Do You Have To Go To Mecca?

  Originally uploaded by macoggins.

Randall Stross suggests in today’s New York Times that Silicon Valley remains "mecca" for tech startups. And he cites data that Silicon Valley has consistently drawn about 1/3 of all venture capital dollars in a given year. Randall is right that Silicon Valley is the biggest venture capital center in the world.

But his implication that you really can’t do a startup as easily elsewhere demands a response.

Where is the other 2/3 of the capital being invested? Boston, New York, Los Angeles/San Diego, Seattle, Denver/Boulder, Austin, Chicago, DC, Atlanta, London, Tel Aviv, Banglore, Beijing, Shanghai, etc, etc.

The venture business is alive and well all over the world. And it’s getting easier to do startups outside of Silicon Valley every day.

Randall cites the fact that 43% of "web 2.0 deals" were in the bay area. Well that may be true. But as someone who invests in "web 2.0 deals", I can tell you that we are seeing really interesting "web 2.0" deals coming from all over the world. And in many cases, the most interesting ones are not coming from Silicon Valley.

Let’s look at the three biggest Internet deals of the past three years, Skype, MySpace, and YouTube. Only one of them came from Silicon Valley.

I think entrepreneurship is going global. It’s a flat world in the venture capital business. The best developers are not only in Silicon Valley. They are in Siberia, Israel, Australia, Argentina, and Canada as much as they are anywhere else these days.

And the comment by Seth Sternberg that:

“In New York, it would
be extremely difficult to find a law firm willing to defer the first
$20,000 of your legal fees,” Mr. Sternberg said. “Here, we got that.
It’s a pretty standard thing in Silicon Valley.”

is dead wrong. I can name three firms that we work with regularly in NYC that are more than willing to do work for free or at a loss in order to get a company going.

Same with this comment:

He did end up needing Silicon Valley for something else: technical
talent that would be willing to accept equity in place of any salary.
Six weeks ago, he moved to Silicon Valley to recruit more people like
his chief technical officer, who has been working full time since Jan.
1 for equity only.

Working for equity in lieu of cash is not somthing that is limited to Silicon Valley. It happens all the time in NYC and every other place that there is a startup culture.

Randall is a professor at San Jose State. Maybe he should get out of Silicon Valley and see what goes on elswhere. I’ll give him a tour of the startup scene in NYC, and I am sure there are people in Tel Aviv, London, Seattle, and Toronto who will do the same.

I am not predicting the Valley’s demise. It’s a wonderful place to do a startup. But it’s by far NOT the only place.

#VC & Technology