‘Not New York City’ Startup Stock On The Rise
Tuesday, November 22, 2022
Source: Crunchbase News
Those who have traveled across New York State can attest that it really is two places.
There is New York City. And there is Not New York City. Both are unique, vibrant and gritty. But, in many ways, they are also worlds apart.
At Crunchbase News, we regularly analyze the geographic distribution of startup funding across states and major metro areas. This time around, however, we’re focusing on a region that tends to get left out because it is neither a state nor a city.
Yep. We are talking about Not New York City, which begins, for our purposes, from just outside commuting distance from Manhattan. It extends west all the way to Buffalo and north all the way to the Canadian border.
Not New York City was in the tech spotlight in a big way last month, when chipmaker Micron Technology announced plans to build a $100 billion semiconductor fabrication plant just outside Syracuse.
The deal represents the largest private investment anywhere in the state, ever. And it instantly raised the tech world profile of a broader region that hadn’t previously garnered so much attention.
“It puts us on the map,” said Jack McGowan, executive director of the Western New York Venture Association, which focuses on Buffalo, New York’s second-largest metro area.
It’s a sentiment echoed by New York’s senior senator, Majority Leader Chuck Schumer, who called Micron’s move the region’s “Erie Canal moment,” predicting that it will “put Upstate New York on the map in a way we haven’t seen in generations.”
Reverberations should extend well beyond Syracuse. From Albany to Ithaca to Rochester to Buffalo, Not New York City has long known itself to be a region rich in major research universities, tech and healthtech employers, and entrepreneurial talent.
But the area hasn’t historically seen a lot of love from venture investors, nor, more recently, the kinds of big-tech R&D projects that garner national headlines.
Deals are getting done
Still, we don’t want to create the impression that Not New York City is bereft of startup investment.
A Crunchbase analysis of 2022 and 2021 funding to companies in the region unearthed a lot of intriguing deals. We highlight 25 of the larger ones below:
A couple of the largest hail from Troy, in the Albany area. Ecovative, which stitched up a $60 million Series D last year, develops mycelium-based materials for industries including fabric, food and packaging. From the health care side, Aptihealth, a behavioral health platform, landed a $50 million Series B last year.
Roughly 300 miles to the west, Buffalo is also seeing more startup action. Per McGowan, much of that is tied to 43North, a state-backed startup accelerator and competition program focused on establishing and scaling high-growth companies in Buffalo.
A 2015 winner of the 43North competition, online car auction platform ACV Auctions was the city’s first startup to join the unicorn club, according to McGowan. The company went public last year, and had a recent market cap around $1.4 billion. Other 43North alums that have raised venture funding in the past year include Kangarootime, a software tool for child care providers, and Circuit Clinical, a platform for clinical trials.
Syracuse has its own startup scene as well. One manifestation is The Tech Garden, a former parking garage that now incubates and houses startups. There are some sizable funding rounds as well, including a $17 million financing last year for Hidden Level, a developer of technology for monitoring the low altitude airspace of urban areas.
Cold winters, cheap housing
Upstate and western New York may not be the most obvious locales for startup founders to scale. They do, however, have a number of attractive attributes. Labor costs are lower than most metros. There are also plenty of universities training tech talent, including Cornell, Syracuse, Rochester Institute of Technology, Rensselaer Polytechnic and SUNY campuses in multiple cities.
Cost of living is also comparatively low. The median house in Buffalo, for instance, is selling for around $180,000, and likely comes with three bedrooms or more. Syracuse is even lower.
Yes, the winters tend to be long, snowy and cold. But in the era of climate change, the area is relatively insulated from fires and extreme drought. Summers are generally mild and pleasant as well.
No one’s predicting Buffalo or Syracuse will be the next Silicon Valley. But as Micron’s big bet and the growth of local startup hubs shows, these often overlooked geographies do have a lot to offer founders and investors.