3 tips for choosing the right city for your startup

TECHNOLOGY

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You’ve got your disruptive idea. You’re making the rounds with angels and VCs. But where will you launch and set up shop with your new startup?

A successful business can have origins in almost any location — Rogers, Arkansas, was the site of the first Walmart, after all. Strategically basing your startup, however, can add power and velocity to your growth, positioning you to gain partners and market share more quickly.

On that note, below are three key points to consider when evaluating the ideal city for your startup:

1. Access to customers

The Bay Area is an easy answer for any tech company, but it might not be where most of your customers are. Examine where other startups in your field have started and succeeded. If you’re in health IT, Atlanta could be your customer hub. If your software is related to government, head to the Beltway. Face time is the best way to build and nurture relationships, and you want to have the ability to easily serve customers where they are.

When considering the ideal location for our university-oriented tech startup, my cofounder and I of course gravitated towards the biggest tech centers with universities: Boston, the Bay Area, New York City and Austin.

One of the biggest differentiators for Austin was that it housed not only students, but some of the top property management companies in the country, such as Campus Advantage and, in nearby Irving, Greystar Student Living. Austin also hosts the InterFace Student Housing Conference, one of the biggest annual industry events in the U.S. It was clear to us that Austin would give us not only a solid and growing tech ecosystem, but proximity to the students and property-management customers that we’ve created our app to serve.

Where you want to be 10 years from now should factor in as importantly as your immediate business needs. Finding social equity in your community of choice positions you for success in the future.

Austin positioned us at the core of what I believe will be a long-term boom. It’s the ideal place to be right now, when it’s still a “big small town” where I can call any of my investors on the phone anytime. That wouldn’t be an option in larger tech hubs, nor would I be able to know all of the major players personally, the way I do here. The tight-knit community is ideal now, and we’re excited to have the opportunity to grow with it.

2. Affordability

Once you’ve raised that precious capital, you want to stretch it as far as you can. Again, while the Bay Area is an intuitive place to go find capital, that 12% California state income tax will shorten the runway for your money — unless other factors, such as the quality of the ecosystem, offset the tax loss.

In our business, we ran the numbers and decided that we’d rather save that 12 percent and put it towards business development and R&D. Also, Austin’s investor environment was more than adequate to serve our funding needs. This may or may not hold true for you, depending on what your investment requirements are and which industry you serve.

On that note, also consider the quality life. As the father two children, it was important that the home base for my startup was family-oriented. The high cost of living in San Francisco, Boston and New York would cut into the opportunities I wanted to provide for my family, and that was an important factor in choosing Austin as well.

3. Ecosystem

A good ecosystem makes success flow naturally your way because the people, resources and infrastructure are in place. In the same way that you’ll quickly succeed at snowboarding if you live in a ski community with snow-covered mountain outside your door, your company will flourish when investors, partners, customers, workers and suppliers are located nearby.

In addition to customers, Austin had a lot to offer us in terms of investors, incubators, accelerators and VC firms. ATX Ventures, Capital Factory, TechStars and Silverton Partners are some examples of great Austin-grown establishments. Then there’s SxSW, arguably tech’s ultimate networking event, where, among many other notables, Twitter and Oculus Rift launched. Austin is not everyone’s ideal ecosystem, but for our particular product and industry, it was perfect.

One size doesn’t fit all

It’s worth taking the time to strategize the best location for your startup. You’ll find that your impulsive first choice might not match what’s actually the right place. Statistically, few startups make it big — and you want to do everything in your power lock in every strategic advantage — beginning with the new home for your startup.

Jordan Wright is the cofounder and CEO of Comfy, a startup changing how university students locate and secure housing.


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