Four Things A City Needs To Become A Startup Hub
It’s common sense that being part of a thriving startup community can bring immense advantages to your own project. Yet, not all startup founders have the opportunity or desire to move to Silicon Valley, New York, London, Beijing, or any of the other big startup hubs.
In this article, we’ll talk about how to find a productive compromise.
Paul Graham, one of the founders of Y Combinator talks in his blog about the concept of the Milanese Leonardo. The idea is that there is no such person – all the great Italian renaissance painters are from Florence.
Surely, there were people with plenty of talent in 15th century Milano, yet they weren’t able to realize their talent as well as their fellow Florentine painters.
“At any given time there are a few hot topics and a few groups doing great work on them, and it’s nearly impossible to do good work yourself if you’re too far removed from one of these centers. You can push or pull these trends to some extent, but you can’t break away from them. (Maybe you can, but the Milanese Leonardo couldn’t.)” – Paul Graham
The principle is fully applicable to startups. Being connected to a thriving ecosystem is a crucial factor for the success of any startup project.
Yet, the Milanese Leonardo didn’t have access to the internet. To benefit from the advantages of startup ecosystems without moving there, it’s interesting to consider the exact factors that make it more likely for a startup project to succeed in one geographical spot compared to another.
Access To Knowledge
Success in any field is achieved based on accumulated knowledge. Startups and the tech industries in which they thrive have their own specificities, and being part of a community with a deep pool of accumulated expertise makes a huge difference.
It’s hard to be successful in a high-value-added field if you have to start by reinventing the wheel, so access to fellow successful startup founders, mentors, and knowledgeable partners is an advantage that’s hard to compensate for.
To get access to knowledge, you can do two things. First, you can actively consume the informational content created by people who have been successful in what you want to do. Paul Graham’s essays are a great example. Second and much more importantly, you need to search for a personal connection with people working in your industry and located in thriving hubs. Communicate online, connect on social media, participate in forums, and consider traveling to hubs and events to create these connections naturally.
If you are serious about building a tech startup, it’s a great idea to create a strong connection with at least one investor, mentor, or partner located in an active startup hub. This person will serve as your bridge to the community not only in terms of knowledge but also in terms of connections.
Connectedness and Access To Talent
Attracting startup talents is no easy task, so it helps a great deal if you live in a community where you’ll get acquainted with such people.
After the pandemic, however, remote work became much more standard, especially for developers. Building a remote team is almost mandatory if you are not located in a startup hub. You simply wouldn’t have access to high-quality talent locally, which would make your growth much harder.
Access To Capital
Last but not least, most VCs and angel investors with successful investment track records are located in startup hubs. This makes it easier to fundraise if you live and work there yourself. Some investors even say that they don’t invest in companies that are not located within driving distance.
Let’s assume you have already solved your access to knowledge and connections problem, which is a big part of the reason good investors add a lot of value to early-stage projects. If you are only interested in capital, then fortunately it is likely that your local government is trying to stimulate and develop an active ecosystem, and the main way they are doing that is by providing financing to SMEs.
The capital available wouldn’t be close to the amount of capital circulating in startup hubs, but the competition for it would be smaller. If you manage to build good traction, then it is possible to find funding locally, which would in turn help you get high-quality talent.
The three aspects we mentioned above form a positive feedback loop. The easiest way to benefit from them is to be part of a thriving startup ecosystem, but if that is not an option, then you can try to use the power of online connection and remote work to compensate and put yourself in a similar position.