With the cost of living in San Francisco and Silicon Valley astronomical, some startup entrepreneurs are even leaving the tech mecca for more affordable arrangements. A similar high-tech exodus took place over a decade ago, but this time, it seems more noticeable.
Folks and the companies they work for are setting up where the land is flat, cost of living is low, and people still genuinely ask how you're doing.
It's the Silicon Prairie, spanning states like Kansas, Missouri, Nebraska, Iowa and the Dakotas.
The tech ecosystem here may have arguably started back in 2012 when Ben Milne sought money for a groovy, new mobile-payment app, Dwolla, now used by more than 100,000 people, and moving $30 million to $50 million in transactions a month.
The region is getting to look more and more like the Bay with accelerators, Meetups, startup events, and hackathons. The Prairie even has its own Silicon Prairie Awards. This year's finalists have names like Blooomout of Kansas City, Hip Pocket in Lincoln, and Ear Compass, Garbshare, and HIPAA Trek, all out of Saint Louis.
Each Midwest tech hub has its own unique reasons for blossoming.
In St. Louis, entrepreneurs have more resources available today than they did even 10 years ago. Networks such as ITEN, Capital Innovators, and the #1 ranked Silicon Prairie co-working space, T-REx have helped to nurture innovative companies. Small business marketing automation software developer Hatchbuck who launched in T-REx, took a $1.25 million cash infusion in late 2013. Last year Hatchbuck grew revenues over 300% in and is ranked as the fastest growing start up in Missouri according to the MatterMark Startup Report.
The strong tech startup community in Nebraska can be found in Lincoln, a city with one of the lowest unemployment rates in the country. Here, investor networks like the Nebraska Angels, are eager to finance great ideas. Local entrepreneurs will descend upon the city in October of this year for Lincoln Startup Week.
Last year, LinkedIn released a study listing computer-related skills the top discipline in Kansas City. The city is one of eight in the country that offers Google's gigabit Internet speeds, and is ranked as having a Top 10 downtown scene, according to Forbes. And this year marks the first entrepreneurial LaunchKC grant competition worth $50,000.
Des Moines ninth in the country in a recent list of the 14 best startup cities in America compiled by Popular Mechanics. The city aims to become a place where mentors from the long-standing, corporate insurance industry work with entrepreneurs to produce innovative new technologies. 2014 saw an increase in incubator startups taking up at StartupCity Des Moines, which provides working space, money and networking. And hometown, smart lighting company, Igor, closed $2.5 million that same year.
Home of Silicon Prairie News, Omaha is where a website's "About Us" really is about us, according to the Greater Omaha Chamber of Entrepreneurship and Innovation. The city-born BuyNow mobile commerce app is driving return on engagement, allowing consumers to instantly purchase products from multimedia ads by sending a tweet or a text message. The city is one where you not only advocate your own ideas, but the ideas of others. And Omaha's Straight Shot accelerator helps developing technology startups go to market with a sustainable path to revenue generation and future profits.
Prairie State of Mind
San Francisco blogger, SocialMarketingFella recently published interviews with three Silicon Prairie executives about what's happening in Midwest tech. There are some spectacular and insightful differences between the region and its California counterpart. "The companies you see around here are, more often than not, are revenue producing at a very early stage," explains Rick Knudtson, Co-founder and CMO of expert WordPress providers, FlyWheel.
This is very different than the tech industry in the Bay Area. A recent episode of HBO's Silicon Valley had Pied Pipper's startup investor, Russ Hanneman, advising his team not to focus on revenue generation, but brand growth.
And it's often true. Some of the biggest brand names in tech, like Snapchat, Square, and even Pinterest, have yet to break even. "Many companies build large networks of users before ever monetizing," Flywheel's Knudson continues.
Beyond business approach, there's is a great sense of community in the Silicon Prairie startup community. "Everyone genuinely wants to help one another succeed," reveals Jonathan Herrick, Chief Sales and Marketing officer and Partner at St. Louis-based, Hatchbuck. The marketing automation and CRM company has seen funding and mentorship get easier for tech startups to secure, since they started back in 2012.
Silicon Prairie ecosystems and incubators have popped up, along with a rise in mentorship opportunities. Jim McKelvey, Co-founder of Twitter and Square, established the St. Louis-based Launch Code program, which pairs up aspiring coders with experienced developers.
Pair that with flowing early stage and growth capital, from firms like Cultivation Capital (MO), Split Rock Partners (MI), Detroit Venture Partners, and others, and the region's startups have a terrific chance of success. "What coastal hubs like Silicon Valley have managed to capture is what St. Louis continues to build--a strong presence of local resources," Herrick reflects.
The Prairie has an equal sense of startup grit, too. Entrepreneurs who have success in the midwest aren't pampered with the over-abundance of funding Silicon Valley startups enjoy. Kevin Raheja, Head of Business Development at Minneapolis-based conversion technology provider, Leadpages, reveals, "[Silicon Prairie companies] actually have to do things like make money." Raheja continues, "So when they do receive venture capital, they have, in many instances, already figured out a scalable and profitable model."
But what about partners and customers? Does being in the middle of the continent stifle business? How do they feel if a company's working from a pasture, and not calling them from a 415 or 650 area code? They don't really care, according to Paul Jarrett, co-founder of e-commerce platform, BuluBox. "After potential investors hear his business plan," Jarrett reveals, "they don't really care that he's not in the Silicon Valley, but on the Silicon Prairie."
Part of that, I theorize, is because the natural Prairie state of mind, is a calmer, customer-centric one. No one turns down that level of service and hospitality.
In the exploding world of web and mobile technology, not everything originates from the far West. The Midwest, in fact, has a whole lot of contribution to it all.