It’s very rare that a joint effort between the public, private, and education sector comes together to produce meaningful results. However, The Varick Street Incubator may be a shining example and roadmap for other cities to follow on how to foster tech innovation.
After spending time at various incubators in the city, it very well may be that the Varick Street incubator is the top place in NYC for new entrepreneurs to call home. If you get the opportunity to be at Varick Steet, you enjoy a lot of benefits. The incubator does not ask for any equity in your company. The rent is really affordable and includes a lot of amenities that are not free at other incubators. Best of all, you get access to high quality interns / employees from NYU, potential seed investors, NYU faculty advisors, and assistance from dozens of other private partners involved with the incubator. Probably one of the best benefits is that several serial entrepreneurs call the incubator home and serve as mentors and motivation for first time founders. For example, Stephanie Sarka (founding member of Overture), Jeff Giesea (Founded and sold FierceMarkets) and David Sudolsky (Experienced Entrepreneur in the biotechnology space) are just some of the heavy hitters at Varick Street.
The incubator has one single goal. To help create great companies that will call NYC home.
I interviewed Micah Kotch, the operations director of the Varick Street incubator on its history:
How did the Varick Street NYU Poly incubator come about? Who are the private / public entities involved in making it happen?
Our NYU Poly president, Jerry Hultin, was one of the community leaders whom New York Mayor Michael Bloomberg called upon as he strategised the direction for the city after the 2008 financial crisis. The city needed to diversify its economic base, and it was facing a shortage of young engineers and entrepreneurial talent to accomplish that. Jerry recognised that most of our graduates very much want to remain in the area, but New York City needed to compete for their talent by providing jobs that would keep them here as new graduates and, later, as a place they could build families. I’ve heard President Hultin talk about how quickly we embraced the call from the New York City Economic Development Corporation to become the city’s first partner to create a startup business incubator with space provided by Trinity Real Estate.
The NYU-Poly enthusiasm sprang from several sources: The Varick Street Incubator would allow faculty to work alongside entrepreneurs in building ventures to bring their research to market. It would give student interns a breadth of experience they would never obtain in the silos of major corporations. And NYU-Poly would do its part to help grow the economy by providing great value to startup companies – after all, NYU-Poly is a research university dominated by faculty and students studying for their master’s degrees in fields like computer science and engineering – the kinds of human capital that tech startups can rarely find or afford to hire full-time.
The Varick Street Incubator launched in July 2009, and I’m particularly proud of the strength that the New York State Energy and Research Development Authority (NYSERDA) brought to the partnership. I have witnessed first-hand how eager the leadership at the New York City
Investment Fund and NYSERDA have been to seed a clean energy economy and help diversify the city’s economy beyond Wall Street. They provided NYU-Poly with funds to launch NYC ACRE (The Accelerator for a Clean and Renewable Energy). As part of that initiative, NYC ACRE offers special support services to about a third of our portfolio companies at Varick Street, which are helping transition New York to a low-carbon future.
I should also mention that NYC Seed also makes its home at Varick Street. NYC Seed is NYU-Poly’s partnership with the New York City Investment Fund, the New York State Foundation for Science, Technology and Innovation (now part of the New York State Empire State Development Corporation) and several other private and public organisations. NYC Seed provides provide funding and services to seed-stage technology entrepreneurs in http://www.businessinsider.com.au/cms/posts/edit?vertical=New York City. Owen Davis at NYC Seed is a tremendous resource, and we’re fortunate to have him here every day.
Can you share some stats on how many companies have come into NYU Poly and some of
their success markers?
In addition to the 10 companies that are served by NYC ACRE, Varick Street has about 29 other “investments,” which as how NYU-Poly refers to incubator companies: While NYU-Poly does not invest cash, its interests and those of the city and Trinity Real Estate are aligned. Our institutions invest time, temporary subsidized space, our network and our knowledge base. These startups reflect the city’s entrepreneurial ecosystem: a healthy mix of fintech, mobile tech, digital media, consumer web and cleantech companies.
