powering new york ’ s startup ecosystem: an economic impact analysis of nyu-poly ’ s incubator...

Powering New York’s Startup Ecosystem:

An Economic Impact Analysis of NYU-Poly’s Incubator Initiatives

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“We want New York City to be the most welcoming city in the country for people who want to start a business. The incubator program is a prime example of what government can do to help create that environment and spur job creation.”

-NYC Mayor Michael R. Bloomberg, August 18, 2011 launching New York City’s First Sponsored Incubator at 160 Varick St.

Study Overview: NYU-Poly IncubatorsChanging The Landscape of a City for the

Better • Creating Successful Businesses

• Creating Jobs

• Revitalizing the Local Real Estate Market

• Supporting Entrepreneurship

• Generating Wealth

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The Model

Helping Startups Achieve ‘Escape Velocity’ through:

• Capital• Customers• Expertise• Service• Multiplied by Community

Tackling Common Friction Points: • Lack of Funding• Lack of Affordable Space• Hard to Find Engineering

Talent• Inadequate Information

Infrastructure

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Timeline

2009 Two incubators launched in Hudson Square, Manhattan

• “Varick Street Incubator”• “NYC ACRE” (Accelerator for a Clean and

Resilient Economy)

2012 Third incubator opens in DUMBO, Brooklyn

• “DUMBO Incubator”

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NYU Poly Incubators by the Numbers

3 Incubators

102 Total companies in the incubators since 2009

900 Total jobs generated by incubator activity

59 Companies currently in the incubators

35 Companies graduated to a larger space in NYC

5 Companies acquired

$ 60M Raised by incubator companies to date

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Some Additional Facts• Varick Street

- Fosters: Adtech, cyber security, financial tech, information tech and

social media startups- Current tenants: 30- Graduates: 26

• NYC ACRE- Fosters: Clean tech and green energy startups- Current tenants: 10- Graduates: 8

• DUMBO- Fosters: digital media, mobile and gaming startups- Current tenants: 19- Graduates: 1

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Spotlight: NYC ACRE NYC’s Flagship Accelerator for a Clean and

Resilient Economy

• NYC ACRE began with a grant from NYSERDA to NYU-Poly which has been extended through 2017

• Focus on capital efficient, IT driven energy-related tech– 9 ACRE companies were selected for NY Greentech 50 List– 112 new full-time jobs created – 10 current tenants – 8 graduates – 2 acquisitions– Interest from international clean energy companies

establishing a US HQ – $22.7 million raised to date

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Inaki Berengeur: Co-Founder, Pixable Owen Davis: Managing Director, NYC Seed

Shelley Harrison Ph.D: Senior Advisor, Coller Capital Habib Kairouz: Managing Partner, Rho Ventures

Evan Korth: Co-Founder, HackNY; Associate Prof. NYU Courant Peter Nager: Senior Managing Director,

Egret Capital Laurie Racine: Founder, Managing Director, Startl Ventures Frank Rimalovski: Managing Director,

NYU Innovation Venture Fund Mark Wachen: Managing Director, DreamIt NYC

Advisors

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Economic Impact Analysis: Methodology

• The survey was conducted from October 2012-January 2013. (All statistics are as of December 2012.)

• Went to 102 tenants, current and previous. 35 companies responded

(a 30% response rate)– 24 current tenants– 11 graduated companies

• One-on-one interviews with six selected companies• IMPLAN multipliers used• Team led by Dr. Jill Kickul at NYU Stern and supporting members

from Harley & Co. and Zain Yousaf; experience analyzing incubators all over the world

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Key Findings

• Incubators are drivers of significant economic activity

• Foster production of ground breaking technologies in diverse industry sectors

• Benefit businesses through public/private participation and academic resources

• Strengthen NYU-Poly academically

• Create Good Jobs

• Attract Significant Capital

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Economic Impact

• Through both direct and indirect job creation, taxes and spending, the incubators have had an economic impact of $251.2 million as of December 2012

• By 2015, the impact is projected to be $719.8 million

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Projected Economic Impact: Multipliers Applied

Year Total Economic Impact

Total Jobs Direct Jobs Indirect Jobs Induced Jobs

2009-2012 $251.2M 900 562 221 117

End of 2013 $352.4M 1270 808 285 175

End of 2014 $500.1M 1800 1150 400 250

End of 2015 $719.8M 2580 1650 570 350

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• All data is cumulative and based on extrapolation of survey data to produce employment estimates encompassing all incubator companies

• Indirect and total job estimates and economic impact based on IMPLAN multipliers

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Projected Economic Impact: Multipliers Applied

Strong Job Creation

• As of December 2012, NYU-Poly Incubators have created 900 jobs

• By 2015, NYU-Poly Incubators will have created nearly 2,600

jobs • The average graduate of NYU Poly incubator earns $72,230 a

year • It is estimated that former and current NYU Poly Incubator

members contributed $31.4 million in tax revenue from 2009 to 2012

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Projected Tax Revenues

Tax figures include personal (payroll, income, etc.) and business taxes

Year Total State and Local Federal

2009-2012 $31.4M $21.0M $10.4M

End of 2013 $44.7M $30.1M $14.6m

End of 2014 $63.7M $42.9M $20.8M

End of 2015 $91.7M $61.7M $30.0M

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• The average funding growth rate for current tenants is 147%

