South | Tremendous

For decades, if you wanted to build a startup, you had to be in Silicon Valley. But today, the best place might just be Tennessee.

Or Omaha. Or Little Rock.

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In today’s market, building away from the coasts offers some huge advantages:

1) Lower burn. This is critical in today’s tough fundraising market.

When I meet with companies in NYC and SF, they often have massive burn rates. Part of the reason is high cost of living.

If you rent is $2000 or $3000 a month, you have to pay yourself and your team more. But what if you could rent a 1 bedroom for $750?

In Biloxi, MS, you can!

This means your seed funding will last much longer. That gives you precious time to find product-market fit.

2) Exposure to different opportunities.

I recently met with a company in a small town in the Midwest. They’re building SaaS for meatpacking.

No one in New York or SF is going to think of that. After all, we don’t have much of a meatpacking industry!

The middle of the country simply has different industries than the big coastal cities. And they need tech too!

Would you rather sell a unique, valuable tool to meatpackers or try to sell the 10th team collaboration app to an over-SaaSed startup?

3) Global teams. In the past, you had to be in Silicon Valley or New York because that’s where the talent was.

Now, remote work is common. A startup based in Iowa could hire a developer in SF and a product manager in Brazil.

This levels the playing field, big time.

4) Fundraising is on Zoom. Today, I met with founders in Nigeria, Canada, New York and DC.

Many of the investors are still in the Bay Area and New York. But the founders are everywhere.

Even as COVID recedes, fundraising has stayed on Zoom. It’s so efficient, I don’t think we’ll ever go back.

This means that a Kalamazoo startup and a Palo Alto startup are on similar footing. They both pop up as boxes on the VC’s screen!

If you have a great product and lots of happy customers, investors will take you seriously.

Wrap-Up

There are still some advantages to being in a tech center. You can meet investors at in-person events and learn from other founders.

But balanced against the high costs, you’re better off in the heartland.

Where do you think is a better place to build, SF/NYC or a smaller town? Leave a comment and let me know!

Tremendous