What should entrepreneurs be looking at when deciding where to start a company? If you are putting together a startup or expanding an existing one into more territories this is an essential question to examine. Many factors contribute and enhance the possibilities of being able to grow and thrive. Missing any one of them could shut you down before you start. Having been a leading provider of financial consulting to many rising stars we are familiar with what goes into the deliberation. Here are some key starting points as you evaluate areas and think about where to begin your next phase.
Part of what shapes the success of any startup is the talent pool available. This is especially important for any tech focused firm, such as those concentrated on SAAS or similar developments. You will want to make sure that the colleges in the area you choose have strong science and tech departments. Having a history of generating founders previously helps, both in term of a track record for the area as well as possible synergy down the line when it comes time for hiring, or possibly for partnering on projects.
The colleges feeding into the startup ecosystem are most heavily concentrated in California, either in the Silicon Valley area with Stanford and Berkley, or further south thanks to University Of California – Los Angeles and University Of Southern California. New York City is a powerhouse as well between NYU, Columbia and Cornell, while further north is Syracuse.
Despite that there are many successes originating across the USA. In a recent overview of startups launching right out of the gate by students, or in some case while still in courses, there is development ranging beyond NY and Cali. There are notable undertakings springing forth from the students of Carnegie Mellon in Pittsburgh, Georgia Tech, Duke University in Durham NC and Northwestern University in Evanston, Illinois.
Growth year by year
It is just as important that not only is the area generating a startup aligned ecosystem, but more importantly that it is growing. You will want to see how rapidly are startups being launched in the area. What kind of deal flow is coming in, and is it increasing?
The densest collection, just like with the colleges, will be on the coasts. Even with those deals occupying most of the limelight other cities have been experiencing bursts to catch up.
Outside the lens of the usual scenes Missouri has had two cities, Kansas City and St. Louis, experience over 30% and 342.7% growth in deal size respectively since 2015. Salt Lake City in Utah has posted an increase of 113.27% since 2015 as well as averaged 27% growth annually over the last 5 years. Another rising star has been Nashville, posting deal growth numbers of 80% since 2015 and YOY increases of 21% since 2012. All this posits well for startups to be a nationwide possibility with each increasing year.
Last, we’ll mention the obvious driver to consider, venture capital investment. If you know from the start that your startup is going to be seeking funding, then you must have a stake in the coasts. While some startups spend time or even prefer to remain privately held and/or bootstrapped those with a determined eye for fundraising should be looking at the big three, SF, LA or NYC.
Those cities alone have nearly 60% of the total investment put forth by venture capital. If those cities are out of reach other notable cities have slices of the U.S. based VC investment. Boston has nearly 10%, and their proximity to NY is attractive. Similarly, Washington, D.C. and the surrounding areas of Arlington and Alexandria, has nearly 4%.
With these three basics, you can begin to assess any city you look at with a critical eye on what matters. Startups are happening both in places known and new every day. They are changing the future and we are glad to support them across the country.
To know more on how we can assist with organizing your financial structure, reach out.