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Is This the End of Silicon Valley?

If Startup America is to succeed, it needs start-ups to eschew the Bay Area. But there's no shortage of skeptics in the idea a "Silicon Prairie" will emerge.
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The Startup America Partnership launched in January 2011 with lofty goals. It was created to "inspire and celebrate entrepreneurs," while helping aspiring business owners make contacts within the venture community. The ultimate purpose of the partnership is to create jobs—some 100,000 by the end of 2012, to be precise. 

While the partnership does not provide funding for start-ups, it does provide them with something quite valuable: a Rolodex of developers, designers, advisors, and investors within their state, as well as free marketing through the Startup America platform.

And by targeting young, fast-growing companies—even those that area actually just in the "idea" phase—the initiative believes it can make good on its promise to get America back to work. But to do so, says Donna Harris, the managing director of startup regions for the Startup America Partnership, the Partnership must challenge some deeply rooted beliefs about where start-ups can truly thrive.

"We're definitely challenging that assumption that you need to move out to San Francisco [to start a business]," she says. "You don't have to be physically face-to-face with your employees or customer base anymore. Many of these companies are global from Day One. It's a completely different world for starting an enterprise than it used to be."

The "assumption" Harris alludes to—that in order to start up you need to be in a place like San Francisco—is still a pervasive idea among young, aspiring entrepreneurs. Start-up friendly communities are certainly nurturing for entrepreneurs—they offer access to capital, talent, support, etc.—but to Harris and others at Startup America, it's just not a scalable dynamic.

The national diffusion of start-ups is nothing particularly new, either. Michael Burcham, a serial entrepreneur and president and CEO of the Entrepreneur Center in Nashville, says he's been seeing the interest in entrepreneurship grow over the last few years, but aspiring entrepreneurs often lack the resources to turn an idea into an actual business.

"I don't think people quite even understood or had it on their radar two years ago that there might be even 20 start-ups on the ground in Nashville, let alone 50," he says.

Burcham, who now leads the Nashville Startup America region, Startup America's Nashville regional center, says that their center has already screened 600 start-ups, and expects to see that number grow.

So far, Startup America has launched in six regional centers: Colorado, Connecticut, Illinois, Massachusetts, Tennessee, and Florida. But Harris says the partnership is already in talks with nearly 30 states.

"Some of the best conversations I've had have come from places like Nebraska and Iowa and Vermont and Rhode Island," says Harris. "A highly scalable business can and should be able to grow anywhere in our country. This is a platform for us to come together as a community.”

The regions also solve a logistical problem.

Kirstie Chadwick, a venture lab coach at the University of Central Florida who was nominated to lead the Florida Startup Region, says it "blew [her] mind" how many tech start-ups have launched within Florida in the last few years, but says the entrepreneurial networks were not cross-collaborating within the state, which made it extremely difficult for young entrepreneurs to get their footing.

"We've got angel networks and early stage VCs, but if you're a new entrepreneur out exploring, there's just not a place to go to find these resources..." —Kirstie Chadwick, Florida

"We do have resources, but they're very disparate and hard to find," she says. "We've got angel networks and early stage VCs, but if you're a new entrepreneur out exploring, there's just not a place to go to find these resources, and it's a very complicated network."

"That's where Startup America comes in—and that's where it will help," she adds.

To be sure, the are skeptics—and rightly so. The obvious advantage of moving to a place like San Francisco is that there's access to capital markets and plenty of investors. Cairn Cross, a venture capitalist who spent his entire professional life in Vermont, tells me that "The biggest fear I'm hearing from high-growth companies that require tech talent is that they're outstripping the capacity of what's here [in Vermont]. They're constantly on the hunt to find new people." Still, Cross, who says he is in talks with Startup America and is "exploring what this affiliation could lead to," says finding talent is a two-way street: although it may be easier to find talent and advice in a place like Silicon Valley, you'll spend a lot less in Vermont. 

There have been other attempts to create entrepreneurial ecosystems within states, but few, if any, have sought to unify entrepreneurial resources on a scale that Startup America is hoping to achieve. Donna Harris tells Inc.com that in the next few years, the Startup America Partnership may very well change "what it means to be a 'good place' to start a company."

It's a popular idea. The Silicon Prairie group—which represents the start-up and tech communities in parts of Nebraska, Iowa, South Dakota, Kansas, Minnesota, North Dakota, Missouri, and Wyoming—last week officially challenged its group to register more start-ups than California on Startup America's platform.

It's created some sort of friendly competition, says Harris, but it underscores a broader question. In Harris's words: "How do we stop talking about how great Silicon Valley is, saying '[Our city] wants to be the next Silicon Valley of whatever,' and start focusing on what we do well and what we need to do more of in our own state."

IMAGE: iStock
Last updated: Nov 17, 2011




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