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The Case For Launching a Startup Far Away From the Tech Bubble

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When I talk about my journey, I often talk about how and why being from a small, rural town played a big role in me becoming the tech entrepreneur that I am today. When I launched my first startup, Sheena Allen Apps, I was convinced that I needed to be in Silicon Valley for my company to be successful. It wasn’t until the start of my second startup, CapWay, that I truly realized the advantages of operating a company outside of a major tech hub.

People create companies to solve a problem. The problems that those outside of major tech hubs are looking to solve are different than those within most major tech hubs. For example, I created CapWay because many people who live in inner cities and rural areas are victims of the predatory economy. Take a trip to San Jose and count how many payday lenders are in the entire city compared to the number of payday lenders in southside Chicago.

While it is had traditionally been easier to raise money in a major tech hub, it is also expensive to operate a company and live in major tech hubs. Office space could cost you thousands more in New York or San Francisco versus Cincinnati, OH or New Orleans, LA. Talent is also cheaper. A junior developer in the Bay could cost you $150K+ but could cost you half of that if you operated in a place like Jackson, MS.

When I started my first tech company in late 2011, most investors were only funding companies in places like New York, Austin, or Silicon Valley. That has changed. There are now angels and VCs that only fund companies that are outside of these major tech hubs. In fact, I heard Mark Cuban speak at Venture Atlanta this year, and he was very straight-forward about how he prefers not to fund Silicon Valley companies.

I want to be transparent and say that I do think it is a must that you have a footprint or some connections in a major tech hub, but I do not believe that it is a must that you operate there. I had almost one million downloads with my first startup before I ever made my way to the Bay. In fact, even after going to San Jose, I ultimately decided to settle in Austin, TX because it was cheaper and I was still able to get great mentorship.

Two of the most important factors in creating a successful company is timing and execution and unlike five or ten years ago, you can now execute on a high level in a city outside of a major tech hub.

Follow more of Sheena's story in the film SHE STARTED IT.

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(Photo by Brannon Naito on Unsplash)

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