3 ms·

If flyover states didn't produce these startups during the last decade of easy capital, I am struggling to see how there would be a new breed of startups when c

by dmode 9y ago

If flyover states didn't produce these startups during the last decade of easy capital, I am struggling to see how there would be a new breed of startups when capital eventually tightens in the next few years. Another problem with investing in "flyover" states is that you are spreading your investment across many states and cities, individually any one of them lack the capital and talent concentration to compete with coastal cities. A much better strategy is probably to focus the entire investment portfolio in Chicago or Detroit. Finally, when you scale your startup to 10s of billions, you will need to attract immigrant talent. Which is much easier to do in the coasts.

kamarg 9y ago
I think you just hit on part of why they weren't attracting VC money the last decade of easy capital in your second sentence. VCs were afraid of spreading themselves out so they just continued investing in NYC/SF. If the mantra is "don't spread your investments out geographically" and you're already heavily invested in an area, how do people not from that area attract your money? Now that the traditional startup hotspots are over saturated with investors, those who can't set the best terms for themselves in those areas are finally realizing they can likely get better terms in places that aren't currently competing as heavily for VC money.
deadmetheny 9y ago
>If flyover states didn't produce these startups during the last decade of easy capital, I am struggling to see how there would be a new breed of startups when capital eventually tightens in the next few years. The cost of living is lower here (the Midwest) and outside the coasts in general. It's easier to bootstrap. There's plenty of successful startups that started in the Midwest, they're just not the Big 3. >individually any one of them lack the capital and talent concentration to compete with coastal cities. A much better strategy is probably to focus the entire investment portfolio in Chicago or Detroit And create another SV situation where all of the talent is squeezed into one small geographic area (granted, with less insane building regulations than SV), in an age where we can effectively work from anywhere in the world that we want to? Hard pass. >Finally, when you scale your startup to 10s of billions, you will need to attract immigrant talent. Which is much easier to do in the coasts. I'm not convinced that we actually lack Americans capable of doing the jobs we need to do. Immigration has been increasing in the past 10 years or so in the Midwest though, despite still lagging behind the coasts, for whatever that's worth.

by dmode 9y ago

kamarg 9y ago

I think you just hit on part of why they weren't attracting VC money the last decade of easy capital in your second sentence. VCs were afraid of spreading themselves out so they just continued investing in NYC/SF. If the mantra is "don't spread your investments out geographically" and you're already heavily invested in an area, how do people not from that area attract your money? Now that the traditional startup hotspots are over saturated with investors, those who can't set the best terms for themselves in those areas are finally realizing they can likely get better terms in places that aren't currently competing as heavily for VC money.

deadmetheny 9y ago

>If flyover states didn't produce these startups during the last decade of easy capital, I am struggling to see how there would be a new breed of startups when capital eventually tightens in the next few years. The cost of living is lower here (the Midwest) and outside the coasts in general. It's easier to bootstrap. There's plenty of successful startups that started in the Midwest, they're just not the Big 3. >individually any one of them lack the capital and talent concentration to compete with coastal cities. A much better strategy is probably to focus the entire investment portfolio in Chicago or Detroit And create another SV situation where all of the talent is squeezed into one small geographic area (granted, with less insane building regulations than SV), in an age where we can effectively work from anywhere in the world that we want to? Hard pass. >Finally, when you scale your startup to 10s of billions, you will need to attract immigrant talent. Which is much easier to do in the coasts. I'm not convinced that we actually lack Americans capable of doing the jobs we need to do. Immigration has been increasing in the past 10 years or so in the Midwest though, despite still lagging behind the coasts, for whatever that's worth.