The Best US Locations to Build Your Startup (Outside of Silicon Valley)

Why Overlook Silicon Valley In the First Place?

Silicon Valley is the epicenter of the startup world with an innovative, competitive atmosphere consisting of the best and the brightest in the entrepreneurial game. But not every startup will find the environment that Silicon Valley has to offer conducive to their company’s growth.

Firstly, it’s an expensive place to set up shop, in housing, daily lifestyle and funding. Funding opportunities are everywhere in the Valley; it’s true, but it can cost you; sometimes upwards of 30% of your company’s equity. Meanwhile, your startup is competing with the cream of the entrepreneurial crop, and the question isn’t if your startup’s product can compete, but rather if you can keep up with the fast, competitive pace while dealing with the heavy costs of the location.

Now if you do win big, and receive major funding early on - in your seed round, let’s say - it won’t necessarily be as conducive to the growth of your product as you might think. When you have a lot of funds at your disposal, especially while you’re still adjusting major aspects of your offering to coincide with product/market fit, you can find yourself throwing money at the issues, rather than troubleshooting them tactfully and creatively as you would if you didn’t have the luxury of an easy solution. Your product’s growth ultimately suffers in the end because of it.

Now if your startup happens to fail in Silicon Valley, you then lose on a grand scale, and expensively at that. It’s the big leagues in Silicon Valley, but that doesn’t mean that if your startup can’t hack it there, for whatever reason, that it isn’t meant to see steady growth, success, or a great amount of funding.

There are other startup hubs in the US that can be just as conducive to your business’ growth if not more because when it comes to other locations, the risks come at a lower cost and the gains can frequently be more stable. So let’s take a look at some solid, lucrative locations for your startup to call home, other than Silicon Valley.

Alternative Startup Hubs

Boulder, Colorado

Boulder has been a great playground for startups for decades. It started in 1952 when the US government planted a 27-building nuclear weapons manufacturing plant in the area. This lead to a boom in small business production as many jobs were produced with the arrival of the plant.   

Shortly afterward, the 1960’s Flower Power movement led to the rise of organic food startups, and Boulder proved to be a great testing ground for these companies due to the outdoorsy and open nature of its citizens. Boulder was perfect for this market: food companies, specifically organic, in a nature rich environment with citizens that were open to adapting to something new. Hugely successful companies like Celestial Seasonings and Horizon Organic Dairy call Boulder home, not to mention tech powerhouses like Google and Microsoft have offices there.

Today Boulder has the highest startup density rate in the whole country, which is six times the national average. Boulder also averages about $250 million in annual investment and has seen a constant upward momentum in technology patents. Simply put, Boulder is one of the most active and wealthiest startup hubs right now, ranking in the top 20 of the most productive areas in GDP. If startups do indeed attract more startups, Boulder will soon be brimming over with new business.

Seattle, Washington

When you think of Seattle, the names Amazon and Starbucks come to mind. It goes without saying that the presence of these companies has lead to the creation of a lot of jobs and a lot of innovation in the area. With a population of 650,000, and with a reported 55 percent having a college degree, this is a climate buzzing with intelligent millennials creating technology-based startups. To date, there is a record of 825 companies which having launched successfully in the city.

Startup Seattle, an organizer, and facilitator of startup events in the area, reports that VC investment has nearly doubled since 2013 with $804 million having been invested in 139 startups. The city has even reached Series G level funding. Seattle also recently ranked number 1 in the country for technology jobs and was named the fastest growing city in the US right now with a 6.9% rise between 2010 and 2013.

The strong entrepreneurial community in Seattle is in large part thanks to the accelerators like TechStars and 9Mile Labs, who call the city home. Generally, startups that go through TechStars average $2M in follow on investment after their time in the accelerator. These programs are mentorship-driven and help create the conducive environment that sees so many companies thrive in the area.

Seattle is a city that has a startup scene with a sustained momentum, and thus it’s a city in which you can feel comfortable investing your startup’s time and money.

Austin, Texas

Austin is the epicenter of cool in the United States, currently.  Thanks to a cultural boom due to an ever-growing diverse music and art scene, millennials have come in droves to inhabit the area and with them, their innovative ideas.

The atmosphere now has a mixture of old companies and new startups. Dell was created there, making many new tech jobs available, and Facebook, Google, and IBM have locations in the area. The area experienced a 41.4% rise in employment in the tech industry between 2001 and 2013 and with upwards of 50,000 tech jobs available. A few of the most common jobs available in the area are Java Developer positions and development analyst.

They also have a large community of VCs in the area that facilitate the growth of new business. Austin has experienced a 72.5% upswing in investment activity between the years of 2012 and 2015 and it’s annual growth rate (AAGR) is the first 3rd highest in the country, maintaining a steady 14.6%.

When rated on the Affordability scale, which takes into account the average cost of living and the average salary for the market, Austin ranks impressively as an economical solution for young business owners who are looking for more economical house than found in other startup hubs.

Nashville, Tennessee

Nashville has been known for years as the hotbed for the southern music scene. Now Nashville is beginning to be considered a startup hub as well, due to an influx of media agencies as well as co-working spaces in the area. This surplus can in part be attributed to the 48% increase in college graduates who moved to the area between 2000 and 2012. Living in this vibrant location is highly affordable and with the unemployment percentage is at an all time low of 4.6%.

Nashville is currently the second biggest addition of college grads to an area after Houston, Texas. Now, with a Google for Entrepreneurs Tech Hub in the area, the city has become a very conducive location for the startup scene and the self-employed alike.

The city is home to media startups as well as tech startups. Media startups grew from the need to capture the ever-popular Nashville markets like their music and food scene, which, due to these markets has given the city sustained growth for years.

In the tech circles, Nashville boasted upwards of 20,000 tech job positions available in the area in 2015. The most common tech jobs available in the area are Senior Programmer analyst, information security engineer, systems administrator, IT manager, and iOS developer.

Miami, Florida

Miami was recently ranked second in the nation for new startup activity. The location is experiencing a huge up-swing entrepreneurship, which shows no signs of slowing down in the near future. From accelerator programs like  500 Startups,  Venture Hive, Endeavor Miami, Rokk3r Labs, and TECKpert, to new to co-working spaces, such as The LAB Miami, Pipeline Brickell, MiamiShared, MEC261, Miami Innovation Center, Büro, and Right Space 2 Meet the city is enthusiastically embracing its importance in the global startup scene. 

Ultimately, your startup’s location will become your pool for hires (those that you don’t hire remotely that is) and your customer base. These are the two most important things for a young company and the more diverse those groups are, the better. You certainly can’t beget a diverse customer base without a diverse group of employees and for that you need to be in a hip area full of fresh, experienced thinkers, who have some experience in the startup world but are still willing to color outside the lines when it comes to working a new venture. In many ways, Silicon Valley is oversaturated with the same types of entrepreneurs. Thus, these alternative startup hubs offer new opportunities for entrepreneurs looking for an eclectic, helpful atmosphere in which they can grow their business.