There are some good engineering schools in the NYC area that could supply the talent they need (Cooper Union, Stevens Tech, Rutgers, RPI, etc.). The problem is most grads don't know about the startups. I went to Stevens ('02) and at the senior career fair it was all banks, gov't agencies, military contractors, and telecoms. There's a lot of (well-paying) competition in NYC that's competing over a well-indebted population of engineering grads.