Boston Vs. New York: Tech Startups and Investors Add New Spice to Classic Rivalry

I’ll come right out and say it: I hate New York. OK, maybe it’s worse during football and baseball season. Maybe it’s especially bad this week as the J-E-T-S and their loudmouth coach (see right) are talking trash about the Pats. Maybe I just need an excuse to wind people up.

But tech investors love New York. Especially Boston-based tech investors. There has been a rash of early-stage investments in New York startups lately. Just this week, OnSwipe raised $1 million in seed funding from a group that includes Boston-based investors Spark Capital and angels such as Wayne Chang, Jennifer Lum, Roy Rodenstein, and Dharmesh Shah. Meanwhile, SalesCrunch raised a $1.4 million seed round from investors including First Round Capital, Accel Partners, and NextView Ventures, a Cambridge, MA-based micro-VC firm.

And in recent months, New York-based Offerpop raised $1.3 million from CommonAngels’ Chris Sheehan and others, while New York and Boston-based Svpply got $550,000 from investors including Founder Collective and Spark. Throw in other Boston-financed companies in New York like Boxee, Tumblr, OMGPop, Yieldbot, and Gilt Groupe, and we’ve got an epidemic on our hands.

What do these companies have in common besides geography and the Internet? Not much really. They span advertising, analytics, social tools, shopping, gaming, TV, and retail/fashion. But taken together, they represent a fast-growing cluster of tech innovation that has the full attention of early-stage investor groups like Founder Collective, CommonAngels, and TechStars—which started its New York program this week—as well as traditional VC firms, which all seem to have more representation there as of late. (Heck, Xconomy is recruiting a top-notch journalist in New York—so you know this is serious.)

Despite all the talk of inter-city collaboration and kumbaya, this is a competitive situation for Boston and New York entrepreneurs, who are all vying for a limited supply of investor dollars. But, as usual, I wondered how “new” this trend really is—and what other interesting context is around it. So, as a start, I reached out to a few young investor types around town, and they had slightly different viewpoints.

“Nothing has dramatically changed in recent years,” says Rob Go from NextView Ventures. Go points out that VC firms such as Spark Capital, First Round Capital, and Union Square Ventures have been investing in New York startups for years. “There are just more people jumping on the bandwagon recently,” he says.

That might be true, but others in the startup community say there’s a real (and relatively recent) trend going on—and also some important issues to consider. One driving factor is the “legitimate growth” … Next Page »

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Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] xconomy.com. Follow @gthuang

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