startups

Where to Start (Or Grow) Your Startup Outside The Tech Hubs – Forbes


Back in the day, when an entrepreneur wanted to start a business, they likely looked to establish that business wherever they lived at the moment. Their understanding of the market and their local connections no doubt powered their decision to open the business in the first place.

Now, thanks to the power of the internet (not to mention other technologies we now take for granted, like air travel), we aren’t tethered to our hometown when it comes to entrepreneurship. We can go where the opportunity is, rather than wait for it to arrive. 

We’ve seen tech hubs appear in cities like San Francisco and New York, and to a lesser extent places like Seattle, Austin, and Boston. The idea that you can only succeed within these hubs is dated, of course—you can find million-dollar startups in every U.S. state. But the Silicon Valley Bay Area and the Acela Corridor (Boston-NYC-DC) soak up nearly three-quarters of all venture capital investment. Culturally and emotionally, as well as financially, these hubs attract and perpetuate startup entrepreneurs. 

If you are starting a new business and want to attract top talent without breaking the bank, you might consider alternative cities. The same goes for expanding your business. If you find it difficult to afford excellent tech talent in San Francisco, maybe your tech team should grow elsewhere. 

Either way, you essentially have three options: You can head to an untapped startup city, set up your business in a “hub-adjacent” city, or go remote and disperse your team. 

Test The Water Of An Untapped Startup City

My company, Fundera, recently released a report on the best “untapped” startup cities in the country. The report identified under-the-radar metropolitan areas that show signs of soon becoming mini startup hubs of their own. 

Some may already be on your radar due to their proximity to excellent universities and low costs of living (Durham, N.C., Atlanta, GA, Pittsburgh, PA). Other top contenders seem like surprising bets, including Plano, TX, Cincinnati, OH, and Lexington, KY. 

What’s compelling about these untapped cities? A few factors: 

  • Costs are low: New York and San Francisco are two of the most expensive cities in the U.S. by most metrics. If you’re looking to hire talented people while still providing them with a competitive salary—not to mention bring them together in an office space—you’ll save a ton by working out of a city with lower median incomes and average commercial rental costs.   
  • The talent pools are robust: The percentage of the population with at least a bachelor’s degree in Madison, WI and Plano, TX (the top two cities on the list) actually beats out San Francisco. Other cities have competitive percentages as well. 
  • VC interest is present: If you’re interested in attracting venture capital, many of the cities on the list boast over 100 VC deals over the past three years. 

There may come a time when some of these cities hold the same startup cache as Silicon Valley and Alley. The time to establish yourself there, however, is now—while they still fly under the radar.

Look Nearby For ‘Hub-Adjacent’ Options

If you’re from the coasts, or you’ve already begun to establish your business in a startup hub, you may not be prepared to set up shop in Kentucky, Missouri, or Arizona just yet. 

In that case, you may want to explore establishing or growing your business in a city that is adjacent to or near a vibrant tech hub. 

For example, Oakland-area startups saw over 6,000 VC deals over the last three years. Jersey City-area startups saw nearly 3,000. That means you can save on the cost of living and office rentals, while continuing to secure meetings with investors, just by crossing a river or bay.  

Compared to even the higher-performing untapped cities, like Atlanta (269 VC deals), it’s hard to argue that the same ecosystem exists in cities that aren’t in or near startup hubs at this point. 

Suffice to say, if you’re in the metro-area, you’re in the conversation. Consider the benefits of moving outside tech-hub-limits and seeing what’s possible for your business. 

Built A Dispersed Team That Spans The Globe

Working remotely isn’t just a buzzword, and it’s not just appropriate for freelancers and the occasional full-timer who has earned the privilege. Entire organizations have gone remote over the past few years, demonstrating how effective collaboration and communication tools have become in connecting dispersed teams. 

Tech companies such as Automattic, Zapier, and Buffer all boast completely distributed teams that work across the country, and even around the globe. 

There are two main benefits to this structure: 

  • Significantly lower overhead costs: Goodbye office space. You’ll no longer have to worry about long-term commercial leases, liability insurance, and other costs associated with bringing everyone together under the same roof. You’ll have to invest in enterprise-level tech solutions for communication (no more free plans for you and your team), but this cost should pale in comparison to what you could pay otherwise. 
  • Your talent pool is global: Your search for the perfect engineer or marketer doesn’t end at the city limits. You can hire just about anybody, anywhere, provided they fit your budget and culture. 

There are downsides to this approach, which may be significant—or not, depending on how you feel about your team working outside your direct line of sight. Some people feel it’s important from a cultural standpoint to have everyone more or less in the same place. On the other hand, various statistics demonstrate that remote teams are much happier and more productive—so it will be up to you to decide if those possible upticks outweigh a lack of centralization. 

Increasingly, we should expect that startup growth will take place outside of the traditional tech hubs of the country and the world. If you have a good idea and can hire the right people around you to help enact your vision, you can make it anywhere. It’s up to you where exactly the story of your business will take place—so consider at least one of the above options when doing so, to keep your costs low without sacrificing the quality of your business. 



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