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 Josh Kaplan, director of properties and ventures at United Entertainment Group.
This question triggers a broader interpretation that may be easier to answer: How important is it for startups to be located in the heart of their respective industries? Should all fin-tech and fashion startups be located in New York City? Should all oil and gas startups be located in Texas? Should all media and entertainment startups be located in Los Angeles? If we split the question into how your startup relates to your market and how it relates to raising capital, the former is astronomically important. It’s microeconomics 101: Your product should always be available to your customer. And as a startup founder, you are always selling yourself. So you must always be available to your market.
Our venture fund specializes in emerging technologies that power the entertainment industry, and we know wholeheartedly that the decisions that come out of Hollywood are determined within a 10-mile radius somewhere off Wilshire Boulevard. If you want to see traction and make a splash in the entertainment industry, you need to be there.
However, from a capital-raising perspective, your location really doesn’t matter. As a native and current New Yorker, I am often asked the question, “Why isn’t your fund based in Hollywood?” Simply put, it comes down to relationships. Sure, most of our strategic partners and clients are headquartered in Los Angeles where the entertainment industry thrives, but we would be limiting ourselves to a small sector of entertainment-focused startups if we didn’t venture northeast of the 101 freeway. And no, I’m not talking about Burbank.
See also: The Secret to Any Startup’s Success
Some of the most curious and capable startups we’ve discovered have come from the most unique places. Sure, Silicon Valley, Alley and Beach have proven time and again to be winsome incubators for high-quality talent. But we are fortunate enough as strategic investors to discover and identify talent across markets like Chicago, Miami, Boston, and even (read: especially) Cincinnati.
I recently spoke with a friend at Chicago Ventures about this exact phenomenon: How do you leverage your strategic positioning in the heart of the Midwest without limiting your reach and interest in the best opportunities nationwide? Once again, it comes down to relationships. We often source deals outside of our physical proximity through the same avenues that have proven to be viable for years: the people we know, we trust, and/or we’ve worked with before. Once you build a network of individuals in various locations, you will find that the world becomes much smaller in regards to your industry.
So how important is it for startups to be in Silicon Valley? About as important as it is for restaurants to have their names on the door. Sure, you want to be available to those who are hungry, but you need to prove your worth before people will just walk right in.
Josh Kaplan is the director of UEG’s newly minted Properties & Ventures practice. Josh identifies and invests in emerging technologies that power the entertainment and sports industries, as well as building and monetizing UEG’s own IP platforms.
Read all responses to the Entrepreneur Insider question:How important is it for startups to be in Silicon Valley?
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.