Mayor Bloomberg outlines 11 initiatives to support New York City's financial services sector and encourage entrepreneurship
Programs Will Help Retain and Grow Financial Companies and Institutions in New York City and Promote Business Innovation through Entrepreneurial Activity. Initiatives Are Part of Job Creation Plan Outlined in State of the City Speech
Mayor Michael R. Bloomberg, Deputy Mayor for Economic Development Robert C. Lieber, Economic Development Corporation (NYCEDC) President Seth W. Pinsky and Small Business Services Commissioner Robert W. Walsh today announced 11 initiatives to help support New York City’s financial services sector and grow as a global center for business innovation and entrepreneurship. The Mayor made the announcement at 160 Varick Street, the site of the first City-sponsored business incubator, which will provide ready-to-use office space for about 100 entrepreneurs. He was joined by Polytechnic Institute of New York University President Jerry MacArthur Hultin, Trinity Real Estate President Carl Weisbrod, Google Americas Operations President Tim Armstrong, SecondMarket Founder and CEO Barry Silbert, SUNY Levin Institute President Garrick Utley, Kauffman Foundation FastTrac Program Director Monica Doss, and New York University Provost David McLaughlin.
“The financial services meltdown is a global problem, not one that any city or even nation can solve on its own,” said Mayor Bloomberg. “And although we can’t predict exactly what its revival will look like, we’re confident the sector will come back. When it does, cities around the world will compete to capture the jobs it brings. In New York City, we’re not waiting for that day to come. Instead, we are taking aggressive steps to put the City in the best position to capture growth, and we’re doing it by promoting one thing more than any other: innovation. New York City’s greatest strength has always been and will continue to be the innovation, drive and work ethic of New Yorkers. Time and time again, history has shown that our City rewards those who have the courage to pursue their dreams and launch new ideas.”
“The initiatives we’re outlining today are aimed at retaining and expanding the cluster of businesses and institutions that has made the City the global financial services capital, while simultaneously fostering those new ideas that will keep the City competitive for decades to come,” said Deputy Mayor Lieber.
The City has identified three basic challenges brought on by the financial services crisis. First, the shrinking of sector jobs and loss of institutions like Lehman Brothers and Bear Stearns has reduced the critical mass of financial services entities in New York City. Second, the sector of the financial services industry in which New York City has particularly excelled in recent years – capital markets – has been hit hardest by the downturn, with recovery likely to take several years. Of the five broad sub-sectors of financial services – capital markets, investment management, insurance, retail banking, and wholesale banking – the greatest job loss is expected to come in capital markets, the City’s biggest sub-sector. In 2007, capital markets made up nine percent of the nation’s 6 million financial services jobs but 39 percent of New York City’s 339,000 financial services jobs. Meanwhile, the City expects that capital markets will account for 57 percent of the total financial services job losses in New York City. Third, the City is facing massive layoffs in the financial services industry, which, if not properly addressed, could result in the loss of a talented portion of the City’s workforce. The industry has been central to the health of the U.S. economy, but for New York City, is especially critical, contributing 348,000 jobs, or 9 percent of the City’s private sector jobs in 2007. These jobs account for more than one-third of the City’s private sector payroll, and workers of a range of incomes. More than half of the people working in the City’s financial services sector make less than $100,000 per year.
“These initiatives will address unique and acute challenges facing New York, utilizing a modest public investment to leverage substantial contributions from the private and academic sectors,” said NYCEDC President Pinsky. “In time, the City’s modest investment will generate substantial returns, including a restored and strengthened financial services ‘eco-system’, the expansion of financial services sub-sectors such as venture capital in which New York has traditionally been under represented, and the growth of the City's entrepreneurial sector to ensure that the talent coming out of financial services firms gets harnessed here, rather than elsewhere.”
“New York City is one of the world's best incubators for innovative businesses and Google's success here is living proof,” said Google Americas Operations President Tim Armstrong. “Due to the depth and diversity of talent in the city, we have thrived here, building the largest concentration of developers, engineers and salespeople working in advertising globally for our company. We support the Mayor's efforts to encourage innovation and entrepreneurship.”
The initiatives are:
Promote Business Innovation and Entrepreneurship and Grow City’s Venture Capital Sector
Create Incubators for Start-up Businesses: To help entrepreneurs launch new start-up companies, the City is partnering with academic institutions, property management companies and commercial landlords to establish high-quality, ready-to-use office space that comes with basic business services and administrative support. For the first incubator at 160 Varick Street at Hudson Square, the City helped negotiate a three-year master lease between the Polytechnic Institute of New York University and Trinity Real Estate. Beginning March 1, start-up companies will be able to sublease the space starting at $200 per person per month for six months with an option to renew. The space comes with basic business services like telephones, computers, fax machines, copiers, shared conference rooms and shared kitchen areas, and will accommodate about 100 people. Bloomberg LP and Thomson Reuters have agreed to provide data feeds at no cost, and university partners will provide mentoring services, business seminars and networking opportunities for tenants. The City and the Polytechnic Institute have an agreement with the Moinian Group for a second incubator at 90 John Street that will open in April and accommodate 100 people. In addition, the City has entered into an agreement with a coalition of existing providers of incubator space, able to accommodate about 700 people, to offer space at up to 40 percent below their standard rates.
