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In the past, tech startups needed lots of talented employees. But things have changed. Technology is so helpful now that it only takes one talented tech person. The only employees needed are for sales, administration, etc. And even those are not always needed, depending on the kind of business. What you really need to start your own tech company are the right tech talents, which you presumably have or you wouldn't want to start that particular company, and lots of money to live on and pay minor expenses while getting your technology developed and your business operating. You don't need venture capital, but just lots of your own personal money, to make sure you don't run out before you have income from your startup.
New York and Massachusetts: neck & neck at $3.3/$3.4 billion
Texas and Washington State: $800-ish million
Utah: High $700's
Down at the bottom, Minnesota and Wisconsin are low $200 million. The true flyover states barely budge the needle. Nebraska leads the pack at $25 million
I was on the founding team of a VC-backed tech startup in metro-Boston that consumed $90 million of VC. That's more than all the flyover states combined.
The reason why startups are concentrated in California, Boston, New York, and to a lesser degree places like Seattle, Austin, and Raleigh-Durham is that they have critical mass for talent pool. When you're in your A funding round building your core team, you're not staffing with people who have never done it before. Your core talent needs to be strong achievers who are already experts in your technology. You're not going to get many of those people to relocate to Omaha from a major metro area where there are dozens of job opportunities. They own a home. They have kids in the school system. Most startups fail. If you've moved to Omaha and your fledgling startup folds, you can't find another job across town in a few days. You're packing up your rental house and the moving truck is taking your belongings back to one of those big metro areas.
yes, but I don't know how important those numbers are. A lot of companies across the U.S. go to Silicon Valley to acquire their funding. You don't need to be in California to get funding from a California VC.
No one is threatening to overtake the Bay Area in startups. Everybody knows that there is an established second tier of cities, we can argue about who, but they include places like Raleigh, Seattle, Austin, NYC, Boston, that form a second tier behind SF.
But I think there's another smaller tier of cities that have viable startup cultures as well. Any investor with $$ can magically become a "VC," and there are a number of places in the US where startup culture is budding.
yes, but a lot of companies across the U.S. go to Silicon Valley to acquire their funding. You don't need to be in California to get funding from a California VC.
That doesn't change the tally. My $90 million VC-funded startup was in New Hampshire just over the line from Massachusetts. One of the lead VCs was a Menlo Park VC (that's where all the Silicon Valley VCs are). When my company was included in VC tallies, that California money was in the "New Hampsire" bucket. VC firms get their investment capital from doctors, dentists, lawyers, and corporate execs all over the company. They can invest wherever they want. People fly into SFO from all over the country to talk to the Menlo Park VCs because they have more than half of the pool of VC money.
Quote:
Originally Posted by eok
In the past, tech startups needed lots of talented employees. But things have changed. Technology is so helpful now that it only takes one talented tech person.
I've done 7 VC-backed tech startups in my career. This statement is nonsense. In all of them, there was a core team of experienced A players and a much larger group of A-/B+ players who were hired later to crank through the enormous amount of work. I telecommute for a living these days. There's no way you could efficiently do a startup with a bunch of telecommuters. There is simply no substitute for all the informal communication that goes on while you're working through all the hard decisions that go with creating a product. The reason startups do much better than big companies is because the team is smaller, stronger, more focused, and able to quickly communicate and reach consensus on all the technical and business decisions. People are working long hours partly because they have ownership in the company where they benefit from the success and partly because it's a very positive, can-do environment where everyone matters. You don't have the big company deadwood and bureaucracy in your way.
Quote:
Originally Posted by J.Thomas
I have no idea why California is so popular
I mean in this age you don't even need workers in an office.
Especially tech startups don't need to hire many people.
You can do most of work online.
You simply don't understand how important informal communication is in a tech startup. You might have a dozen people on the founding team. The company has very limited money from the VC syndicate so everyone has to be incredibly efficient. You can't agonize over decisions and you can't have part of the team going in one direction after a decision to change something has been made and the rest of the team plodding along doing the wrong thing using stale information. You simply can't do that online because it's not efficient enough. It's even worse when you have a number of English as Second Language people on the team. You absolutely have to do it face-to-face or the whole thing is going to fall over.
If I'm starting a tech company, in Palo Alto, I can tap a pool of thousands of strong and experienced people who are already world experts in what I need them to do. In Omaha, I have to either hire young kids out of college who will take several years to climb the learning curve making huge mistakes along the way or I have to relocate experienced people from the nation's high tech areas. I'm metro-Boston. I don't know anybody who would relo to Omaha for an A round startup. That has a 90+ percent chance of failing and nobody would take the risk. The productivity difference between an "A" player and a B-/C+ plodder is staggering. 90% of the work in a startup is recruiting the right team. The remaining 10% is schedule execution. You might be able to build an iPhone or Android application in Omaha with one experienced lead and a bunch of kids but you're not going to do anything much more complex than that.
No one is threatening to overtake the Bay Area in startups. Everybody knows that there is an established second tier of cities, we can argue about who, but they include places like Raleigh, Seattle, Austin, NYC, Boston, that form a second tier behind SF.
But I think there's another smaller tier of cities that have viable startup cultures as well. Any investor with $$ can magically become a "VC," and there are a number of places in the US where startup culture is budding.
There's no particular argument about it. The VC investment per state information is widely published and has certainly always been readily available since I entered the industry in 1981.
Any idiot with a pile of money can be an angel investor in some fledgling company. That doesn't make them a VC. VC firms, or at least the good & successful ones, have a large team that assesses possible investments and then actively tracks the progress of the teams they pick. If the team fails to execute, they're shut off and that company is shut down. With a 90% failure rate, it's kind of important that a VC doesn't throw good money after bad. I've been through tons of proctology exams with the VCs. They do hundreds per year and are usually pretty good at sniffing out the good teams with a good idea and a good business plan. The weak ones are shown the door. Some rich physician in Little Rock isn't equipped to do any of that as an angel investor. That's why they give their money to the Menlo Park boys.
Any idiot with a pile of money can be an angel investor in some fledgling company. That doesn't make them a VC.
i am not aware of any legal restrictions that limit who can be a "Venture Capitalist."
to my knowledge it is just a description, and can be as broad or narrow as a person wants to interpret it. In that sense, any idiot with a pile of money can be a VC.
Or, more importantly, a tech startup can acquire funding from investors who are not venture capitalists. So I'm not convinced that data about VC funding gives a full picture of startup funding.
Here's my question, not necessarily about the tech sector, but the information/tertiary sector of the economy in general: is top tier labor REALLY that important? Is it REALLY important to have the best power dispatcher?
I mean in this age you don't even need workers in an office.
Especially tech startups don't need to hire many people.
You can do most of work online.
Apparently, your exposure to the workplace is very limited, and perhaps non-existent. Collaboration is an essential component of successful businesses, and especially in tech firms. People working on-line tend to be people following established procedures to accomplish a defined task. People working on a new process or a new product or whatever, need to be able to bounce ideas off their peers, and that's especially true with tech start-ups where it's all new territory.
People have different talents and different perspectives. One guy sitting at a computer can have a good idea, but a half dozen guys and gals taking that idea and bouncing that idea off each other for a while can come up with a much better, perhaps even great, idea.
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lol
