Silicon Valley or Silicon Alley: San Francisco or NYC for Startups?

Is it Silicon Valley or Silicon Alley for startups? Should you look to San Francisco or NYC for startup finance? The most famous area for startups is indisputably Silicon Valley – and San Francisco is the biggest city in the area. They no longer come with flowers in their hair - it's now the latest chips and other 'next great things.'

It's no coincidence that the Y-Combinator, the first seed accelerator, was created in Massachusetts, but then taken by co-founder Paul Graham to Silicon Valley.

However, 'famous' does not mean 'best,' and is San Francisco still the best place for entrepreneurial startups?

Sure, the west coast is home to many household names such as Twitter, Apple, eBay, Google, Twitter and Uber but most are now established companies. California Dreamin' is not for everybody, and New York is a serious contender for future investment.

New York is already a major center for investment in startups involving the arts, fashion, design and media, largely because it is a center for excellence in these disciplines. The question is, can NY compete with Silicon Valley for innovations in technology? Let's look at some of the more important differences between the two and how they could affect where entrepreneurs would rather be.

Clients and Customers

Even in this age of instant communications and delivery of electronic products, clients and customers prefer to deal with companies on their doorstep. Although New York leads in the population stakes, most modern technology is situated on the West coast. As inferred above, entrepreneurs will focus where their clients tend to be, so it seems like the West is good for technology and the East for everything else!

Many of the early startups, such as Google and Yahoo, are based in Silicon Valley. It should not be surprising, then, that you will find a lot more technology entrepreneurs based around San Francisco and the Caltech area 380 miles down the I-5. New startups have as much access to high-tech universities, entrepreneurs, accelerators, mentors, venture capitalists and electronics engineers as they will ever need. Who needs New York!

Well, New York offers centers of excellence for fashion, design, media and other arts. It is also an aggressive city with a high work ethic, compared to the more laid back attitude of the West. It may be more cut-throat in business, but people help each other out, and there is a camaraderie here that is equal to any in San Francisco.

New York wins in some respects, but Silicon Valley and San Francisco remain in front for technology. If your product or new business focus on technology, then you might be best in the West – though there are many successful technology firms on the East coast of the USA. Etsy, Kaltura, Splunk and Tumblr are just four examples.

Not only that, but the Applied Sciences NYC initiative is hard at work developing engineering and applied sciences campuses. Cornell NYC Tech is a focus for this investment.

Expertise

Silicon Valley has the advantage of history: this is where it all started, and its roots are long and strong. The top people in technology tend to congregate on the East coast. The Bay area is well known for its camaraderie and sharing of ideas, which generally results in faster generation of innovative products – and the climate helps!

You are tripping over startup companies wherever you go here, and this is also where venture capitalists tend to focus their major investments. It is less frenetic in Silicon Valley than in NYC, where you are under pressure to succeed quickly or you fail. The more laid back approach around San Francisco tends to give more time, although not much more because VCs want to see results. Still, there seems to be an attitude here that failure is not so bad, one that you seldom find anywhere else in the USA.

The higher level of expertise in Bay area leads to a higher level of sharing of knowledge and information. Mentors in accelerator programs tend to be more technologically capable, and more funding seems to be available for new startups and seed investment in technology. Sure, New York is home to many technological geniuses, but most entrepreneurs look to Silicon Valley for help rather to the West coast.

Nevertheless, there are many new digital media and internet companies coming into Silicon Alley: the area in New York around Chelsea, Union Square, SoHo and the Flatiron District. The question is, can Silicon Alley compete with Silicone Valley for startups and funding for emerging technology?

New York has a cut-throat attitude to business and many find it too intimidating an atmosphere for a new startup. They may prefer the more laid back approach of the Bay area and the East coast in general. One thing you can say though, is that if you can make it in NYC, you can make it anywhere. Most, however, may go to where the expertise and product demand is, and that is still Silicon Valley.

Silicon Valley or Silicon Alley: Conclusions

The conclusion is that Silicon Valley still rules for technology. New York is improving, and attracting increasing amounts of venture capital for those firms that want away from West coast customs. NYC is also investing in technology education, while Silicon Alley is gaining some respect and influence in the area of new technology.

However, for now, most new starts will remain on the West coast, although is a slow but gradual growth in new technology in the eastern states. Let's not forget Philadelphia, where many successful accelerator programs are in high demand. It is not all Silicon Valley – Silicon Alley is catching up. San Francisco is favorite, but you are no longer second best if you base your new business in New York.