Startups are hot again!

Now’s a good time for startups: VCs are investing more money now than they have since the recession hit. But do you have to be in Silicon Valley to get the contacts, staff, and VC attention you need to build a venture-backed company?

There’s no doubt, Silicon Valley is frequently the first choice for startups. And there’s a reason why: 39 percent of 2010 venture capital dollars were spent there, according to the National Venture Capital Association and PricewaterhouseCoopers. But the second largest region is along the I-95 corridor on the east coast, which attracted $6.8 billion, or 31 percent in 2010. And there are several great places for venture-backed startups there.

The best place to start your particular business ultimately depends on the field you’re in, but clearly, it’s best to stick to the coasts, because that’s where the money is.

Since much has been written about Silicon Valley, let’s look at the major startup ponds on the opposite side of the country that VCs are fishing right now.

1. New York

Over the last five years, New York’s share of east coast investments has increased from 18.3 percent in 2005 to 33 percent in 2010, almost doubling. What has fueled this? Digital media and e-commerce. And how have those industries performed? Over the same five years, net internal rates of return in these sectors have been 29 percent, according to the Mid-Atlantic Venture Association. New York is on a roll.

2. Boston

Biotech, material sciences, clean energy and mobile. These industries are vibrant and have eclipsed the region’s hardware and enterprise software businesses for venture capital funding. With an abundance of universities and lab space, this town has always attracted young people with creative ideas. Its educated workforce is unrivaled, and the region has reinvented itself over the last decade.

3. Washington D.C.

The Internet’s backbone started here. It is no coincidence Network Solutions, PSInet, MCI/Worldcom, AOL, Nextel, Sprint, Verizon and Mobile365 all operated in our Nation’s Capital they were dependent on changing telecommunications regulations. A decade later, we’re seeing a revival of the DC tech scene, built on the very Internet backbone that was created here.

This is the place to be if you’re in the business of cybersecurity: DC is a strategic hub, and that will only intensify as political uncertainty continues abroad. Ventures with affiliations to government agencies like DARPA, NSA or the CIA will do well here too.

Finally, look no further than the White House: the government is making efforts to be entrepreneur-friendly. Just weeks ago, the President joined forces with AOL co-founder Steve Case to spearhead Startup America, an initiative to spur investment in innovative American startups.

DC is emerging as a hotbed for startups and investment firms.