Cities Positioning for an Expanding Venture Capital Market

Cities outside of the big coastal tech hubs have characteristics well suited for the high-tech sector.
November 15, 2018, 2pm PST | Camille Fink
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Vadim Fedotov

Roy Bahat, Shauntel Garvey, and Nitin Pachisia explore the startup advantages of places other than Silicon Valley and New York — in particular, the Southern cities of Charlotte, Columbia, and Atlanta.

“The cities we visited represent a new breed of challenger to the geographic dominance of venture capital’s leading centers, who — if they can cover the table stakes — bring advantages the Valley may struggle to capture,” they say.

For one, these cities are racially diverse and also have diverse economies. In addition, people in these cities understand what it takes to overcome adversity, a trait that Bahat, Garvey, and Pachisia say is useful in the venture capital world:

If a startup can make it in Orangeburg, SC, a manufacturing town with a median household income of $29k, it can make it anywhere. Many founders in Silicon Valley have had it so good they can no longer smell money. Startups, unlike many other kinds of projects (like learning to play music), simply require the right timing and dosage of adversity.

To foster these markets, they say investors need to engage beyond financial contributions by participating in local events and mentoring and coaching.

Understanding the culture of and institutions important to a particular place is essential as well, with churches being one example. “More than one founder told us about the role The Creator plays in their startup’s creation. Baptist, AME, and Methodist churches have long undergirded economic development in these cities. Startups harness those trusted networks to find teammates and customers,” they note.

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Published on Sunday, November 11, 2018 in TechCrunch
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