Some aspects of this industry expansion are predictable. Almost all Manhattan investment-banking firms are rolling out or expanding their own venture-capital arms, hoping to spawn another Flatiron, the child of Chase Capital Partners. And bankers themselves, tired of the sickening sensation that the real action is happening elsewhere, are quitting their jobs on Wall Street and heading north for Silicon Alley like prospectors racing for the Yukon.

Even the Californians are coming east. Draper, Fisher, Jurvetson, the Redwood City behemoth that funded GoTo.com and Hotmail, just established a Manhattan outpost this winter. "Silicon Valley, Boston, and northern Virginia have built a canvas to paint on," says Tim Draper, founder of the firm. "But the painting is done by the people in New York and Los Angeles, who come from the creative industries."

The most telling activity, though, is happening on the fringes of the industry. Itty-bitty venture-capital firms with quaint local names like Hudson Ventures, Atlantic Venture Partners, Grand Central Holdings, and Silicon Alley Venture Partners (that's Brotman's) have popped up all over the city, most with only $10 million to $100 million to play with (or "put to work," in venturese). At one time, those sums would have been as dismissable as a Canadian quarter. Not anymore.

All Internet companies, from Yahoo! to Kozmo, are funded in stages. First there's the "angel" round, which covers the start-up essentials. Then there's a real first round ("series A"), then a second ("series B"), and possibly a third and a fourth, and then, assuming the company is still generating sufficient buzz, a "mezzanine" round, before it either is bought or goes public. But because the market is on such a champagne high right now, funding a hot company after the angel or first round is extremely competitive -- and often prohibitively expensive. HomeGrocer, for example, just secured $52.5 million for its third round even though its better-known competitor, Webvan, was on the verge of going public. (And what does Webvan do, by the way? Deliver groceries.)

So the real time to start venture-capitalizing -- right now, in New York -- is during the seedling stages of a company's life, when getting in is still affordable. "Are public companies overvalued?" asks Brotman, throwing back his thick, broad shoulders in a shrug. "Yes. Do I care?" He smirks. "No. This is where I invest -- at the seed stage, where valuations are reasonable." If the Internet is a pyramid scheme, in other words, the only time to get in is at the start. Anyone who doesn't is shopping at Saks instead of Loehmann's.

Seed-stage venture capitalists, unlike later-stage ones, are also highly accessible people. They attend forums, press flesh, pound the pavement, return phone calls, open all their mail. One could even say they perform a vital function in the ecosystem of this strange world, because they act as filters: They find small, worthy companies, provide them with a modest amount of money, then bring them to the attention of larger firms later on.

Brotman was once the CEO of a small, worthy company himself. In 1995, at 26, he started AdOne, an online distributor of classified ads. Last year, he sold it to a consortium of newspaper chains for somewhere north of $20 million and walked away with 40 percent of the profits. He says he decided to become a venture capitalist because he knew he'd be good at it. "And besides," he says, "why spend time with one company when you can spend time with eight or nine?"

Right now, Brotman is looking for those eight or nine. It isn't very pretty. He rips open an envelope. Something referred to him by an investment banker. He doesn't even check to see what it is. "Ugh, they get a fee." He flips it over his shoulder.

He opens another envelope and starts to read aloud: An international network of online city guides. He starts to laugh. "Uh, have you heard of Citysearch? Or the failed Sidewalk project Microsoft did? I know it's cool, but I think this is too 1996." Over the shoulder. Splat.

Another envelope: First interactive national insurance agency on the Internet . . . Brotman shakes his head. "They're competing with Quotesmith, which is already public, and insWeb, which is already public, too." He raises his voice, like a Munchkin from the Lollipop Guild. "Hasta la vista, dude." Over the shoulder again.

He once again picks up the business plan for justdivorced.com and slaloms his way through the exclamation points (For kids caught in the middle . . . there will be counseling as well as chat rooms available!) until he finally spots the mission statement: To create an online community for people who've just gotten a divorce. It would include chat rooms, personal ads, and referrals for therapy and legal aid.

Hmmm. He pauses. "One in two families? That is pretty good." He keeps reading. "The problem is, divorce only happens once in your lifetime, hopefully. If they're spending 200 bucks to get divorcée No. 27, what's the lifetime value of that customer, unless they're divorcing three or four times?"

He reads a few minutes more, then reconsiders: Legal battles from divorce can drag on for years. Divorcées remain single for years. Therapy drags on for years. Maybe this idea isn't so cuckoo after all.

Again, Brotman pauses. "I haven't heard of a site that focuses on divorced people," he says. "It is pretty cool." He stares at the plan. "But the thing about it is," he slowly says, "from an investor standpoint, I have 300 plans sitting here. Do I want to focus on all the aspects of divorce for three months of my life? No! I don't! It's . . . depressing."

He tosses the plan over his shoulder. "There are more fun things to do."