Think Beyond Silicon Valley – The US Startup Hotspots Founders Need to Consider

Australian startups looking to expand into the US often have their eyes on Silicon Valley. And why not? It’s home to some of the world’s biggest businesses and has seen small businesses become household names.

Look closely, however and startups may discover that the streets aren’t all paved with gold in the Golden State. There are dozens of burgeoning startup hubs springing up all over the country.

The challenge is finding the spot that’s right for your business.

Innovation is taking place right across the country. When choosing a ‘HQ away from home’, founders must look for a city and startup ecosystem that plays to the strengths and focus of their business. That means evaluating the fundamental differences between the different startup scenes.

Important factors to consider include understanding where potential VCs and clients are located, the cost of doing business and differences in culture and in how business is conducted.

Boston and Seattle continue to attract strong interest but cities such as Washington DC, Austin, Minneapolis, Atlanta are flourishing. These cities are providing significant incentives for companies to set up shop and thrive. The biggest Silicon Valley contender, however, is still New York City.

Why startups should take a bite of the Big Apple

New York is the financial capital of the world and, over the past ten to fifteen years, it has become a hive of innovation, with major capital injections from local government through to venture capital firms. When tech entrepreneur Michael Bloomberg was appointed Mayor of New York City, there was a surge in interest, investment and collaboration.

New York City is now the world’s second largest startup ecosystem, behind only Silicon Valley. The startup scene is thriving, with significant collaboration between local government, corporates, universities and entrepreneurs. It has a higher concentration of potential customers which has attracted the world’s biggest brands. Global corporates and tech companies such as Google and MasterCard have established innovation hubs.

All of this interest has resulted in big gains for the ecosystem. Between 2003 and 2013, the New York City tech sector has grown twice as fast in terms of dollars invested as Silicon Valley’s, with its companies raising more than $3.1 billion in funding in 2013. Venture funding for tech companies in New York City also increased by 240% during that time.

The city has established itself as an entrepreneurial megacity, with a focus on FinTech, EdTech, Media/Advertising, City Planning, Professional Services and Hospitality. NYC-based unicorns include WeWork, Kickstarter, Etsy and Buzzfeed, to name a few. Many successful West Coast entrepreneurs, investors, and tech experts are even transferring to the Big Apple, not only because of the excitement surrounding the city but due to social issues in Silicon Valley, particularly regarding the treatment of women in technology fields.

For the past two years, the Big Apple has been ranked #1 globally for supporting women by the Dell Women Entrepreneur Cities Index. In fact, the NYC Mayor’s Office and the Small Business Services Department actively develop programs and initiatives to support both female and minority business owners. Silicon Valley remains the beacon for entrepreneurs globally and offers greater access to capital, in general terms but the lack of funding available to women entrepreneurs and the unconscious bias in the Valley has been well documented.

Expanding with success

When it comes to choosing a hub from which to tackle the US market, there is no golden rule. Each company is going to have different priorities, needs and goals. While Silicon Valley is the original and most established innovation ecosystem globally, there are many cities throughout the US that can offer a solid foundation for expansion.

Success requires planning and startups will need help from those who can help them decide which city is best. Local, on the ground knowledge will be imperative for startup success, no matter which hub ends up being your US home.

If you’re interested in learning more about what is required to successfully expand into the US, be sure to get in touch with our team. You can also check out our case studies of startups who have made the leap.

And if you are a female entrepreneur or a startup that prioritises diversity, consider applying for our next NYC Immersion Program.