• There is no shortage of capital once startups leave the incubators

• More than $60 million in private funds has been raised by incubator companies to date

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Capital Raised

Capital RaisedAverage Annual Funding and Revenues by

Year

2009 2010 2011 2012

Current Tenant

$34,667 $55,000 $213,263 $413,722

Graduated Tenant

$386,455 $364,545 $742,727 $1,898,485

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Strengthening Local Economies

• 100% of companies surveyed stated that their firm is headquartered in the NY/NJ region

• Once they graduated our companies go on to lease an average of

1,671 square feet in New York City

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New York’s Tech Scene is Growing• New York ranks 2nd in total startup activity

and 3rd in venture funding

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1 - San FranciscoTotal Startups: 3,442; Apple, Facebook, Google, Twitter$11.8 billion invested in 430 companies

2 - New YorkTotal Startups: 1,844; Foursquare, Tumblr, Fab.com$2.7 billion invested in 332 companies

3 - Los AngelesTotal Startups: 1,507; Break Media, Demand Media, Viddy Citysearch$2.0 billion invested in 129 companies

4 - BostonTotal Startups: 700; TripAdvisor, Kayak.com, Carbonite $2.8 billion invested in 285 companies

5 - Washington DCTotal Startups: 261; LivingSocial$979 million invested in 146 companies

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The University Connection

• Allows faculty to work alongside engineers to bring their work to market

• Brings high-quality work

experiences to student interns

• Provides human capital that tech companies NEED that cannot be found elsewhere

• 250 Student Positions Created

• 8 Faculty Engineers in Residence

• 12 Faculty Consulting Projects

• 12 Links to Departments, Programs, Center and Labs

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The Case for University-tied Incubators

• Our companies are here because of….– ‘The opportunity to network.’

– ‘The favorable image and location.’

– ‘The quality, price and flexible terms of the incubator units.’

– The tie to the university; for example, 85% of companies have employed university student interns

– 84% of companies said that the incubator experience was important or extremely important to their overall success 22

Internships @ The Incubator

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Grad students intern for incubator teams

Startups get real value, build talent

Inspired students emerge

with real experienc

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University Progress and Momentum

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RECORD9ARSFAWARDS

INVENTIONDISCLOSURESINCREASE37% $ONE

BILLIONLICENSINGINCOME

RECORD

9STARTUPS FORMEDBASED ON NYU IP

11NYU SCHOOLSIN 2012 NYUENTREPRENEURSCHALLENGE

9NEW STUDENTENTREPRENEURSHIP CLUBS FORMED

Good Exits

• Five Acquisitions (including 3 NYU affiliated companies) totaling over $50 million dollars

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nRelate:

What Success Looks Like • ‘Couldn’t have done it without the incubator!’

– Oliver Wellington, nRelate Co-Founder• Joined the incubator in 2009• Tech based on related content search • In their 2 years they:

– Built their product – Developed relationships with publishers – Hired key staff– ‘Took advantage of everything NYU-Poly had to offer.’– Acquired by Ask.com (bootstrapped to exit)

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Power of Partnership

The incubators rely a unique, interdependent ecosystem of supportive partners:• NYU-Poly: Top Talent and Applied Science• NYU: Talent, Support and Resources• New York City Economic Development Corp: City Support and

Funding• New York State Energy Research & Development Authority:

Funding• Mentors: Access to Network• NYC Seed: Brand and Counsel• Two Trees Management: Real Estate• Trinity Real Estate: Real Estate

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AREAS FOR IMPROVEMENT

• 67% of respondents said that they would have taken advantage of a co-working ‘Step-Out’ space at the incubator – NYU-Poly is currently working with NYCEDC and members of the real estate community to address this need

• 89% of respondents said they would take advantage of a faculty engineer-in-residence program– This program launched in January 2013 with 8 faculty and there are plans to scale it across NYU

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The Path Forward

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Universities develop new innovations

Startups bring new innovations

to market

Celebrateentrepreneurial

role models

Entrepreneurs give back

to university

Attracts talent & funding to university

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Recent Honors - 2009

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Think Eco Wins Incubator Graduate of the Year

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• NSF program to increase quantity & quality of commercialization efforts

• Part of NYC ‘Node’ with CUNY & Columbia- 8 week training program 2x/year to NSF-

selected team from other schools- Awarded $1.0m over 3 years

• Curriculum leveraged for other University City & State programs

NYU-Poly incubators awarded NSF-I Corps Regional Innovation Node

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• ~10 week summer program to enable 10 student teams from across NYU to focus on growing their startups. Included:

- Skill-building bootcamp- Space- Mentorship’s by NYC VCs &

entrepreneurs- Stipends

Summer 2013 Student Launchpad

Contact

Micah KotchDirector, Innovation and Entrepreneurshipmkotch@poly.edu

Media:Kathleen HamiltonMarketing & Communications Directorhamilton@poly.edu

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