The Obstacles Facing Tech Start-Ups

| April 26, 2012 4:00 AM video

Entrepreneurs and start-up tech companies mingle with investors at NY Tech Day at the Lexington Army on April 19, 2012. MetroFocus/ Georgia Kral

New York City, aka Silicon Alley, may be experiencing a boom in technology start-ups, but like in any business, there are obstacles. The young companies require start-up funding and tech-enabled office space, but unlike many other industries, the employees they need are highly specialized and in short supply. And in a field that’s both new and constantly changing, it helps to have mentorship and a strong community of like-minded companies to bounce ideas off.

This burgeoning industry is not without support. Technology-focused groups, like NY Tech Meetup, are flourishing across the city. Perhaps most importantly,  the scene has a friend in the Bloomberg Administration and especially in Mayor Michael Bloomberg, who has consistently supported growth in the industry and promoted the companies that are doing cutting-edge work.

While small business owners and entrepreneurs surely face challenges in opening their businesses, the hurdles start-ups face are unique. MetroFocus spoke with several New York based tech start-ups, at various stages in their business, to find out what they’re facing and what kind of supports they need.

A Shortage of Software Developers

“People might be the biggest problem. It’s incredibly hard to find staff, and a team you can count on,” said Evan Walther, CEO and co-founder of Pearescope, a location-based social networking tool, last week at NY Tech Day, a networking and tech-exhibitor event. “And even if you can get people, they have four or five other options.”

But while concerns abound, both the market and the city are working to bring in more talent.

“We’re seeing the developer community in the city becoming stronger and better organized and networked,” said Scott Kolber, chief operating officer of Roadify, a transportation application based on official data and crowd-sourced transit alerts, and a 2011 New York City Economic Development Corporation (NYCEDC) BigApps winner.

Mayor Bloomberg congratulates winners of the first BigApps competition in 2010. Sponsored by the NYC Economic Development Corporation, BigApps awards funds to tech companies that develop web or mobile applications using city data. Flickr/ Steven Rosenbaum

Brandon Kessler is the CEO of Challenge Post, which powers online competitions for many different groups, from First Lady Michelle Obama’s Joining Forces Community Challenge to the NYCEDC BigApps competition. Kessler says the city has played a huge role in helping the tech scene overcome the obstacles they face.

“New York City has taken an active role in supporting start-ups,” he said, adding that supporting the scene just makes sense. “It’s an engine for economic growth. They want to answer the needs that are out there while also promoting New York City as a technology hub.”

With Cornell’s applied sciences campus on Roosevelt Island, and the NYU applied sciences campus in Downtown Brooklyn that was just announced on Monday, the city is making sure talent to staff the start-ups will be here for the future.

“With the addition of this new campus, Brooklyn will be one of the most dynamic environments for entrepreneurs anywhere in the country,” Bloomberg said at a press conference.

Entrepreneurs Need Mentors

Tech entrepreneurs also need advice in navigating the uncharted waters of the start-up world, which is why the NYCEDC launched the Founder’s Network for the winners of the BigApps competitions.

WATCH VIDEO:

The city’s first Entrepreneur-at-Large, Steve Rosenbaum, is interviewed by Jane Pauley for MetroFocus about the start-up community in New York City. YouTube.com/MetroFocus.

The Network, open to this year’s BigApps winners as well as the previous two years, will focus on three components: mentorship, networking and targeted services. Though the execution of the network is not fleshed out, the  EDC will likely host events for networking and will act as a mediator, introducing start-ups with potential investors. The EDC will also likely assist the winners with guidance and advice on logistical issues, like how to staff an HR department or an IT department.

Joel Natividad, CEO and co-founder of NYCFacets, the big winner at this year’s BigApps competition, says they will surely take part in the Founder’s Network.

“The most important thing for us is getting advice from veterans. You need frank advice from alums,” he said, adding that a BigApps panel was being organized for the upcoming New York Internet Week.

Public Data in its Early Stages

But despite the level of support, some BigApps winners still face challenges.

Best Parking was the third-place winner in the 2010 BigApps competition. The founder Benjamin Sann said that while the recognition he and his company received following BigApps was great for business, he was disappointed in the data the city provided.  Sann also said he had trouble communicating with other city agencies, which made it hard to move forward with Best Parking and instilled in him doubt in the city’s commitment to the open data initiative.

“I got a photo op with Mayor Bloomberg and a check and that was pretty much it,” said Sann. “New York City has a long ways to go.”

Natividad said the data had “some issues” but was “good overall.”

“The data is there and you have to start somewhere,” he said.

Despite the hardships, one venture capitalist (VC) who’s been in the New York City technology scene since the first boom in the mid-90s, says being located here is a major benefit.

“All the customers are here,” said Bob Greene of Contour Venture Partners in an interview at NY Tech Day. “It’s easy to walk up and down Madison Avenue pitching. You don’t have to live in Palo Alto.”

Another veteran VC, Charlie Federman of Crossbar Capital, offered a dose of reality, which can be taken as either a threat or an inspiring call to arms.

“A year from now, half these companies won’t exist. We don’t know which ones,” he said at Tech Day, gesturing to the dozens of young entrepreneurs around him, their exhibitor tables covered in flyers, free candy and laptop computers. “We didn’t know Pinterest would be the third most popular social network either.”

“The energy is inspiring,” he added. “My son and his peers want to go into this world, not Wall Street.”

For more technology news, watch “MetroFocus: The Tech Economy,” airing on THIRTEEN on June 30 at 5 a.m. and 7:30 a.m. and July 12 at 8:30 p.m.; on WLIW at 5:30 a.m. on June 30; on NJTV on July 1 at 5:30 a.m. and July 2 at 4:30 a.m.


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