A new tech incubator has come to New York City, and unlike other accelerator programs, the 19 startups chosen to work at Grand Central Tech aren’t charged an equity fee — or even rent.
The effort is made possible by the Milsteins, a powerful and controversial family of real estate moguls who were responsible for developing many parts of Manhattan in the late 20th century. The name has left its mark on the city, from the Milstein Hall of Ocean Life at the Museum of Natural History to the Paul Milstein Pool and Terrace at the Lincoln Center.
Now the family has turned its attention to Midtown.
Grand Central Tech cofounders Matt Harrigan and Charlie Bonello met Michael Milstein, son of billionaire banker Howard Milstein, last summer, when they were running a startup accelerator program through their alma mater, Regis High School on Manhattan’s Upper East Side.
Michael liked the accelerator model they had adopted, and he eventually worked out a deal to let them build a similar program in a 10,000-square-foot space in the building his family owned across the street from Grand Central Station. The space had recently been vacated by Facebook.
“The Milsteins’ goal is to build a hub for technological innovation in Midtown Manhattan, and they’re hoping that this space helps encourage that,” Harrigan said to Business Insider. “So much tech has moved downtown, but it doesn’t get much more convenient than being located directly across the street from Grand Central. I think up until now, Midtown has suffered from an image problem with the younger population, and that can be overcome with efforts like Grand Central Tech.”
It would be an understatement to say the competition to get free workspace at Grand Central Tech was tough. More than 400 companies applied, and only 19 were ultimately accepted.
As they evaluated applications, Harrigan and Bonello made an effort to avoid selecting companies that would be in competition with each other. That means the selection of companies runs a fairly wide spectrum, from a startup working on a children’s coding platform to another developing new techniques for treating water.
They’ll all benefit from the programming Harrigan and Bonello have arranged, from consultations with tax and advisory firms to meetings with lawyers and a panel of advisers.
“Because we take no equity from the companies, we’ve attracted a more mature set of startups, who are a little farther down the line. They may have already raised an initial round of funding; they may have already started a company,” Harrigan said. “Several of our founders have already successfully started and sold companies, and they’re not particularly attracted to the standard accelerator model where you have to give up so much of your company just to get in the door.”
This startup community is also decidedly more diverse than others. According to Harrigan, half of the founders in Grand Central Tech are minorities or women.
“One of our objectives is to widen the aperture as far as who gets access to the tech community. Right now it still feels a bit tucked away and a bit of a boys’ network,” Harrigan said. “These are concerted efforts to make sure this is a more comprehensive tech system that we’re building here in New York.”
The Milsteins have allowed Grand Central Tech to use their space for free under one condition: at the end of the year-long mentoring program, graduates are expected to move to another Milstein-owned space on the 16th floor of the building, where they will have to pay rent.
“Each of our companies here has committed to taking space up there, provided they can afford it and it doesn’t impede their ability to run their business,” Harrigan said. “We think that’s a fair trade for the free space.”
That 45,000-square-foot office will eventually accommodate up to 60 startups, according to Harrigan. Companies who haven’t graduated from Grand Central Tech’s program are also welcome to apply for space.