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 Simon Berg, CEO of Ceros.
It’s not nearly as important for startups to be in Silicon Valley as it used to be.
Silicon Valley was the place for startups about 20 years ago, but times have changed. Thriving startup communities exist around the world today, each with their own cultures. The unique benefits of Silicon Valley are not significant enough that entrepreneurs require an address in Mountain View. Fundraising and culture are the main areas in which I see Silicon Valley’s reputation helping and hurting it. (Full disclosure, Ceros is based in New York City.)
In London, where I first went to raise funding for Ceros, VCs tend to approach fundraising with the attitude that you’re likely to fail, and it’s up to you to convince them otherwise. When I came to the U.S., I talked to VCs in Silicon Valley and in New York City. In both places, investors assumed you’d impress them, and were disappointed if you didn’t. While nuanced, it was a mindset I really appreciated.
See also: What Entrepreneurs Can Learn From Steve Jobs About Silicon Valley
Yet even within the U.S. VC community, there were a few major differences. On the West Coast, there’s a penchant for theatrics. Investors are hungry for huge moonshot ideas and obsessed with finding the next billion-dollar exit. That gives the advantage to certain types of companies looking to raise money, but it makes it harder for smaller startups to get the kind of attention they deserve. You may feel limitless when you’re pitching, but when you fall, you fall much harder.
On the East Coast, investors want moonshots, but there’s less BS and fewer theatrics during the process. They drill you harder on the realities of the business and your desired outcomes. Maybe it’s the Wall Street effect—investors in New York take a more hard-nosed business approach that you don’t find in Silicon Valley. However, they seem more open to exploring opportunities with modest valuations. They’re not just chasing unicorns.
The other difference I see between Silicon Valley and Silicon Alley is the surrounding culture. I recently visited San Francisco for business, and when I was there, I felt like I was in Los Angeles—except instead of every cab driver being a burgeoning or failed actor, everyone was a burgeoning or failed entrepreneur. The tech scene has gotten so pervasive in the Bay Area that it’s now difficult to find people outside of it.
By contrast, in New York, there’s such a diversity of industries and interests that you’re always meeting people from other walks of life. It constantly challenges you to think about your own work from a different perspective—and that’s a good thing. Ultimately, at Ceros we set our roots in the diverse New York community. So far, it’s paid off in spades.
Read all responses to the Entrepreneur Insider question: How important is it for startups to be in Silicon Valley?
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.