But as the New York program took off, Mr. Cohen started to think maybe his excitable director was right. The incubator had a warm reception, with a waiting list of more than 200 top-tier mentors, Mr. Tisch said. "We've had 85 mentors out of 100 who have come by already for the season and over 60 that have engaged with companies directly. In other cities we only have 50 mentors, period."

Companies in the first New York class are already getting interest from investors familiar with the TechStars brand, and the April demo day is two-thirds sold out, he said.

"We could have taken 20 companies," Mr. Tisch said. "I said it to a lot of companies we had rejected: 'If you had applied in other cities you would 100 percent be in this program.' We just didn't have room for all the qualified applicants. It became a clear necessity to do a second program," Mr. Tisch told The Observer.

"The city's ecosystem is just able to support 20 companies in two programs, and wants to," he said. "We believe we can do two equally strong programs. If we can do two why wouldn't we? We'd be leaving ten companies out that should be part of this program."

Mr. Tisch was also worried that if the program adjourned for six months, people would forget about it. In other cities, people buzz about the fall TechStars season all year, he said. In New York, TechStars would drop off the map and probably be replaced in that time.

It seems Mr. Tisch has won his argument. TechStars announced a summer program yesterday, which will run from early July to mid-October and is now accepting applications. "David Cohen really understood the ecosystem in New York when he came here and saw how strong and supportive it is, and how key a piece we could be," Mr. Tisch said.

ajeffries [at] observer.com | @adrjeffries

“There is a pretty small group of us, really young guys, who are in the fortunate position to be making investments in tech,” Mr. Wohlstadter said, grabbing a seat in an oversize armchair. Ivy League handsome in a white Oxford shirt unbuttoned a few notches below the neck, he bounced his smart phone from palm to palm, flagged down the waitress and ordered a Brooklyn Lager.

“What do you think of Hashable?” Mr. Wohlstadter wondered, name-checking one of his investments. The Observer related our score on the application, which gives users a way to track meetings and awards points for each connection. “Oh, man,” Mr. Wohlstadter laughed. “You need to get out more.”

Mr. Wohlstadter, 23, began funding entrepreneurs a year and half ago—just a few weeks after graduating from Harvard. A friend, Eliot Durbin, also in his 20s, was the driving force behind the creation of Penny Black, and brought Justin on to help source deals and manage investments for a wealthy Wall Street pro. The project grew from there. “A bunch of his friends saw what we were doing and asked to get in,” Mr. Wohlstadter recalled. “Bankers, attorneys—it became sort of an investment club.” In the wake of his early success Wohlstadter joined up with a formal fund, BOLDstart, and a young venture capitalist was born.

“There are a lot of people that want to get involved in all the cool innovation that is going on right now but don’t have the time or energy to do so directly,” Mr. Wohlstadter explained. “That’s where I come in.”

Mr. Wohlstadter isn’t the only young gun pumping money into the Silicon Alley scene these days. David Tisch, Ben Lerer and Josh Kushner (kid brother of Observer owner Jared Kushner), all under 30, have emerged as some of the most prolific investors in town. Each can claim, to varying degrees, experience as a Web entrepreneur, a bond they share with the young founders they fund.

Despite their high profiles, though, it’s still too early to say which, if any, of their bets will pay off. “We’re all just two years in doing this, so for us to have ‘exits’ is rare,” Mr. Tisch, 29, acknowledged. “You can’t be judged on that, so your status comes from the perceived quality of the deals you have done.”

“Young guys are close to the deal flow, the technorati, the hackers,” noted Roger Ehrenberg, an investment banker–turned–angel–turned–venture fund manager.

These investors are working principally at the seed stage, the wobbly early moments of a company’s lifespan when it’s often little more than an idea. Few of these investments, which range from $25,000 to $250,000, will pan out, but they can mean a tremendous windfall in the rare event that the fledgling company turns out to be the next Facebook or Twitter.

