In attracting investors, does the city/location of the startup play a role?
3 Answers
It does make a difference, people will invest locally fist.
VCs focus on their favourite areas or those they feel most comfortable with.
That said, there are a lot more investors opening up so you can view any area as
either
"not having enough investment"
OR
"your the first so what ever is there you are in the frnt row due to less competition for the dollar".
The other questions
- is where can you find good staff at a price you can afford?
- is location important for your client base?
- where do you want to live?
- This week in startups.
- This week in venture capital
They both discuss this from different stand points in several shows.
Well location/city does matter for a start-up just because you would want to know which group of people you are catering to. In addition, investors would want to know why you chose that certain location or city.
Every decision should be reasonable, even if the reason is because you live in that area, which would mean you'd be able to spend most of your time there.
As for those two locations, I do not have much knowledge of both. You should most definitely check to see in which of those two areas you are planning to market or start-up whatever venture you are involved in.
Let me know where you choose and if it works out!
:)
I'm from outside the US (Australia) and am currently looking for funding from investors here and overseas. Even though I'm here, we are already a global business with the team in Aus, US and Europe. This is my take on it based on my reading and talking to investors.
- Incubators and seed investors like to have you as close as possible - usually in the same town (or preferably, building). That is because they feel they can add value by frequent input.
- Angel investors generally prefer to invest close to home as they like to be involved in some kind of hands-on way such as mentoring, strategic input or using their networks to help you. However, some angels are loosening up on this as they realise they are living in a global world. (I'm not sure this is the case in the US though where it seems they are still fairly territorial.)
- Most VC firms are pretty open to investing globally. This is because by the time you get to them, you have probably met some milestones and got a lot of traction and so they can see that you have de-risked the venture and are operating well. That makes it less risky for them so they feel more comfortable if you are further away. As the investment market is getting hotter, they are more and more open to opportunities outside their own area/country.
- Finally, I am finding it is more important to target investors who have experience in our sector than investors in the same geographical location.
Looking at the profiles of investors in AngelList.co is a good way to get a feel of how many and who is investing in your area and sector.
So I would base yourself somewhere that makes sense for your business. Unless you are in a total backwater, you will likely find investors in this market if you have business that solves a real problem and has a defined market.
