Silicon Alley humming despite slow economy.

The recent recession may have cut venture capital available to young firms, but it hasn’t prevented a blooming of high-tech startups in New York.
Many of the companies getting attention from venture capitalists and on tech blogs are social media sites, which rely on networks of friends to do everything from picking out gifts to sharing photos. “New York is a hotbed of innovative startups and always has been,” said Nate Westheimer, co-founder of AnyClip, a company that aggregates clips of movies. Westheimer also runs NY Tech Meet Up, a networking group with 12,000 members where entrepreneurs pitch business ideas to each other and potential venture capitalists.
“There are a great deal of risk-takers here and a lot of smart money; as well as serial veteran entrepreneurs who are getting engaged with the young generation,” Westheimer said. Silicon Alley, as New York’s high-tech scene is called, has also been given a boost from Wall Street professionals looking for new horizons after being laid off in the financial crisis. “Before, it was about whether to take a $40,000 job at a startup or a $200,000 job at Morgan Stanley,” said Caterina Fake, co-founder of the photo-sharing service Flickr, and most recently Hunch, a decision-making site based in New York.
“That option is not as readily available anymore. But it’s a perfect recipe for people who are scrappy.” Mix that with a strong support network and a growing number of lawyers with experience on start-up deals and the Big Apple has become a great place to launch a new venture, experts say. Among the young generation of Silicon Alley is 24-year-old Ben McKean, co-founder of Village Vines, a site that allows restaurants to offer discounts on slow nights.
McKean said he was working in investment banking, for Morgan Stanley and later Bank of America, when he became convinced of the vast and underutilised potential of the Web to help businesses market themselves. “The opportunity is incredibly exciting,” McKean said. “We believe we are solving a market inefficiency and we are thrilled to work with some of the top New York City restaurants.”
New York still attracts less venture money than California’s Silicon Valley — 247 deals netted a total of $1.4 billion in 2009, about $500 million less than the previous year, according to the National Venture Capital Association. The reduced funding has forced startups to create leaner operations — and in the process better-run companies — instead of relying on venture backing to grow, according to industry insiders. But a string of successes — such as Delicious, an online bookmarking service, Tumblr, a microblogging site, and Etsy, an online market for crafts — have caught the eye of venture capitalists, who are increasingly moving to New York.