In at least one respect, Kansas City is going Cleveland one better: Silicon Prairie and the Ewing Marion Kauffman Foundation's new Center for Entrepreneurial Leadership recently announced the creation of a large-scale information network designed to match investors with early-stage companies. "We've suffered from a lack of seed and venture capital," says Silicon Prairie's Jerry Stogsdill. "Now we're addressing that issue very aggressively."
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And Now: The Envelope
Alphatronix's Bob Freese and his partners looked carefully at Kansas City, as well as at other finalists such as Washington, D.C., and Salt Lake City. Various cities scored high on one or another criterion. Washington had a well-developed high-tech infrastructure; it also had high costs and a mixed quality of life. Salt Lake City had moderate costs and a high quality of life, but transportation was a problem: reaching customers on the East Coast wouldn't be easy. The ultimate winner: Research Triangle Park, in the Raleigh-Durham area of North Carolina. "Other places in the country might look better in any given category," says Freese. "But when you begin looking at two or three criteria, this area just pops right up."
Ironically, the Research Triangle region is a Johnny-come-lately to the entrepreneurial economy: most of its technology companies are branches of national or international concerns, and start-ups until recently were few in number. "If you left IBM down here, people would ask you why you lost your job," says Fred Hutchison, a Raleigh lawyer who has been involved in local economic-development efforts. "In California they'd ask why it took you so long." But in the past few years, Hutchison and other observers say, the atmosphere has changed noticeably. An organization called the Council for Entrepreneurial Development (CED) offers start-up assistance and networking opportunities. The North Carolina First Flight Center, a state-sponsored nonprofit, recently opened Research Triangle Park's first new-business incubator. Among the signs of change: people such as Gerard Hall, a young New Jersey native and Harvard graduate who runs two-year-old SportsMedia Technology Corp. and has a company called Schoolbook Computer Systems almost ready to launch. "With my kind of businesses, I could have located anywhere," says Hall. "But I wanted a great place to raise a family and settle down, as well as a great place to run a high-tech company."
The emerging interest in entrepreneurship clinched the deal for Freese. "A small company coming into this area gets a lot of help from an organization like the CED, all of it free," he says. One key moment for Alphatronix: it made a presentation at a venture-capital forum organized by the CED. That led to one contact, which led to another, which led eventually to two rounds of expansion capital totaling $4.5 million.
Today Freese couldn't be happier with his Research Triangle home. Even so, you get the sense that several of the cities on his list would have been fine, too -- and that they aren't the cities that would have been on anyone's list in the past. "You go back seven or eight years," he says, "and everyone was talking about Silicon Valley, Southern California, and Boston. Those areas just aren't as fertile for growing new companies today.
"But Cleveland, Kansas City, Raleigh-Durham -- they all have a reasonably good quality of life, good transportation, good educational systems, a favorable climate for start-ups." The right city for you? It's your call. But your own list, like Freese's, may include some unexpected candidates.
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Data for this article were compiled under the direction of special-projects consultant Sara Baer-Sinnott.
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TOP OF THE LINE
Entrepreneurship
Most Business Starts 1989-1991
1. Las Vegas 2. Orlando
3. Phoenix 4. Atlanta
5. Raleigh-Durham, N.C.
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Most young high-growth companies 1989-1991
1. San Jose, Calif. 2. Las Vegas
3. Anaheim, Calif. 4. Seattle
5. Houston-Galveston
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SOURCE: Cognetics Inc., Cambridge, Mass. Business-starts leaders are cities with the most new businesses of five or more employees, founded between December 1989 and December 1991, calculated as a percentage of all businesses in the area. Young high-growth companies are companies whose employment growth (in both absolute and percentage terms) exceeds a certain threshold; the leaders are cities with the most high-growth companies as a percentage of all young companies in the area. Metropolitan areas with fewer than 500,000 people were excluded.
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Employment
Job Growth 1990-1991
1. Salt Lake City 2. Houston
3. Denver-Boulder Riverside, Calif.
5. Indianapolis
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SOURCE: Bureau of Labor Statistics; Woods & Poole Economics, Washington D.C. Excludes cities with fewer than 500,000 people in 1991.
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Projected job growth 1991-1996
1. Riverside, Calif. 2. Orlando
3. Houston 4. San Diego
5. Sacramento
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SOURCE: DRI/McGraw Hill, Lexington, Mass. Excludes cities with fewer than 500,000 jobs in 1996.
