Varick Street Incubator Hatches City Start-Ups

When Andres Blank and Inaki Berenguer started their social-media company last year, they spent the first few months working in the living room of Mr. Blank's one-bedroom apartment along with three other friends. It led to awkward situations.

"Sometimes people would arrive super early and I was still in my pajamas," Mr. Blank said.

Later, Mr. Blank and Mr. Berenguer, graduates of the Massachusetts Institute of Technology, moved their company, Pixable, to a city-sponsored "incubator" at 160 Varick St. There they found a more entrepreneurial environment—not to mention cheap rent in a prime SoHo location.

Opened last July, the 17,000-square-foot incubator houses 28 start-up companies in areas as diverse as financial services, green technology and film.

Incubators and co-working spaces have been around for decades, backed by private-sector investors.

But the Varick Street incubator, run by the Polytechnic Institute of New York University with help from the New York City Economic Development Corp., is one of five that the city has founded with hopes of nurturing a robust start-up culture.

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