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The cliché about New York City is that if you can make it there, you can make it anywhere. But maybe it doesn't have to be so hard. When it comes to fostering an environment where entrepreneurs can turn back-of-the-napkin business models into real companies, New York wants to look more like Silicon Valley, a place where startups that might not stand a chance anywhere else are able to thrive. This fall, a new partnership of various New York City and state foundations working with local venture capitalists will attempt to do just that. Ten homegrown startups will receive early-stage financing of no more than $200,000 each under a new program known as NYC Seed. If necessary, office space also will be provided, along with the kind of networking opportunities such arrangements afford. "I have been an entrepreneur working in New York City for a while now, and it has always felt like there was a lack of funding available for early-stage companies," says NYC Seed managing director Owen Davis, who got the idea for the program earlier this year while pondering the persistent disparity between New York and the rich startup culture of Silicon Valley. New York has given birth to many successful high-tech and digital-media companies over the years--including the wireless marketing company Sonata Inc. that Davis founded in 1999--but the city has never generated the level of startup activity that exists on the opposite coast. Even some of the most prominent New York venture capitalists draw heavily on California companies to fill their portfolios. Arguing that supporting startups with unproven business models would not be a giveaway but a vehicle for economic development, Davis got the New York City Investment Fund, a well-endowed investment vehicle formed by Kohlberg Kravis Roberts & Co. founder Henry Kravis, to come on board as a key backer. NYC Seed was unveiled to much fanfare in June by New York Mayor Michael Bloomberg. Other partners include New York's Industrial and Technology Assistance Corp., or ITAC; the New York State Foundation for Science, Technology and Innovation; the New York City Economic Development Corp.; and Polytechnic University, which will serve as a source of engineering talent and also house the fund's offices (Along with the NYC Investment Fund, ITAC and Polytechnic University are also contributing funding). Venture capitalists including Fred Wilson of Union Square Ventures, Todd Pietri of Milestone Venture Partners, Daniel Schultz of DFJ Gotham Ventures and Drew Lipsher of Greycroft Partners LLC will serve on the fund's board. This long list of partners and advisers is Davis' best attempt to replicate the ingredients that are so abundant in Silicon Valley, from engineers and VCs to a supportive local government and cold, hard cash. It is a step in the right direction, but in reality, it may not be that easy to quantify the things that make Silicon Valley work so well. Along with the obvious attributes, a multitude of other factors--from the laid-back culture that is more accepting of people without "real jobs" to the area's abundance of hiking and mountain biking trails--arguably attract a different personality. But New York City Investment Fund president Maria Golsch maintains that one big hole in New York is a lack of seed money for startups, which in Silicon Valley often comes from veterans of companies like Google Inc. who have already struck it rich working on startups and understand the tech landscape well enough to invest in next generation technologies. "We've traditionally been a big corporate town, and Wall Street swamps everything," says Golsch, who noted that the NYC Seed fund was formed with a civic mission. The program will identify "situations where a little bit of money can make a big difference," she says. NYC Seed says it will consider proposals from any businesses that are located in New York City, have at least two employees and have a basic business prototype. So far, it has received about 100 submissions. Although startups from all industries are invited to apply, Greycroft's Lipsher says he suspects the fund will draw heavily from traditional New York strongholds like media and advertising. "New York is a different kind of place, but for startups I think it's an equally attractive place," Lipsher says. "I think the challenges are largely the same--these are fragile young companies." -- Andrea Orr
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