Additionally a lot of the VC figures for Boston count in biotech numbers (as they should) but this often makes it look like we are floating in cash here- which isn't the case. YC also skipped town, which was unfortunate. Thankfully we've got TechStars now handling similar here.

What I think makes Boston special is that we've got some of the brightest students in a very geographically dense area, a great tech community (betahouse, WebInnovators, Sprout Labs), some decent local tech publications (Xconomy, Mass High Tech), coffee shops willing to deal with hordes of laptop users, etc.

Plus while it is expensive here- it isn't so ungodly expensive like having an office in Manhattan. I'm guessing New Work City's (coworking spot in NYC) rent is probably 2-4x that of betahouse in Cambridge. Stuff like that makes startups a bit easier here.