I often get asked the question: “What is the best place for startups, Silicon Valley or Seattle?” It’s a fair question. Silicon Valley has been the frontrunner of technology and innovation ever since the foundation of Fairchild Semiconductors. It is the region with the most venture capital and the highest concentration of technology startups in the world. Yet, Seattle has fostered great companies such as Microsoft and Amazon, and we have a thriving startup community. I generally don’t care for comparing the places, each place is distinct, both have their strengths and weaknesses, and you can create great companies in both locations. Usually it comes down to the founders anyway.
Nonetheless, I recently stumbled upon an interesting data point derived from our 2014 Techstars application process. Techstars Seattle received 67% more applications from San Francisco in 2014 compared to 2013, and 34% from California in general. Without revealing the nominal values, I can assure you it is a significant number of startups, and it puzzled me a little.
At first, I figured that if you can’t make it in Silicon Valley something must be wrong with the company. Until I looked further into the applicants. The majority of these startups were in fact very talented people with great ideas. Many of them ended up making it to the final rounds of our selection process and some even ended up being accepted for this year’s class. This lead to the question: “Are Silicon Valley startups looking to Seattle for greener pastures”?
There are many potential explanations to the increase in applications, and I don’t want to extrapolate a single data point. However, from a business standpoint, I think it makes sense for a lot of startups to be located in Seattle as opposed to Silicon Valley. Seattle is the center of cloud-computing and big data, venture capital investments are up, software engineer salaries are lower than in San Francisco, and you have a pool of very talented people graduating from University of Washington, Microsoft, and Amazon on a continuous basis. All the ingredients you need to build a successful company. I wouldn’t be surprised if there is a trend. It makes sense.
What is your experience? Do you see a trend, and if so, what is driving it?
Photo credit: Charles O'Rear who took the Microsoft Windows XP picture "Bliss" picturing a hill in Sonoma County, California.