Where would you have a better chance of landing a venture capital job, or attracting VC capital for your hot new tech start-up? New York City or Seattle, Washington?
Well, the obvious answer might be New York, with its bigger population and close proximity to the deep pockets of hedge funds and other investors in nearby Connecticut. But as recently as 2007, Washington State was out in front when it came to venture capital dollars, says John Cook at GeekWire, in a recent article.
But the tide is turning. Citing data from CB Insight’s quarterly venture capital report, he mentions that Seattle’s $197 million and 29 deals in the third quarter of 2011 accounted for just 2 percent of our total venture capital pie. Whereas New York’s share has risen to 10 percent, attracting $831 million in venture capital investment in the third quarter. That’s more than four times the activity of Washington State.
So what happened? Cloud computing, for one. Cook points out that cloud-based services like Amazon’s Web Services help startups keep infrastructure costs low no matter where they’re located, whether it’s Seattle or a crowded loft space in SoHo.
Another industry insider, Kathy Savitt, a former Amazon.com executive who is now connected to Lockerz, says the venture capital community in New York decided to “make it happen.” “They simply decided ‘We are going to be a hub. We are going to be #2 to San Francisco. This is the greatest city in the world, and we are going to do it.’ And I think a lot of that was driven by the venture capital community, and that became evident in the compensation packages, it became evident in the amount of time that, not just CEOs but rather board members who had big successful outcomes, were spending with the entrepreneurs and helping them with their career track.”
Another reason, of course, is that if you were a young, smart, ambitious engineer with a hot business idea, where would you prefer to live? Silicon Valley and New York (and to some extent Boston) come at the top of most engineers’ lists.
“It just comes back to engineers, engineers, engineers. I don’t think it is any more complicated than that,” says Redfin CEO Glenn Kelman. “I don’t think there’s a shortage of capital, there’s a shortage of engineers with good ideas.”
What about you? If you had a choice of working east coast or west in a venture capital job, would you have a preference? Add your comments below.
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