“As one of the oldest and most innovative educational organizations in New York City, NYU-Poly is committed to using applied science and technology to create new services, companies, and jobs in this time of economic distress,” said Polytechnic Institute of NYU President Jerry Hultin. “Our goal is to create an environment in New York City where invention, innovation, and entrepreneurship thrive. We are pleased to join with Mayor Bloomberg in this new effort to stimulate invention, innovation, and entrepreneurship in New York City. This new, expanded ‘center of innovation’ in Manhattan allows NYU-Poly to significantly expand our program of teaching 21st century skills and helping entrepreneurs realize their dreams.”
“Trinity is pleased to contribute this space and to partner with the City and NYU-Poly on this important incubator initiative,” said Trinity Real Estate President Carl Weisbrod. “We are especially delighted that this incubator – focused on innovative start-ups – will be in Hudson Square, which has emerged as the center for New York's most creative companies.”
Establish New York City Angel Fund: Angel investors typically provide funding to small start-up companies before they are in a position to garner venture capital dollars – a crucial stage in the entrepreneurial process. The City will invest $3 million to create several funds totaling between $9 million and $10 million to make angel investments of $20,000 to $250,000 to New York City-based start-up companies. By the end of February, NYCEDC will release a Request for Proposals from private fund managers to operate the fund. It is expected that this fund will provide early-stage financing to 250 New York-based start-up companies over the next 8 years and will increase by 25 percent the angel funds now-available to New York-based companies.
Launch Annual International Financial Services Business Plan Competition: To attract groundbreaking financial services start-up companies and enhance New York City’s reputation as a center for financial innovation, the City will market and conduct an annual business plan competition with top business and engineering schools throughout the U.S., Europe, Asia and Latin America. Today, Mayor Bloomberg invited universities interested in participating to contact NYCEDC. The City will invite students to submit financial service business plan proposals to be judged by NYCEDC officials, New York City angel fund managers and participating university representatives. Winners will receive a cash prize, a trip to New York City, free space within one of the City’s new incubators for two years and access to additional investments through the Angel Fund if a company is established locally. Outreach relating to the competition will be completed by June 2009 and the first prize will be awarded in September 2009. Interested universities should e-mail: [email protected].
Open “VC Connect” Online Information Portal and Provide VC Support Services: To establish a central information clearing house and support network for entrepreneurs and startup companies and to help publicize the activity already occurring in New York, the City will create and manage a website that will include a calendar of seminars and networking events, real estate information, a discussion forum and other resources to help entrepreneurs. NYCEDC will release a Request for Proposals from website developers in the coming weeks, and the website will launch in Summer 2009. The City is also working to expand existing events in high demand in the startup community, such as seminars on writing business plans and pitching investors and networking events. For example, this summer at Columbia University NYCEDC will host a seminar on how to participate in the Federal Government’s SBIR program – a program to help small businesses access Federal Research support.
Begin FastTrac Program to Help New Yorkers Start Entrepreneurial Businesses: Mayor Bloomberg announced the launch of FastTrac, a business training program to help emerging entrepreneurs, including those displaced from the financial services sector, start new businesses and help existing entrepreneurial business owners run their businesses. The City’s Department of Small Business Services is partnering with the Kauffman Foundation, a philanthropic organization that works to advance entrepreneurship around the world, to bring the FastTrac programs to New York City. The program will offer two courses: FastTrac NewVenture, a six-session classroom-based “crash course” beginning March 23 that is designed to help entrepreneurs determine the viability of their business concepts and develop start-up strategies for their businesses; and FastTrac GrowthVenture, an eight-session classroom training beginning in mid-April that will teach existing businesses how to review and reshape their business models in order to meet the current economic challenges. Applications are available starting today at www.nyc.gov. It is estimated that up to 1,000 people will be able to take advantage of FastTrac programs over the next year.
“The Mayor is committed to retaining our City’s talent by helping individuals from the financial industry access resources and acquire the skills needed to become successful entrepreneurs,” said SBS Commissioner Walsh. “Our partnership with The Kauffman Foundation supports aspiring entrepreneurs and assists existing businesses with reshaping, adapting and strengthening their business.”
“As someone who started his own business, Mayor Bloomberg knows better than most the impact that entrepreneurs can have on job creation and economic growth,” said Kauffman Foundation CEO Carl Schramm. “We look forward to working with the city to give New Yorkers the tools and training they need to start and grow successful businesses.”
Start JumpStart NYC to Help New Yorkers Join Entrepreneurial Businesses: Mayor Bloomberg announced the launch of JumpStart NYC, a free job training and placement pilot program designed for workers laid off from the financial services sector looking for opportunities within New York City’s network of venture capital portfolio businesses. Created by NYCEDC and SUNY’s Levin Institute, JumpStart NYC will offer an entrepreneurial training “boot camp,” after which participants will be offered a 10-week unpaid internship with a start up company with the potential of converting to full-time employment at the end of the internship. Starting today, the application to join the program is available online at www.levininstitute.org. The first class will begin in April with 50 students. It is estimated that more than 400 will be able to take advantage of JumpStart NYC over the next two years.
