New York has enough attractive alternatives

When Doug Imbruce wanted to start an interactive video company in 2009, he had no luck finding investors in New York. So he moved to Silicon Valley - where venture capitalists were receptive to his pitch - and founded Qwiki. But in February, he decided that being so far away from the nation's big media companies was stifling his startup's growth. So he moved back to New York, bringing the company with him. Qwiki, with 15 employees, now operates out of a SoHo loft space. "We went to Silicon Valley because they understood how big we wanted to get," Imbruce said, "and we moved back to fulfill that promise." The recent burgeoning of New York's Internet industry has forced some entrepreneurs - who, just a few years ago, might have felt they had little choice but to head west to pursue their dreams - to make a difficult choice. New York is now enough of an attractive alternative that a few West Coast-born startups are even packing up and moving east. Much of this change has to do with the way that the technology industry has shifted toward creating consumer products and applications, rather than building the basic framework of computing and the Internet. Many new startups benefit from proximity to the media, advertising and fashion industries, New York's strengths. And as the city's industry grows, entrepreneurs say, it is offsetting some of the traditional disadvantages of being outside Silicon Valley. There is little talk of New York overtaking the Bay Area as the hub of the country's technology industry. And the concept of New York as a real rival to Silicon Valley can make some Californian eyes start rolling. "You can definitely build great companies elsewhere, but I have not seen anyplace in the world that builds true global franchises - technology-based franchises - like this place does," said John O'Farrell, a partner at the venture capital firm Andreessen Horowitz, based in Menlo Park, Calif. Though the firm has invested in several New York-based startups, Farrell said, it sets the bar higher for them, largely because it believes they are less likely to succeed. A lack of venture capital financing outside of Silicon Valley has traditionally been a prohibitive barrier for startup founders who might have wanted to put down roots elsewhere. But that is changing. Almost 500 startups in New York received venture financing from 2007 to 2011, according to a recent report from the Center for an Urban Future, a New York-based public policy organization.