Often such investors are referred to as “angels,” a term originally applied to wealthy New Yorkers who risked their money backing Broadway plays. “An angel, in the original sense, was the kind of person who would bet on a dream,” explained David Rose, who began funding tech companies during the heady dot-com days and helped found the early-stage investment group NY Angels. “It’s much more professional now, but there is still an element of that.”

Mr. Tisch, who spends his days running Techstars NY, an incubator of select start-ups from around the nation, prides himself on his swift reflexes. Unlike Messrs. Lerer and Kushner, who invest through formal funds, and thus have to answer to their limited partners, Mr. Tisch is free to jump on any fresh project he finds promising. “In a lot of the deals I do, maybe I didn’t lead the round, but I was the single first person to say, ‘Yes, I’m in,’” he told The Observer. “I can use my gut. I don’t need to answer to anybody. That’s my freedom as an angel.”

The flood of early-stage money has made for a certain giddiness among young entrepreneurs. “I felt like a kid in a candy store,” said Vin Vacanti, recalling how he raised money for his company, Yipit, using Angel List, a online network that matches investors and start-ups. “I was browsing through all these names I had heard of, investors whose blogs I read every day.” Before he knew it, Yipit was being offered more money than he knew how to spend.

For the creators of Greplin, a California-based start-up, the enthusiasm of the local angel scene was almost dizzying. “I flew here to meet Chris Dixon, and he liked the company, and he cut me a check,” founder Daniel Gross recalled. “The next day I get a call from Jordon Cooper at Lerer Ventures saying he heard about me, and then they cut me a check. Less than a day later I get a call from Josh Kushner, saying he’s heard about me from Dixon and Cooper, and then he’s cutting me a check. It was incredible.”

“There’s a lot more interest in seed-stage investing now, from people who really know the sector, and that’s great for local start-ups,” Mr. Dixon, an investor and entrepreneur, told The Observer. “There is a class of older angels here who have built tech companies, and can really add a lot of value to young startups. What screws up New York is all the random rich people from Wall Street and real estate who know nothing about tech but still want to invest. It’s the same network that keeps new restaurants opening.”

For the more experienced angels—those with battle scars acquired by launching their own tech companies—the flood of seed money can be grating. “These founders are talented, and there’s no doubt they have the ability to create a great business,” said Josh Reznick, who built and sold an online marketing company before becoming an angel investor. “But 20 minutes into the conversation, when they should be asking for $50K, they’re talking about $1.5 million, and I’m just flabbergasted, ’cause we’re talking about an idea on a cocktail napkin. There is frankly way too much money that wants to be invested.”

It’s a complaint that offends some of the younger dealmakers. “It pisses me off that people are complaining about the number of angel investors that have entered the market,” Lerer Ventures’ Mr. Cooper, who founded the start-up Hyperpublic, wrote on his blog. “Personally, I welcome anyone who wants to cut a $50K check to support a new product and pull a smart mind out of Wall Street or advertising or any other industry that is not pushing the limits of what can be,” he continued. “I’m not saying all these companies that are getting funded deserve funding or the valuations they are raising at, and many of them will die, but I’d rather see a slew of dead carcasses on the side of the road with a single world-changing product leaping over them on the way to victory.”

Back at the Ace, Mr. Wohlstadter scanned a text message from his girlfriend and fired back a response. “She hates it when I say I’m working and then it turns out I’ve been writing on my blog,” he said.

“There are certain advantages,” he went on, “not having a family yet, just being able to pound it out all hours of the day or night. I am at every single party, every event, and I’ll take a call from a founder at 3 in the morning to talk about a bug in the software.”

He’s also heading down to Austin for SXSW to promote his companies. “I am an evangelizer; I mean, I will talk about this stuff nonstop.”

