Location, Location, Location. Entrepreneurs, Where You Locate Your Startup Might Be As Important As The Timing

We all know the failure rate of startups, about 90% over five years. And we know Silicon Valley might still be the dominant location in the United States for starting technology companies. Perhaps that is due to the venture capitalist’s insistence that companies they fund be in or move to Silicon Valley. But as you consider the type of company you wish to start, you really should examine the importance of several factors outside of funding that could hedge your startup’s success. Where you locate your startup, even in the age of remote work, might actually be more critical than you think.

Several startup ecosystems, outside of Silicon Valley, have been quietly rising for more than 20 years. And in addition to the actual city, you should be studying the regional entrepreneurship ecosystem for valuable resources.

Entrepreneurs. There is nothing like success to support success. For an ecosystem to thrive, you want to have high number of successful and aspiring entrepreneurs. They create support networks, organizations, meetups and provide advice and mentoring to future entrepreneurs.

Talent. If you are creating a biotech startup, then you should be in San Diego, one of the largest thriving biotech regions in the country. Why? Because your ability to recruit top talent is greatly enhanced. So, as you consider your startup and what it needs at the core, does that talent exist in your selected city or region?

Education. In the age of rapidly accelerating companies based on competition, your potential top talent could be coming out of the local universities. Choose an ecosystem that is graduating a diverse talent base that is critical to your company’s success. Recruit some of this talent as paid interns and recruit them to be your future employees.

Investors. Every entrepreneurial ecosystem needs investors. Study a potential region and look to the numbers such as capital invested, diversity of investments and overall growth trend line. Also, look to the type of investor that may be specializing in an area that your startup is heading.

Costs. Not a lot of founders look at this metric but again it could be critical to your startup’s ultimate success. If you are raising capital, you might need a burn rate or runway to attain your overall objectives. While you may want to be in Silicon Valley, all of the right ecosystem resources might be in Salt Lake City where the cost of living is lower and potential burn rate is much longer.

While there are many cities and regions in the USA that are growing entrepreneurship rapidly, the list below contains the perennial leader, Silicon Valley and another region that has benefited from companies like Microsoft and Amazon and that is Seattle. The rest of the list has quietly spent the last 10-15 years growing their entrepreneurship base and region on a consistent basis. Today, the bottom three are some of the best places to start your company for different reasons.

Silicon Valley: The godfather of startups as a region, it is still very relevant if you can stand the pressure, the costs and the competition.

Seattle: It’s easier to spin out companies from large successful startups like Microsoft, Amazon and Starbucks. Plus, lots of talented potential employees who are experienced from a host of other large successful companies in the region.

Austin: Quietly rising for 15 years, it is now one of the top regions in the country outside of Silicon Valley attracting startups, venture capital, and possible tax advantages. Like Seattle, it has benefited from early and large startups like Dell and others that have spawned a strong entrepreneurial base.

Salt Lake City/Provo: Qualtrics, Domo, Omniture, all were started in what is called ‘silicon slopes.’ Not only that but large tech brands like Google, and Meta (Facebook) have been increasing their employee count in the region leading to a bigger talent pool. The cost of living is also substantially lower than Silicon Valley.

San Diego: Another quietly rising entrepreneurial ecosystem. Its strength might be in its diversity with several industries thriving like biotech, technology, hospitality/tourism, medical device, active outdoor/lifestyle, and the military/defense industry. Proof of its arrival are current ‘unicorn’ startups valued at more than $1 billion including Click up, Flock Freight, Drata, Shield Ai, Seismic, Vouri, Tealium, Biosplice and Kyriba.