When Kevin Ryan went out to raise money for DoubleClick in 1996, every California venture capital firm he spoke with told him they would love to invest—if he moved to San Francisco. He couldn’t bring himself to leave New York, especially because his burgeoning startup benefited from being close to its clients of advertising agencies. “It was the right place to be,” he tells me.
The bet paid off, and DoubleClick grew from 10 employees to 2,000 in four years. Ryan went on to found a string of New York companies—MongoDB, Zola, Gilt, and Business Insider—along with his own venture firm, AlleyCorp. He’s rightfully earned the title of the “Godfather” of the New York tech, which most would argue he shares with Union Square Ventures’ Fred Wilson. And what about the VCs who turned Ryan down for DoubleClick? “Every one of those firms has opened a VC office in New York now,” he says.
The mythos of Silicon Valley should be familiar to Term Sheet readers: the “traitorous eight,” the myriad garages, the emergence of Sand Hill Road, the cycle of exits and new legions of founders. It is decades old and steeped in legacy. But the story of New York’s tech scene is just beginning. “I'm a first generation, like at the very beginning, and I'm still in the mix,” Ryan tells me.
I have been lucky enough to call New York home for 15 years, moving here just a few years after Google acquired DoubleClick for $3.1 billion in 2007. That was the same year the search behemoth moved into Chelsea Market, later taking over an entire city block. But for years, tech remained an afterthought. “A bit of a backwater,” as BoxGroup founder David Tisch puts it to me. “Getting attention for anything in this city is hard.”
So when did that change? It happened in fits and starts. DoubleClick found success in the ‘90s, alongside Fred Wilson, who founded his first venture firm Flatiron Partners in 1996. But the dot-com bubble wiped out progress. Eventually, the upward march resumed, with Wilson founding Union Square Ventures in 2003 and DoubleClick finding its monster exit soon after.
By Tisch’s estimation, the 2008 financial crisis actually helped the nascent scene by upending the city’s incentive structure and pushing “smart people” into tech. Tisch got serious about angel investing in 2009, starting the New York wing of the Techstars incubator the next year. He knew the scene was taking off when he hosted its first demo day at Webster Hall in 2011. He looked out from the stage and saw tier 1 San Francisco VCs that had flown out. “It felt like there was a moment of growth in New York.”
The “next Silicon Valley” is a futile term conjured up by reporters and editors hoping to pattern-match for a story (it’s not just you, VCs), and it doesn’t really make sense for New York, which is a city often tritely defined by its patchwork of people and sectors. Monoculture is essential for Silicon Valley, where you live, breathe, and sleep tech. New York’s diversity breeds apathy toward any single industry’s supremacy, which is probably why so many tech people want to move here in the first place. It’s nice not having to hear a startup pitch every waking moment of your life.
While no one is arguing that New York can challenge Silicon Valley for the throne of tech hub, Ryan still thinks we might get there in 10 years. And for now, New York has the undisputed claim to second place, especially for venture capital, with homegrown firms from AlleyCorp to BoxGroup, and from Union Square Ventures to Thrive Capital. New York still has yet to mint its own Oracle, Google, or Meta, but it has created generation-defining companies like Foursquare, Tumblr, and Kickstarter that didn’t quite make it, along with an unsexy crop that did, like MongoDB and Datadog.
New York has Wall Street, many of the country’s top hospitals, and is the fashion and design capital of the country. It’s no coincidence that you have Uniswap and Ramp; Flatiron Health and Oscar; and Etsy and Glossier. But increasingly, it seems like New York has the critical mass of tech talent to produce that necessary cycle of exits and founders. Ever the booster, Ryan even challenged the truism that San Francisco is the better city for AI.
I want to use this weekly edition of Term Sheet to explore the booming startup and venture scene here, where the city shapes the people and companies more than the inverse. But I’m not looking to deem New York as the next anything. “There’s no championship given out in startup land,” Tisch says. He finds any idea for a tech rivalry among cities strange. But really, that’s the most New York attitude you can have. What’s there to compete for? I tell him that San Francisco has better burritos. “But we have better everything else,” he says. “There you go, you got my quote.”
Scoop...Three veterans of the venture arm of Two Sigma, the secretive New York investment firm, are raising a $25 million crypto venture fund with backing from senior executives, according to a regulatory filing and sources. You can read more here.
Leo Schwartz
Twitter: @leomschwartz
Email: leo.schwartz@fortune.com
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