New York State Cybersecurity and Homeland Security Industry Study Confidential Prepared For: New York State Economic Development Council Attention: Ryan Silva Executive Director July 2019 k2intelligence.com New York · London · Madrid · Geneva · Los Angeles Restricted Use Warning This report was prepared by K2 Intelligence at the request of the client to whom it is furnished ("Client"). The Client acknowledges and agrees that this report and information received from K2 Intelligence (collectively, the "Report"), is being provided solely with respect to the Services defined in, and subject to the Client's compliance with, the terms and conditions of the Professional Services Agreement ("PSA") and is intended for the Client's use consistent with the terms of the PSA; provided that nothing in this Report shall be considered legal, business, regulatory, investment, financial, insurance or accounting advice, opinions, endorsements, recommendations or the like. 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Introduction ........................................................................................................... 9 2.1. Key Definitions ............................................................................................................... 9 Cluster ...................................................................................................................... 9 Industries .................................................................................................................. 9 3. Methodology ........................................................................................................ 11 4. Strength of Homeland Security & Cybersecurity Markets ................................ 12 4.1. The Cybersecurity Market ............................................................................................ 12 4.2. The Homeland Security Market ................................................................................... 13 4.3. Market Futures ............................................................................................................. 14 5. Factors Driving Cluster Development ................................................................ 15 5.1. Talent: Access to Talent Drives Location Decisions .................................................... 15 5.2. Customers: Face-to-Face Meetings Still Critical ......................................................... 16 5.3. Economic Incentives: Government Spending Only Goes So Far ................................ 17 6. Fast-Growing Regional Clusters ........................................................................ 18 6.1. San Antonio, Texas...................................................................................................... 18 Proximity to Federal Government Resources ........................................................ 19 Academic Institutions & Public-Private Partnerships ............................................. 20 Economic Incentives .............................................................................................. 20 Challenges to Growth ............................................................................................. 21 6.2. Pittsburgh, Pennsylvania ............................................................................................. 21 Proximity to Federal Government Resources ........................................................ 22 Academic Institutions & Public-Private Partnerships ............................................. 22 Economic Incentives .............................................................................................. 23 Challenges to Growth ............................................................................................. 23 6.3. Colorado Springs, Colorado ........................................................................................ 24 Proximity to Federal Government Resources ........................................................ 25 Academic Institutions & Public-Private Partnerships ............................................. 25 Economic Incentives .............................................................................................. 26 Challenges to Growth ............................................................................................. 27 6.4. Augusta, Georgia ......................................................................................................... 28 Proximity to Federal Government Resources ........................................................ 28 Academic Institutions & Public-Private Partnerships ............................................. 29 Economic Incentives .............................................................................................. 30 Challenges to Growth ............................................................................................. 30 Privileged and Confidential 1 7. The New York State Landscape ......................................................................... 31 7.1. Tier One ....................................................................................................................... 31 New York City ........................................................................................................ 32 Mohawk Valley Region ........................................................................................... 33 Central New York Region ....................................................................................... 36 7.2. Tier Two ....................................................................................................................... 38 Capital Region ........................................................................................................ 38 Finger Lakes Region .............................................................................................. 40 Long Island Region ................................................................................................ 43 Western New York Region ..................................................................................... 45 8. New York Challenges .......................................................................................... 48 8.1. National Shortage of Cybersecurity Talent .................................................................. 48 8.2. Pessimism about Upstate New York ........................................................................... 48 Perception That Quality of Life Upstate Lags Behind New York City ..................... 49 Lack of Transportation to Major Urban Centers ..................................................... 49 Customer Education Required in Upstate New York ............................................. 50 New York State’s Corporate Tax Structures are a Disincentive ............................. 50 9. New York State’s Strengths ................................................................................ 52 9.1. Market Share Argument ............................................................................................... 52 Location of Major Industries Drives Demand ......................................................... 52 New York’s Unique Threat Landscape ................................................................... 53 New York’s Economic Clout – A Force Multiplier ................................................... 55 9.2. Diversity of Talent Pool ................................................................................................ 56 9.3. Affordable Cost of Living and Talent ............................................................................ 56 9.4. Potential to Expand Existing Hotspots ......................................................................... 57 10. Development Opportunities ............................................................................... 59 10.1. State-Sponsored Technology Testbed ........................................................................ 59 10.2. Apprenticeship Laboratory ........................................................................................... 59 10.3. Leveraged Purchasing Power ...................................................................................... 59 10.4. Star Power ................................................................................................................... 60 10.5. Cultural Re-Branding ................................................................................................... 60 10.6. Tax Credits & Other Economic Incentives ..................................................................