Business

Californias Fintech Startups Are Invading New York

When two Irish brothers started Stripe Inc. together in 2010, there was little question about where they should put their headquarters. It had to be California.
Now, though, Stripe is leaving the tech mecca of San Francisco, awash in tech talent and investor cash, and is in the process of moving its main office about 10 miles to neighboring South San Francisco. Whats more, the company—whose $35 billion valuation makes it one of the worlds most valuable startups—is currently building up its staff in another state altogether: New York.

In September, Stripe opened an office near Wall Street the company told Bloomberg and plans to add several hundred employees there in the coming years. The startups planned New York growth is on track to outpace its headquarters.

The city has long been a hub for finance, and more recently for tech. “New York is a global leader, said David Singleton, Stripes chief technology officer. “Its just an important market for entrepreneurialism and startups.”

Stripe is one of many Bay Area-based fintech companies now building up a New York presence. Plaid Technologies Inc., which connects various apps to customers bank accounts, has relocated or hired more than 100 people in the city over the last year, or about a quarter of its staff. Affirm Inc., the lending startup founded by former PayPal Holdings Inc. co-founder Max Levchin, also recently opened up a Manhattan office that has about 50 employees, the company said. And Brex Inc., the business credit card startup most recently valued at $2.6 billion, has permanently relocated its chief financial officer to Midtown, according to a person familiar with the matter who asked not to be identified discussing information thats not yet public.

In some ways, the moves are natural for tech startups with financial ambitions. Despite the growing success of fintech upstarts hailing from San Francisco, Wall Street institutions remain on top of the financial world, and New York offers an appealing pool of potential hires. Uber Technologies Inc., for example, announced the creation of a new unit called Uber Money in October and will be shopping for fintech talent in and around Manhattan, according to a CNBC report. At Affirm, the companys New York employees resumes are littered with names like Morgan Stanley and Goldman Sachs Group Inc.

Often, financial technology companies that are just getting started set up shop in San Francisco to be close to tech workers with experience designing products at big companies, said Mark Goldberg, a partner at Index Ventures. San Franciscos resident tech giant include Uber, Lyft Inc., Twitter Inc., and Airbnb Inc. But “what they dont understand is the industry,” he said, adding that eventually, many fintech companies look eastward for hiring. “What I think happens is that companies that start on the West Coast end up recognizing that they want to compliment that DNA with capital market expertise, and with people that have been in and around banks.”

Meanwhile, tech epicenter San Francisco has become less hospitable for some companies. Last year, voters passed a new tax on businesses that will go to fund homelessness relief efforts, and taxes financial services companies at a higher rate than other types of businesses. Stripes decision to leave the city was widely regarded by local officials as related to the passage of the new tax. The company, which strongly opposed the measure, denied that taxes were a major factor in the decision to move.

Stripe instead pointed to the limited office space in San Francisco. The citys asking prices for commerciRead More – Source

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