Nevertheless, Silicon Alley survived: and now—unexpectedly, even improbably—it is reemerging as an economic force in New York. Many of the hundreds of entrepreneurs and thousands of tech-savvy workers who flooded the city during the 1990s stuck around after 9/11, it turns out, and as Internet use becomes almost universal, these industry veterans are back with waves of new start-ups, catering to Internet surfers’ demand for more online tools and interactivity or helping New York’s mainstream industries do business better in the digital age. Their talent has grabbed the attention of industry leaders, who have made New York a key part of their worldwide networks.

All this excitement has investors ready to finance a new generation of tech firms. The New York metro area has become the third-biggest market for venture capital in the nation, outpaced only by Silicon Valley and greater Boston. Even more important, perhaps, a crucial component of the digital economy—venture capitalists willing to finance start-ups—has emerged in the city. They have joined together in New York Angels, a consortium of nearly 70 investors, each agreeing to put up at least $50,000 a year for local high-tech start-ups. “We get maybe 400 businesses a year looking for funding,” says chairman David Rose, a scion of New York’s Rose real-estate family and an early investor in local technology firms. “There’s a lot of pent-up demand.”