“I applaud Mayor Bloomberg for his action to help people who have lost their jobs in financial services and to also keep New York’s talent base working in the entrepreneurial sector,” said Levin Institute President Garrick Utley. “The Levin Institute of the State University of New York is very pleased to have been chosen to run the JumpStart NYC program to help New York’s talent make a quick transition.”
Retain and Grow Financial Services Institutions in New York City
Expand Incentives for Financial Services Companies Locating in Lower Manhattan: In the coming days, the City and State will announce details on the redeployment of more than $30 million in Federal incentives to attract new financial services firms and institutions to Lower Manhattan, the traditional heart of the industry in the City.
Attract and Grow New Financial Services Utilities: Utilities – such as stock exchanges and clearing institutions – serve as the “glue” that holds together the financial services sector. The City will work with established and developing exchanges like the New York Mercantile Exchange’s Green Exchange and SecondMarket to help them capture business in growing areas, like carbon credits and other emerging asset classes. The City will also seek out new utility firms and work with them to identify appropriate space, reserving, in partnership with the State, a portion of the Lower Manhattan incentive program specifically for these firms.
“Aside from the robust infrastructure, entrepreneurs come to New York for its most abundant resource: smart, ambitious and innovative people,” said SecondMarket Founder and CEO Barry Silbert. “This collection of raw talent is what first drew me to the City over a decade ago and also prompted me to establish my company here. These are certainly unique times in our financial markets, and the next chapter in the history of Wall Street is being written right now. Never has there been a need for such a cultural and intellectual shift in thinking on Wall Street. I’m excited about the initiatives being introduced today by the City and am thrilled to help New York remain the financial capital of the world and a hotbed for innovation and entrepreneurship.”
“The vibrancy of New York City from a business and cultural perspective is a key factor in attracting the best technology talent in the world to our organization,” said NASDAQ OMX Group President and CEO Bob Greifeld. “The city has many innate advantages, including its energy and spirit of innovation. In this new world we live in, I believe there is great opportunity for New York City to take the lead in redefining the shape of financial services, particularly in the over the counter markets.”
Conduct International Recruitment Campaign: As firms in emerging markets continue to grow and expand, many will look for appropriate locations in which to establish North American offices. To maximize the number that choose New York City as their regional base, the City will conduct an international recruitment campaign focused on attracting commercial banks and insurance companies headquartered in China, India and other developing economies. The City has compiled an initial list of 25 firms to target. The campaign will include in-person meetings starting with firms in Middle East in May 2009 and Beijing, China in June 2009. EDC has created marketing materials with language and content tailored to specific markets that includes information on New York City’s assets, demographics, business services and resources to help companies access incentives and navigate various regulatory processes. Financial Services Advisory Board member organizations Credit Suisse, Marsh & McLennan Companies, Standard Chartered Bank and New York University have agreed to help the City work with these foreign institutions on expansion strategies. The City will also use the Lower Manhattan incentive program as a means to attract these companies to the City’s traditional financial hub.
Establish Ongoing Financial Services Advisory Committee: In November 2008, Deputy Mayor Lieber and EDC President Pinsky convened a group of senior financial services executives and academic leaders at Gracie Mansion to discuss the problems plaguing the industry and begin to work through potential steps the City could take to address them. The group reconvened in January 2009 at Rockefeller University. Today, the Mayor announced that the City will create an ongoing Financial Services Advisory Committee to be led by Deputy Mayor Lieber that will meet regularly through 2009 to maintain a dialogue between City Hall and the industry, as well as within the industry. The Committee will discuss industry developments and track the ongoing value and effectiveness of these and other initiatives.
“Goldman Sachs supports the Bloomberg Administration's efforts to help ensure that New York City remains a key global financial center,” said Goldman Sachs Group Chairman and CEO Lloyd C. Blankfein. Goldman Sachs will participate on the Advisory Committee. “We look forward to continuing to work with the City towards this and other important goals that create jobs, additional revenues for the city and overall economic growth.”
Refocus Regulatory Advocacy: In January 2007, Mayor Bloomberg and Senator Schumer outlined national reforms to help keep the U.S. and New York City as global financial services leaders. While many of those issues continue to be of importance, the recent downturn has made the need for regulatory reform in Washington even more urgent – though potentially in ways that are different from those envisioned in 2007. Today, Mayor Bloomberg tasked Deputy Mayor Lieber and EDC President Pinsky to work with our Financial Services Advisory Committee to understand New York City’s most pressing regulatory needs and report back to him and Senator Schumer by the end of March.
New York City Economic Development Corporation is the City's primary vehicle for promoting economic growth in each of the five boroughs. NYCEDC's mission is to stimulate growth through expansion and redevelopment programs that encourage investment, generate prosperity and strengthen the City's competitive position. NYCEDC serves as an advocate to the business community by building relationships with companies that allow them to take advantage of New York City's many opportunities. Find us on Facebook or follow us on Twitter, or visit our blog to learn more about NYCEDC projects and initiatives.