Should You Move Your Startup to Silicon Valley?

Startups thrive in Silicon Valley. In fact, the region has been labeled by Sparklabs Global Venture as one of the best ecosystems in the world for startups. For that reason, you might want to consider moving your new firm to Silicon Valley.

Startup

However, although Silicon Valley has much to offer, the area has many disadvantages that can outweigh its benefits for some firms. Before rushing to move your startup to Silicon Valley, consider the following pros and cons that should influence your decision.

Pros

Silicon Valley hosts numerous unique advantages that can help your startup thrive. A supportive community of entrepreneurs alone can give you access to guidance that you might not find in your current location.

Also, Silicon Valley hosts the financing options, beneficial business-to-business relationships, and investors that can turbocharge your business and give your faster and better results than you might otherwise elsewhere achieve.

1. Easy Access to Investment Capital and Talent

Investors gravitate to Silicon Valley because of the many startups hosted there. As a result, new firms can avoid the expensive and time-consuming practice of driving and flying long distance in pursuit of capital. Silicon Valley investors have plenty of experience with funding new ventures and have developed processes that give the firms in which they invest improved prospects for success.

In addition to investment capital, startups can find the talent they need to manage and staff their operations. Silicon Valley can also give you access to other vital resources such as attorneys and legal advisors, partners, and marketers that can collectively give your firm the competitive edge it needs to succeed in local, national, regional, and global markets.

Professionals who live and work in the Silicon Valley area understand the role that failure plays in success. After seeing many entrepreneurs succeed after initial failure, you can expect to discover a supportive environment should your company fail, especially if you have worked hard and developed healthy relationships. Perhaps no other area in the world is equally supportive of failure.

2. The Location of Pillar Companies

Companies such as Google, Facebook and Apple have roots in Silicon Valley and, in many ways, act as pillars that support startups such as yours. If you move to Silicon Valley, you will have many pillar companies in proximity to you, giving you a chance to form mutually beneficial and supportive relationships that can help your firm grow.

Universities in the Silicon Valley area can also serve as pillars that stabilize and support startups. As a source of intellectual property and expertise, academic institutions such as Stanford, Santa Clara University, and the University of California Berkeley can accelerate your business and supply you with a steady stream of talent. Other nearby accelerators such as Y Combinator can also contribute to your success.

3. Mentors and Networking

As the owner of a startup, never underestimate the value of connections formed with other business owners and industry veterans. Such experienced people can provide you with guidance that can help you avoid common pitfalls. When you move your startup to Silicon Valley you give yourself a chance to meet one-on-one with advisors and mentors that can help you navigate the challenging modern business environment.

Cons

Silicon Valley has become an epicenter of venture activity because of all the valuable advantages it affords. Still, every startup is unique, so the region might not fit well with your business model or circumstances. As you consider making the move, consider the following disadvantages that might, in your case, outweigh any positive gains that you could otherwise enjoy.

1. A Lot of Competition

The competitive environment that engulfs Silicone Valley means that you must work smarter and harder than ever before to get noticed by the mentors, venture capitalists, and influencers that you need to thrive.

The competition also affects the labor market in Silicon Valley. With so many amply funded companies in the area, attracting the best talent will cost a lot, often more than what a startup like yours can afford to pay. After all, when skilled programmers or engineers have a choice between working either for you or for Facebook, for example, which employer do you think they will choose?

2. Lack of Customer Diversity

You should consider the customer base in Silicon Valley before deciding to move your startup. Customers and clients in the area are, perhaps, more homogeneous than anywhere else. If you don’t have something drastically different from your competitors to offer, you risk depriving yourself of the ability to attract and serve customers.

Of course, if you offer something too different, such as fashion products, you might do better locating somewhere closer to your customer base. Suppose you had a killer product that addresses the needs of soccer moms. You might do better operating somewhere closer to your market so you could perform market research, and produce products and services that your market can afford.

3. It’s Expensive

Living in Silicon Valley requires a lot of money. The cost of living is about 87 percent higher in the Valley than the average U.S. cost of living. Lagging only behind Los Angeles and New York City, Silicon Valley will place a major financial burden on you and your firm, unless you have a solid plan for generating the revenue and profits required to support such a lifestyle.

As part of the cost of living in the area, you can expect to find yourself priced out of homes similar to the one you now own. The area also has astronomical rents, so only those with the most lucrative business models and plenty of money in the bank can live there stress-free. If you want to ensure your financial stability and keep your firm above water, you might want to look elsewhere to relocate your business.

You can build a fantastic business if you live and work in Silicon Valley. The unsurpassed resources in the area have been enough to propel countless startups to the top of their industry. However, before relocating there, make sure you consider the possible disadvantages offered by the area. A rushed move without careful thought could make a quick end to your venture.

You should also remember that you can succeed away from Silicon Valley. If necessary, you can fly there to meet with prospective investors and mentors. Technologies such as video conferencing can also bridge the geographic gap without forcing you to relocate. Ultimately, the decision about moving to Silicon Valley is up to you. Make the right choice and you will set the stage for a wonderful future.

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Author: Eric Gordon

Eric D. Gordon is an independent business development and marketing specialist for SMEs. He loves sharing his insights and experience to assist business owners in growing their revenues.

2 thoughts on “Should You Move Your Startup to Silicon Valley?”

  1. Hey Eric,

    There are many reasons Silicon Valley produces the most aggregate value, regardless of whether measured on Wall Street or in the private markets. All startups need to execute against sales and business development goals.

    The time-frames are tight because each investment round has milestones built in that help future investors measure the talent of the team as well as the company’s growth. Eventually, thanks for sharing your best experience regarding this topic in deep.

    With best wishes,

    Amar Kumar

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