New York tech leaders are trying to unseat San Francisco for the future of the industry

Business Insider

11-07-2025

If Silicon Valley is where tech companies are born, New York is where they go to mature, says a growing ecosystem of NY tech founders and venture capitalists.
This community says the Big Apple can unseat the Bay Area in tech dominance. New York, a bona fide destination for tech companies, is further catching up to San Francisco as a tech hub as the importance of having an East Coast presence grows. The city benefits from a diverse culture, has multiple developed industries, and is seen as a gateway to international markets.
The state isn't just counting on this happening; it's actively funding the effort. New York Gov. Kathy Hochul has spearheaded a $40 million Empire AI program to supercharge artificial intelligence research in the state.
California still beats NY for funding. In the first quarter of 2025, the Bay Area boasted 658 VC deals totaling $58.7 billion, compared with 441 deals totaling $7.1 billion in New York City, according to a report by PitchBook and the National Venture Capital Association.
Still, as investment volume picks up, a steady stream of VC firms has set up shop in New York. In recent years, Lightspeed Venture Partners joined a list of firms, including Index Ventures, Thrive Capital, and Andreessen Horowitz, by opening or expanding offices in New York.
"We were really fortunate to have some New York-based investors, but fundraising as an exercise was always one that felt we had to do mostly on the West Coast," Mike Mignano, partner at Lightspeed, told Business Insider.
"When you're trying to build a team in New York, those trips can be super distracting, time-consuming, and exhausting. I know firsthand that founders relate to this experience," he added. "We feel like having a firm in New York City gives us the ability to meet founders where they are and hopefully make the fundraising process a lot easier."
Just don't call it 'Silicon Alley'
Tech:NYC, an organization that aims to foster a stronger tech industry in the city, recently secured $350,000 of Empire AI funding.
"If you want to go live in a group house and go build an app from the second you wake up to the second you go to sleep and not really see anyone except for your cofounders, then New York is probably not the place for you. And that's OK," Julie Samuels, founder and CEO of Tech:NYC, told BI.
Samuels said New York matters most once companies begin to address questions of scale and late-stage considerations. The city has several developed industries, such as finance, professional services, and the arts. It also has a diverse populace, which Samuels says creates a network effect where founders can more easily access customers and clients in one market.
She said that New York's tech scene, classically called "Silicon Alley," is not a diminutive of Silicon Valley, but very much its own thing.
"Once you build that technology and you're ready to figure out who you're going to sell it to, who's going to pay you for it and use it in practice, and how someone who might not be deeply technical will interact with it, what some of the regulatory concerns are — I feel all of those questions will be answered here in New York," Samuels said.
In particular, consumer tech companies like Partiful and Kalshi have found a foothold in New York, which boasts a colorful petri dish of consumer segments.
Teddy Solomon, the 23-year-old cofounder and CEO of social media company Fizz, relocated his entire 25-plus-person company to New York from Palo Alto earlier this year. He says NY has a "really tight-knit community" of growth-stage and public company tech founders and executives.
"People in New York care more about their companies than themselves, and I love that," Solomon told BI. "In the Bay Area, there are a lot of founders who care more about themselves than their companies."
What about the Midwest?
As well-trodden as the East Coast versus West Coast arguments have become, a VC who focuses on neither coastal market and is based in Ohio takes a different view.
"It's not about New England or the West Coast or whatever. I think this is a more exciting time from an American innovation standpoint than we've ever seen before," Chris Olsen, Drive Capital cofounder and partner, told BI.
The firm, which says it makes investments from "east of the Rockies and west of the Hudson River," takes an America-first view on the competition for venture dollars and technological dominance.
In the future, Olsen doesn't see a win-or-lose scenario between New York and San Francisco tech companies.
"We've got this new thing called artificial intelligence that's shaking up the snowglobe, and this time, when all the snow settles, where is it going to land?" Olsen said. "I'm betting there's more that's going to settle in America as a whole. I don't think it will be nearly as much in California as was concentrated in the past."