Eight companies have “graduated” by closing an A round of funding or hiring at least 15 people. Half of those graduates were from the NYC ACRE program – a remarkable accomplishment considering that Internet and mobile startups received 90 per cent of all venture investment in New York in Q2 2011, according to data from Varick Street portfolio company CB Insights. Sector diversity is smart, and diversity is one of the strengths of New York City. Initiatives like NYC ACRE can help New York diversify its economy more: By comparison, Internet and mobile investments made up 39 per cent of California’s total venture capital allocation of $3.65 billion last quarter, and just 26 per cent of Boston’s $1.14 billion in VC funding.
In terms of highlights, we love the story of Pixable. The Varick Street Incubator’s first graduate company, Pixable, is a great group of immigrant entrepreneurs and MIT grads who create tools to share and categorize photography within social media. An extraordinary team, they recently closed $3.6 million in Series B funding led by Menlo Ventures, bringing their total funding to $6.6 million. This is one key metric for success that Varick Street and NYC ACRE stakeholders look to: capital raised. Collectively, portfolio companies have raised $26 million in early stage capital.
But we also look at job creation because of our local economic development mandates from the city and NYSERDA, as well as a desire to create not just jobs, but careers that will attract students and alumni. We’ve seen a number of student interns transition to become full-time employees of Varick companies, and there is tremendous satisfaction in that. Altogether, 76 founders have hired 118 full-time employees as well as 233 part-time employees and interns in the last two years. We estimate the portfolio companies at Varick, including the NYC ACRE-supported companies, have paid nearly $2 million in payroll tax to the city and the state, which is a significant return on their original investment.
We’ve also helped bring press to the table, which has meant exposure for startups in The New York Times, The Wall Street Journal, Mashable, Crain’s, public radio’s Marketplace and other outlets.
Lastly – and the most important but difficult key performance indicators for all of our partners to measure — are the energy here and the amount of interaction between the companies. We’ve found that curating this is more art than science, but we’ve been incredibly blessed to have a community that reinforces each other’s success. Part of this is by design, and Varick has a number of successful serial entrepreneurs in the space, including the founders of BestVendor, Anellotech, Yelli and LifeEnsured. As you know, being an entrepreneur can be a long and lonely road, so to have people who have been on the path before is a real asset.
What is your vision of Varick Street’s NYU-Poly’s incubator? What will it look like in fiven years?
From the perspective of someone who works with entrepreneurs daily, I believe that some of the biggest opportunities for our SoHo startups will emerge from Washington Square: NYU and NYU-Poly are working toward full integration, and you can already see the integration happening at Varick: NYU students are interns; grads have become employees; and one of our most successful companies, The Hotlist, sprang from a business plan competition at NYU, for example. nRelate, a very cool Varick startup that is developing related content management plugins for publishers, was started by an NYU alum. We also have a great working relationship with the NYU Entrepreneur Business Network, Tech @NYU, and people like Frank Rimalovski, who runs the NYU Innovation Venture Fund. Frank and his team have organised an Entrepreneurs Festival this November and have put together a great speaker series at NYU and NYU-Poly. In fact, noted venture capitalist and blogger Fred Wilson of Union Square Ventures is speaking at NYU-Poly on October 27.
As President Hultin points out, five years from now, we’ll have the knowledge and support of our collectively seeded and funded companies to support new ones. Already many of our portfolio companies who “graduate” to larger spaces remain in touch and help us mentor existing companies, devise programming, and guide our thinking on continuous improvements. We’ve also been charged with incubating more companies who operate in Pasteur’s Quadrant: where basic science is driven by the desire for societal benefit.
President Hultin also sees the incubators as playing an increasingly important and integrated role in propagating the culture of i-squared-e at NYU-Poly. As an example of the growth we anticipate will continue, NYU-Poly recently announced with Mayor Bloomberg that we will open a second incubator with the city’s Economic Development Corporation – this one in Brooklyn’s hotbed of digital talent, DUMBO. NYU-Poly and the city are working with developer Two Trees Management Company to attract digital technology, entertainment and media startups there. If you’re interested in being part of this initiative, you can email [email protected]