You may not want to admit it, but moving to Silicon Valley can increase your start-up's ability to succeed.

Maxwell Wessel, vice president of innovation at SAP and an investor with NextGen Angels, argues that moving to a start-up "super-hub" like San Francisco, New York, or Boston is a major advantage for any entrepreneur. Moving to one of these cities is "one of the simplest things" you can do to improve the chances that your business does well, he writes in the Harvard Business Review.

According to Wessel's research, it can take a company 10 percent longer to raise capital for the average Seed and Series A stage funding rounds if they are outside of California, New York, and Boston. But as smaller hubs sprout across the U.S. in ColoradoPhiladelphia, and even Dallas, it's easier to get founding any where you live. So, before you move to Silicon Valley (and inflate her ego even more), ask these three questions to find out if your city is just the right place for your company.  

1. What's your city's greatest strength?

Every city has its own advantages and specialities. Philadelphia is a medical services hub, Houston's focus is on energy, D.C. is synonymous with security and intelligence. "For entrepreneurs starting up outside a super-hub, understanding where their geography has an advantage is key," he says. Successful entrepreneurs focus on solving one real problem, and Wessel says you need to "look for the problems you're better positioned to solve because of--not in spite of--your location." Once you find the problem your city can help you solve, it'll be easier to find employees, customers, and funding through your local network.

2. Does your city lend itself to exposure?

Exposure, Wessel says, is one of the key ingredients to a start-up's success. "Exposure to customers, incumbents, and competitors all drive success," he writes. Not only does a start-up need to be exposed to customers and get its name out there, it also needs to be exposed to all the elements--most importantly fear. By being in a super-hub, you are surrounded by competitors who are better than you, more advanced, and more successful. Wessel says this fear of being dominated is just what a start-up needs: "The fear that you're falling behind. The fear that your products are inferior. The fear that you're two heartbeats away from obsolescence. That fear is the motivator that keeps you driving forward," he writes.

3. How can your city help set your start-up apart from the pack?

Factually speaking, it's easier to start a business in The City, The Valley, and Beantown. Wessel says if you're not planning to move to one of those cities, you have to ask yourself: "What edge [can you] create for your business that others in the [three cities] can't replicate?" He says Tony Hsieh, CEO of Zappos, created a family atmosphere of loyal employees in Las Vegas (oh, he's also building his own start-up city). With limited competition, Hsieh's employees do not have the ability to jump on the next hot company's staff out in the desert, like employees in San Francisco can. What can your city offer to set your company apart from others? If you find the right answer, you shouldn't move.

Published on: Nov 14, 2013