The Entrepreneur Insider network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “How important is it for startups to be in Silicon Valley?” is written by John Boitnott, advisor to Startup Grind.
The location of a business’s headquarters can be one of the most important factors in its success, especially in those crucial early days. Being in a “hot location” at the time a startup launches can make a big difference in dozens of ways (some of them good and some of them bad). In recent years, some of the world’s hottest businesses have launched in Silicon Valley, making it perhaps the epicenter of innovation in the world.
But relocating to Northern California isn’t a viable option for many young businesses, especially if a company’s founders are already established in another location. The good news is that being in Silicon Valley isn’t a requirement for success in business today. In fact, many entrepreneurs have chosen to launch a startup in their own hometowns. But can such a move be successful? Here are a few pros and cons to help business owners decide:
Silicon Valley relocation: pros and cons
The startup community in the San Francisco Bay Area is massive, and as a result, there are tons of networking events happening nearly every day. Having so many useful resources nearby can help a startup founder connect with the people, ideas, and products they need to grow and thrive.
See also: Why Silicon Valley Will Never Guarantee Success
The support network is also stronger in Silicon Valley. Being among so many small companies means that a new business will be a part of a culture of like-minded individuals. If your venture doesn’t succeed, you’ll likely find nearby professionals are much more understanding, since it’s not uncommon for new businesses to fail. You might feel more inspired to try again—or to find a new job afterwards—than if you had failed anywhere else.
The sheer number of startups in Silicon Valley can also be a disadvantage, though. An entrepreneur may find that heavy competition makes it difficult to find talented employees—cofounders and engineers alike. And the cost of living in Silicon Valley can be a huge barrier to a young company’s success. A new startup founder already has limited resources, which should be poured into growing the business—not paying excessive rent.
Remaining in place: pros and cons
The biggest benefit to opening a business close to home is the inherent support that it provides. Those early years as a startup founder can be isolating, especially without a personal support system in place. Having familiar surroundings can have the grounding effect that a new entrepreneur needs. Relocating to a new location can be stressful, expensive, and distracting, forcing a business owner to spend months adjusting to a new environment. Without the distraction of dealing with lining up new utilities and local services, an entrepreneur is free to focus on the many tasks involved in building his or her business.
Perhaps the biggest downfall to staying in place is that an entrepreneur may not live in an ideal city for launching a startup. Being in a small town hours away from potential clients, investors, and fellow business owners can be a serious hurdle.
Instead of relocating to Silicon Valley, a startup founder may find it’s better to move to a “secondary” bustling business hub. Bloomberg’s list of Top 10 Cities for Startups actually ranks the San Francisco area ninth on its list, behind cities like Boulder, Colorado and Boca Raton, Florida. Perhaps the best city for a new startup is only a few hours away from an entrepreneur’s current location, rather than on the other side of the country.
Silicon Valley will likely always draw entrepreneurs. There’s just a too much innovation occurring there for it to become irrelevant anytime soon. However, it’s important for startup founders to determine whether it’s the right move for them. There are pros and cons for each option, but just realizing that a startup doesn’t have to be located in Silicon Valley to succeed can help in making a decision.
John Boitnott is an advisor to Startup Grind.
Read all responses to the Entrepreneur Insider question: How important is it for startups to be in Silicon Valley?
The One Thing That Separates Startup Winners From Losers by Gene Wang, cofounder and CEO of People Power.
Here’s What Can Happen When a Startup Stays out of Silicon Valley by Karl Martin, founder and CTO of Nymi.
The Surprising Way Entrepreneurs Can Recruit Better Talent by Stephen Lake, cofounder and CEO of Thalmic Labs.
Why it’s Time to Stop Blaming Investors by Peter Thomson, marketing director of SeedInvest.
Focusing on This Won’t Guarantee Success by Michael Maven, founder of Carter & Kingsley.
This City Could Be Better for Entrepreneurs Than Silicon Valley by Simon Berg, CEO of Ceros.
What Entrepreneurs Can Learn From Steve Jobs About Silicon Valley by Andrew Filev, founder and CEO of Wrike.
What This CEO Wants You to Know About Billion-Dollar Companies by Gavin Stewart, co-founder and CEO of NavaFit.
What Entrepreneurs Get Wrong About Funding by Linda Darragh, professor of entrepreneurial practice at Northwestern University.
The Key to Launching a Successful Startup by Josh Kaplan, director of properties and ventures at United Entertainment Group.
The Secret to Any Startup’s Success by William Vanderbloemen, founder and CEO of Vanderbloemen Search Group.
The One Myth Keeping Entrepreneurs From Success by Craig Morantz, CEO of Kira Talent.
The One Thing That Can Drag Your Company Down by Suneera Madhani, founder and CEO of Fattmerchant.
The One Thing More Important Than Being in Silicon Valley by Mollie Spilman, chief revenue officer at Criteo.
The Biggest Downside of Moving to Silicon Valley by Allison Berliner, founder and CEO of Cataluv.
What Virgin Mobile’s Cofounder Wants You to Know About Silicon Valley by Amol Sarva, cofoundera of Virgin Mobile USA and developer of East of East.
The Silicon Valley Myth: Proof Your Startup Can Thrive Elsewhere by Fayez Mohamood, cofounder and CEO of Bluecore.
