Tech start-ups opting for NYC over Silicon Valley

— -- The West Coast's Silicon Valley may be known as the birth-place of the American high-tech economy, but the East Coast is quickly becoming a hub for more and more would-be tech titans.

Joseph Cohen, a 20-year old college drop-out, is just one budding Internet entrepreneur in New York City. He's trying to revolutionize the classroom with a program called CourseKit.

"We are just bringing the notions of Facebook and social networking to the learning experience," says Cohen.

At New York University's Stern School of Business in Manhattan, the 400 grad students in professor Aswath Damodaran's corporate finance class use CourseKit to chat with him and their fellow students, post articles and share notes under the professors guiding hand. They've created a mini-social network around the course.

CourseKit is really an alternative to Blackboard software, a widely used educational software program, which some say is the industry standard learning-management program.

"It has an interactive aspect to it that Blackboard doesn't have," grad student Ari Welcher says.

Coursekit combines discussion-based properties with the more traditional "cyber-lockers" functions, such as posting course schedules and reading material.

Another 2,500 students around the world are following the course, without credit, for free.

"It's a change in the way that education is delivered, and I think it's actually going to give consumers a lot more options," says Damodaran.

New York University is just one of hundreds of colleges and universities using the two-month old service, which has raised $6 million in funding from New York based IA Ventures and Toronto-based Social Capital Partners.

CourseKit is expanding its reach by using student marketers across the nation who sound out fellow classmates for their favorite professors, and convince them to try it out. For now, it's free to both instructors and students. Cohen plans to eventually make money through sales of textbooks and other items.

Cohen's eight person start-up is just one of hundreds of start-ups choosing New York City's "Silicon Alley" over its older California cousin.

Total technology employment in New York City increased 28% from 2005 to 2010, and now accounts for more than 90,000 workers at more than 7,100 high tech establishments, according to the New York City government Economic Development Corporation (NYCEDC). Overall private sector employment in New York rose 3.4% during the same period.

"I think New York is a fantastic place to be right now," says Adam Pritzker, co-founder of the tech incubator General Assembly.

The start-up hub received $200,000 in seed money from NYCEDC. Pritzker, a 27 year-old San Francisco native says while Silicon Valley's tech ecosystem is well-developed with lots of engineering talent, New York's advantage is its eclectic combination of people in the retail, entertainment and financial sectors.

"As technology penetrates multiple industries and becomes a much more global phenomenon, those core depths of people who have been working in those industries for years and years, who are teaming up with technologists is a powerful combination," Pritzker says.