others, mostly digital media
area as the second-leading breed- and e-commerce companies, in-
ing ground for tech companies in elude Gilt Groupe, Foursquare
the country. Silicon Valley, and Fab ..
around San Jose, Calif., is still by Mr. Bowles said it was difficult
far the dominant center of the in- to tally just how many people
dustry, but New York was the work in the city's tech areas, but
only place where the number of he said it was clear that the num-
deals to finance tech start-ups ber had been growing at a "phe-
rose between 2007 and 2011, Mr. nomenal clip." In the last five
Bowles said. years, the number of information
The number of venture capital technology jobs in the city in-
deals in New York rose by 32 per- creased by almost 29 percent, or
cent in that period, while it fell by about eight times as fast as the
more than 10 percent across the city's total emplo)rment grew. .
nation, the report said. The study found that the tech
The report attributes some of start-ups were concentrated in
the growth to the efforts of the about 10 ZIP codes in Lower
administration of Mayor Michael Manhattan and Midtown, in part
R. Bloomberg to reduce the city's because attractive locations in
dependence on Wall Street as an Brooklyn and other boroughs
-economic engine. The push to lacked adequate broadband ac-
build up the industry has been cess. A signifiCant problem is that
much more successful than pre- many of these technology compa-
vious efforts to establish the city nies need a backup source of In-
as a hub for biotechnology or en- ternet access but usually cannot
vironmental technology, which arrange affordable redundancy,
Mr. Bowles calls clean tech. Mr. Bowles said.
"It's important to understand New York's broadband infra-
that New York has not passed structure deserved a grade of "B
Boston in biotech or in clean or B-minus; he said. "For a city
tech," he said. that's trying to be a tech power-
One reason that the develop- house, we need to have an A."
ment of digital technology seems The study was financed by
to be taking root in the city is that AT&T and the Association for a
the current wave of innovation is Better New York, a group of busi-
about devising creative applica- ness and labor leaders.