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New York growing as a base for tech companies

In the first three quarters of 2010 compared with a year earlier, the number of venture capital deals grew more than three times faster in the city than it did in Silicon Valley.

December 29, 2010|Nathaniel Popper, Los Angeles Times

Apple Inc. also has been increasing its presence in New York, and Facebook Inc. is rumored to be looking at a new space for its operations in the city.

One factor that might have played a role in New York's tech growth is intangible — ego. Just a few years ago, programmers who might have been rock stars in Silicon Valley would have been overshadowed in New York by millionaire bankers. But the financial crisis has tweaked that balance.

"When I first started teaching in 2007, everyone wanted to go into investment banking," said Larry Lenihan, a venture capitalist and a professor at New York University. "Now, it's not as sexy and exciting explaining to someone at a party that you work at Goldman Sachs."

The financial crisis also pushed the city's government to cultivate more than just its old-line industries. In the last two years, Bloomberg's administration has run a competition for programmers, set up one of the first city-funded venture funds in the country and helped establish several incubators that provide cheap rent and mentoring to entrepreneurs.

The Varick Street incubator that provides services to start-ups is in the top floor of an old industrial building not far from Google's local headquarters. The enormous light-flooded floor has clean white walls, exposed ventilation pipes and neon-colored furniture that can be pulled together for impromptu brainstorming sessions.

John Humphrey, who secured a spot in the incubator after moving from Palo Alto in late 2009, is working on a new device for installing solar panels. He and his partner started their company, Sollega, in California. But thanks to the perks and guidance he has received since coming to New York, the operations here are growing much faster.

"You'd think with all these start-ups in San Francisco, there'd be this support network. We never found anything. We were a small fish in a big pond," said Humphrey, 37, while sitting as his desk that looks out at the Empire State Building.

"Yeah, it's expensive to live here," he added, "but God, if I have a question about anything I have these free resources to help. I mean, it's amazing."

Some of those who made the move East say that New York now has the plucky, intrepid spirit that Silicon Valley was once famous for.

"The Bay Area is known for being a lot more competitive," Chou said. "These days, there is a broader sense of community here in New York."

nathaniel.popper@latimes.com

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