The Best Place To Launch Your New Business Startup

Earlier this year, Penelope Trunk wrote a blog about the best place to launch your startup. The title was, “Starting a Company in Silicon Valley is Stupid“. In her blog, she pointed out that the location for starting a new business, tech or otherwise, should be based on factors other than where the major venture capitalists reside.  College town

Having worked for a major software company in Silicon Valley, I understand where she was coming from when she wrote her blog. First of all, the cost of living in that area is very high. In fact, the entire West Coast has a high cost of living and high cost of doing business, as do most big cities. Yes, I know that Apple, HP and numerous other phenomenally successful businesses got their start in the valley. However, Silicon Valley is also littered with the carcasses of startups that believed they would be the next Apple or Google.

You might be saying to yourself that in order to be successful your startup will need a team of the best and the brightest employees and you can only draw that level of talent from the tech centers or the big cities. Keep in mind, that there are plenty of smaller less expensive cities which have major universities. A lot of those cities are attractive enough to the student population that is where they would like to stay after finishing college. A great many colleges draw cutting edge businesses into their cities because of the available talent being generated by those schools.

In order to be successful, you will need to like where you live. Chances are, if you are not happy in a particular town or big city, you won’t be very successful there. Even if you are prepared to make a huge sacrifice for your company, don’t expect your employees to do the same. Regardless of how great your idea is, it is critical to put yourself and your team in an area that provides outlets and activities that are in keeping with their needs and desires. Happy workers tend to stay longer and are more productive.

Most startups depend on angel funding, not venture capital. Angel funding can be obtained locally from people who live near you. Most angels have plenty of money and are more interested in edgy, out there ideas that might turn their investment into the next big thing. You have to give them something to brag about to their friends and associates.

Given the fact that only one in ten startups make it, the angel investors are in the game as much for the ride as for the return. Do remember that the angels are investing in you as much as in your concept, so you better learn how to become their best friend as well as their business partner. Learn as much as you can about them and ensure your presentation addresses their hot buttons, their interests and their objectives. Keep in mind, if they don’t like you, they won’t invest in your startup.

If your startup gains traction and requires more funding, then all you need is easy access to an airport. Although a lot of meetings these days are being held online, you will need some face time with potential investors if you expect to raise large amounts of funding. Keep in mind that you might present to eight or ten VCs before you find willing partners.

Also remember that a lot of startups become successful without becoming large organizations. So, if your startup does well but doesn’t grow that large, then you don’t have to move from your original home base. Plus, in a smaller city your company becomes a better known entity and draws more publicity.

There is one caveat. If you are launching a business that is a specialty shop or fashion house, then a major city is probably just the ticket. There are some business types that will only work in large cities and if your concept matches that type, then a major city is your only choice.

And if your startup does make it big, then you can always relocate it to a larger city if need be. Facebook didn’t start out in Silicon Valley, but their headquarters are there now. If you already live in a college town and like it, then you are already home. If you live in a rural community, then do your homework, visit a few towns and find the best fit for you and your startup. Good luck and don’t worry about paying me for this great advice…I do take stock options.

Do you have a startup business? Is it located in a major city or a small town? What are your thoughts on this topic?

Mac McKinley,

  1 comment for “The Best Place To Launch Your New Business Startup

  1. December 16, 2009 at 5:25 pm

    Mac’s location framework probably, to some extent holds true for any budding pro-bloggers out there, too. If you are a solo blogger trying to, from scratch, make a living off of your blog, you probably don’t, in most circumstances, want to locate yourself in any high cost urban areas (Unless the people and the area are what you are writing about). However, I have a soft spot for large cities and one of them is where my feet are located right now, so I am probably the wrong person to listen to on this. :-)

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