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

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of New York’s startup ecosystem, especially around Union Square, says Rodenstein, the Boston-based angel investor and entrepreneur (and AOL day worker). With “Chris Dixon playing the young Paul Graham role in indirectly leading the community through blunt anti-establishment rhetoric, as well as the rise of emphasis on [user experience] design which is a strength in NY, it makes sense for nearby investors in Boston to get more involved,” he says.

So what does this portend for Boston startups? “I get asked by VCs all the time where the great companies are in Boston. Some I certainly know about, and some great ones we just lose/let go,” Rodenstein says via e-mail. “I believe there are many others hiding at non-Ivy schools and other areas that are not being explored as thoroughly as could be. So in some ways NY may seem like lower-hanging fruit even though competition for deals is much higher than if you find a gem on your own here.”

One interesting angle is to look more closely at a firm like Spark Capital, which has invested nationally in companies such as San Francisco-based Twitter and Seattle-based ThePlatform (acquired by Comcast). Spark seems pretty focused on New York now, and has invested in many companies there—OnSwipe, Tumblr, Boxee, OMGPop, and 5min (acquired by AOL) come to mind. I’ve heard complaints from Boston entrepreneurs that the VC firm should look in its own backyard more.

But, in fact, it has. Spark has recently invested in a number of Boston-area companies including peerTransfer in Cambridge, 8D World in Woburn, and (more quietly) Linkwell Health in Needham. Last month, Linkwell closed a $6 million Series B round from investors including Spark. (I haven’t seen this news reported elsewhere.) Linkwell works with the healthcare, food, and advertising industries to develop nutritional incentive programs for people with chronic health conditions like obesity and diabetes. It seems like a pretty novel approach—maybe even one of the “gems” that Rodenstein referred to.

So my take is that Boston entrepreneurs need to raise their game and put out more stuff that’s unique. New York startups may not be the clear-cut competitors that the Jets and Yankees are (or Silicon Valley for that matter), but they are capturing a growing slice of the investor pie. Meantime, the VC and angel money is still here in Boston—but it might not be for long.

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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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