United States: Just How Entrepreneur Friendly Is New York?

I know that we are all bored with the perennial comparisons between the Valley and New England in which New England inevitably appears as the landof the hide-bound and the home of the risk adverse. The fact that we are all bored with the discussion does not however address the merits of the claim. It just blinds us to the looming consequence: New England, already only half the size of the Valley by many measures, will lose further ground as exciting start-ups from the Valley (and New York, but we will get to that in a minute) continue to make their mark and investor money drifts (or perhaps races) towards perceived greener pastures.

I finally got around to my quarterly comparison of deal terms published by our firm, Fenwick (a Valley based firm that reports on transactions in the Valley) and Cooley (a firm with many offices that reports on transactions handled by it).

And here of New York: No one that I am aware of reports on New York transactions. But, starting with Q1 o f 2012, we will, because we are doing increasing amounts of emerging company work there.

So here is part 1 of my thesis: I expect that terms will be most favorable to entrepreneurs in the Valley, least favorable in New England and somewhere in between for the rest. Of course, I think that the "somewhere in between" number will include Cooley's New England transactions (which will have the effect of making them generally seem less favorable to entrepreneurs). We should all note that Cooley feels compelled (at least in some instances) to report numbers for Northern California separately from the others.

So, without further fanfare, below is the table that compares certain of the deal terms reported on by the three firms for Q4 of 2011.

Fourth Quarter 2011 Transaction Terms

Of course I knew what the chart would say before I made the prediction, so no surprise that it supports my thesis.

Here, however, is part 2 of my thesis: When we start reporting on New York separately (which we will be doing starting with a Q1, 2012 report – to come out soon), it will show that terms in New York are far closer to those in the Valley than to those in New England. Now I don't' know the answer to that question, but we are doing the research now and will have an answer soon.

Keep in mind that New York has gone from nowhere just a few years ago to equaling (or passing by some measures) New England. Could it be that NYC is just a friendlier place for entrepreneurs than New England?

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