The lobby was filling up. The Black Keys were on the sound system. A row of figures was pecking away at laptops along a wooden table, faces washed in the white light of their screens. “The angel craze means a lot more funding for new ideas,” Mr. Wohlstadter said. “But often that becomes a sort of tragedy of the commons, you know. All that money, and no one to guide the entrepreneur.”

bpopper [at] observer.com | @benpopper

Boulder-based TechStars just started running its first New York program earlier this month. The TechStars program offers startups $18,000 in seed funding, a program of mentoring and talks, and the opportunity to demo for hundreds of angel investors and venture capitalists, in exchange for an equity stake of between 2 percent and 10 percent.

TechStars will provide support to the handpicked accelerators in the TechStars Network, founder David Cohen said in a blog post:

Over the last 6 months, we've fully documented our process and are now making it available to members of the TechStars Network. We're taking the lead on making sure we're driving best practices into the seed accelerator model so that it best serves entrepreneurs everywhere. We'll be organizing an annual conference both for the innovative leaders of these programs and also for the founders who attend these programs. Through the TechStars Network, we're sharing our legal documents, ensuring that mentors who contribute their time are recognized and rewarded, streamlining access to investors, ensuring that entrepreneurs have easier access to these programs, sharing deals and resources, and more. What this means for aspiring entrepreneurs is that there will be more high quality seed accelerators in more places, with more mentors, and more support for them.

The TechStars national accelerator network was announced in conjunction with the Obama Administration's Startup America initiative. Accelerators in the network include New York's Blueprint Health, which mentors entrepreneurs starting companies in the healthcare industry.

ajeffries [at] observer.com | @adrjeffries

For those who are keeping track, that means one more company slipped in than was originally planned. 

It's an interesting range of companies. Two companies have yet to write a single line of code, four have raised some funds already, one is generating a lot of revenue and another two are actually profitable. 

"This definitely skews towards much later stage companies than Techstars is known for working with," says managing director David Tisch. "We've been so happy and impressed that these companies see value in working with Techstars and the mentors we've brought together."

Techstars will help the early stage companies to form their identity and figure our their business model. For the later stage firms, they will work on helping them to focus and scale. "We're in the business of getting our companies funded by other people," says Tisch. 

In other words, a million dollars is cool, but you know what's really cool...

Here they are:

CrowdTwist - NY, NY Social Loyalty and Rewards Platform

FriendsList - NY, NY Social Classifieds

HomeField - NY, NY Online Video Analytics Platform for Sports

MigrationBox - Chicago, IL Easy Email Migration

Red Rover - NY, NY Engagement Platform for Institutions and Enterprises

Relusions - Los Angeles, CA Customers On-Demand for SMB’s

SocratED - NY, NY Mobile / Interactive Learning Platform

ToVieFor - NY, NY Fashion + eCommerce + Gaming

UrbanApt - NY, NY Community Driven Hyper-Local Guide for City Living

Wiji - Boulder, CO Interactive and Intelligent Digital Signage Software  

And a mystery company focused on building a "Platform for Tablet Publishing and Advertising."

bpopper at observer dot com - @benpopper

"Applications to @TechStars in #NYC are now closed. 579 applications mean 1.7% will be accepted," TechStars tweeted this morning.

There is no official list of who applied, but if you follow the trail of brownnosing online, you can spot a few likely aspirants. 

KartMe, a web app for organizing bookmarks, and Text-A-Cab both put in applications, judging by the amount of kissing up they did on Twitter. One entrepreneur who got an early rejection has already uploaded a video of himself making the best of it -- "Why I'm happy our 2010 TechStars application was denied" -- to YouTube and Reddit.

TechStars offers promising startups up to $18,000 in cash plus three months of coddling from New York's biggest founders and investors in exchange for about a six percent equity slice, similar to the Y Combinator program that has been called "the new model" for tech investment.

The biggest draw for entrepreneurs is the all-star lineup of 87 mentors, which include Silicon Alley notables like Dennis Crowley (FourSquare), David Karp (Tumblr), Chris Dixon (Founder Collective) and Fred Wilson (Union Square Ventures).

Now Check Out: Techstars Battles Y-Combinator For NYC Talent