Location Maybe Sorta Matters?

Harvard Business Review posted a little piece the other day extolling the virtues of building your startup in Silicon Valley (or at least one of the startup ‘superhubs’ – San Francisco Bay area, New York, Boston).

Some have taken issue with the source of data (Crunchbase) while others have argued that the definition of success was off. And the data itself, in my opinion, wasn’t as compelling as I would have expected (10% longer to raise a round, 10 to 15% less in follow on rounds, etc.). But regardless of what you think of the data or the argument, the article still raises a valid question – is it easier to play the startup game in one place vs another?

Now I’m a huge believer that you can build a successful company anywhere, even a technology company. There are tons of case studies. And you definitely don’t have to take venture capital to do so. Plenty have bootstrapped their way to success. As long as you have a great product, customers willing to pay for it, and you’ve got the risk appetite to go for it, there’s no stopping you from opening up in Ann Arbor, Dallas or Berlin. (Yes, I’m ignoring things like recruiting and networking which should also play a major role in your decision making process).

But therein lies the key differentiator – who is going to assume the risk? More specifically, the financial risk. If it’s you, the founder, then do as you like. You are your own angel investor / VC. But if you’re unable or unwilling to take on that risk, it’s still a very good idea to go where the money is. It’s one less thing to worry about. And let’s be honest, the odds are already against you, why add yet another hurdle?

The upside to this is that the money is now in a lot more places. Seattle, Boulder, Austin, Chicago, Las Vegas, Los Angeles and more. Sure, the superhubs are outpacing them by a wide margin still, but things are changing. Just look at the number of angels and VCs who have been or are now expanding their geographies to increase deal flow. Not to mention the accelerators and incubators that have popped up virtually everywhere.

So is it easier? For now, I’d say yes. There’s simply too great an ecosystem in place to say that all places are created equal now. But my gut tells me that in 5 to 10 years, maybe sooner, the list of superhubs will be a bit longer.