Tucked between a frozen yoghurt bar and a salon selling 'virgin Malaysian hair', Pittsburgh’s newest company offering co-working space for tech start-ups, Revv, seems to be located on an unlikely site. Yet, despite its surprising setting, the company has already attracted 20 start-ups in the couple of months it has been open.

So why is Pittsburgh such a hotbed for these new companies? “The vibe in Pittsburgh is great. There is something about this city that makes you collaborative and entrepreneurial,” says Jocelyn Saurini of Red Blue Voice, a firm that microfunds social campaigns, regardless of political affiliation.

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Set up by Ms Saurini and her high-school friend Josh Lucas, the firm offers evidence of Pittsburgh’s collaborative environment. “Josh and I could not be more different when it comes to party allegiance, but it does not mean we cannot work together,” says Ms Saurini. “[This is] a very Pittsburgh way of thinking”.

Entrepreneurship and innovation is 'very Pittsburgh' too. The city has a long association with tycoons such as HJ Heinz, Andrew Carnegie and George Westinghouse. Pittsburgh is also a city of firsts: it is where the banana split and Big Mac hamburger were invented, and the city gave birth to the first US commercial radio station, baseball stadium, gas station, internet emoticon and heart, liver and kidney transplants.

Seed funding

Most of these achievements would not have been possible without a strong core of early-stage funding. To meet the needs of fledgling businesses, a regional initiative, Innovation Works, has invested more than $52.3m since its seed capital fund was established in 1999.

“On top of direct investment, we provide hands-on support and business expertise, and our staff largely consists of former entrepreneurs,” says Richard Lunak, president and CEO of Innovation Works. That strategy has paid off. Since 2000, companies supported by Innovation Works attracted more than $1bn of outside capital and in 2011 alone they generated $1.1bn in revenue.

Apart from Innovation Works, Pittsburgh boasts a string of pro-business entities, including Pittsburgh Life Sciences Greenhouse, Idea Foundry, the Technology Collaborative and Pittsburgh Technology Council. The city is also a base for 33 venture capital firms that provide funding for later-stage operations.

Despite this, “there is not enough venture capital in Pittsburgh”, according to Sean Ammirati, a partner at Birchmere Ventures and co-founder of mSpoke, a company that became LinkedIn’s first acquisition. But “a great idea will always find its way to funding”, he adds.

Whiz kid

Mr Ammirati’s words are confirmed by the story of another technology whiz, Luis von Ahn. Born in Nicaragua and based in Pittsburgh, when he was 21 Mr von Ahn co-created Captcha, a challenge-response test, which is now used more than 200 million times daily. He then moved on to create ESP Game, an image recognition initiative and, after selling it to Google, went on to establish reCaptcha, an optical character recognition system.

Mr von Ahn admits that after Google's acquisition of reCaptcha in 2009, he was “seriously considering retirement” at the age of 29. Then, deciding that retirement was “boring”, he instead secured $18.3m for Duolingo, his newest project that combines language learning with website translation. But settling down in Pittsburgh, Mr von Ahn shows that tech entrepreneurs can be successful without a permanent presence in Silicon Valley. “Pittsburgh helps me to keep the right balance between work and life. I like it here,” says Mr von Ahn.

Another big advantage held by Pittsburgh, according to Mr von Ahn, is the constant flow of ideas and talent from Carnegie Mellon University (CMU), Pittsburgh’s educational powerhouse. The alma mater of both Mr von Ahn and Mr Ammirati is seen widely as a magnet for blue-chip companies. Apple, Disney and Intel all have their research offices at CMU, and Andrew Moore, director of Google operations in Pittsburgh, admits that his company would have settled elsewhere in the US had it not been for CMU.

Focus on education

CMU, together with the University of Pittsburgh, excels not only in research, but also helps students and faculties commercialise their ideas. But while CMU and the University of Pittsburgh hog the limelight, they are just a small (albeit important) part of Pittsburgh’s educational system.

The Pittsburgh region has more than 150,000 students enrolled at 34 colleges and universities. Schools such as St Vincent College and Robert Morris University conduct highly specialised research in bioinformatics and advanced manufacturing, respectively.

“One of the features of our system is that, although at times we compete with other universities, more often we collaborate with them on various projects,” says Eric J Beckman, professor of engineering and co-director at University of Pittsburgh’s Mascaro Center for Sustainable Innovation.

In that regard, Pittsburgh has stayed true to its blue-collar attitude. Its entrepreneurs remain down-to-earth and boasting about achievements is frowned upon by locals. “We even have our own term to describe someone who is bragging too much about their achievements or wealth. Such behaviour is called ‘jagging off’ over here,” says Bill Flanagan, executive vice-president of Allegheny Conference, a regional economic development agency.

Nathan Martin, CEO of DeepLocal, a marketing company that applies the newest technologies to branding campaigns, confirms that unlike Silicon Valley or New York, Pittsburgh is not a place for egomaniacs. “I used to work in San Francisco and what you see there is a huge sense of ego. In practice that means higher salaries and less loyalty to the company that developers work for,” says Mr Martin. Lower staff rotation means DeepLocal can focus on devising high-tech campaigns for clients such as EA Sports, Reebok and Toyota. In a typical Pittsburgh manner, Mr Martin talks about the names of his clients and inventions, such as the brainwave bike-shift changing system, without swagger.

“Pittsburgh is relaxed. This city is easy to live, operate and innovate in,” sums up Audrey Russo, a New Yorker turned Pittsburgher and CEO of Pittsburgh Technology Council.