A message to KevinHartz: Bring your money to Seattle(iseff.com)
iseff.com
A message to KevinHartz: Bring your money to Seattle
http://www.iseff.com/post/22794897064/a-message-to-kevinhartz-bring-your-money-to-seattle
8 comments
This.
We just raised a seed round in both Seattle and the Valley, and the pricing difference here in Seattle is significant.
Whether SV pricing is fair, and there are steals to be had in Seattle, or Seattle pricing is sane, and the Valley is overheated I couldn't say. But, I will say that Seattle startup quality seems to be improving, and there's a very different startup-to-money ratio going on here.
Come on up Angels! The water's fine!
We just raised a seed round in both Seattle and the Valley, and the pricing difference here in Seattle is significant.
Whether SV pricing is fair, and there are steals to be had in Seattle, or Seattle pricing is sane, and the Valley is overheated I couldn't say. But, I will say that Seattle startup quality seems to be improving, and there's a very different startup-to-money ratio going on here.
Come on up Angels! The water's fine!
Right! There's probably a lot of markets where there's talented people but no overheating economy. Until last year, I was living in Portland, and they've got some amazing hackers, but only a handful of funded startups.
True, but it's a market with less of a support structure which adds risk to any investment made. The question is if the cheaper startups offset the additional risk involved.
What's the track record for Seattle startups? In any given year, 97% of VC returns come from about 15 startups. In the past 5 years, how many of the ~75 startups responsible for most of the returns have come out of Seattle?
ref: http://www.paulgraham.com/hubs.html
What's the track record for Seattle startups? In any given year, 97% of VC returns come from about 15 startups. In the past 5 years, how many of the ~75 startups responsible for most of the returns have come out of Seattle?
ref: http://www.paulgraham.com/hubs.html
I think the author would argue it's a chicken and egg problem and that there are not as many because there's not good funding here. Having lived in both the Bay Area and now in Seattle I think he's right--there's lots of talent here and much less funding.
True, but I would ask another question then: "Have the startups that have failed to be homeruns or have failed outright failed because they couldn't get the financial resources they need or have they failed for other reasons?"
And if funding is the primary limiting success factor, why don't they just move to where the funding is good?
Knowing what the ecosystem is like in a place like (1) Raleigh, NC; São Paulo, Brazil; and (3) Rio de Janeiro, Brazil; I would suspect that there are a lot more risk factors in Seattle than just lack of funding. Funding helps but it doesn't fix all the weaknesses in an ecosystem.
Good hackers alone does not make it a good ecosystem. How about good UI designers and good bizdev people? Are there plenty of them within the Seattle community? I'd expect that the quality of UI designers and bizdev people contribute more to distinguishing Seattle from Silicon Valley. I know that those were certainly the characteristics distinguishing the three startup ecosystems I am familiar with from Silicon Valley. The presence of UI designers and bizdev people have probably contributed more to the success of NYC as a startup hub than the presence of good hackers. AFAIK, NYC historically didn't have a strong hacker community or culture before it rose to prominence. What it did have is solid base of talented business and design professionals available.
All three markets of those markets had access to terrible funding, but if you were willing to accept the terrible terms, funding could be had.
Where I do agree is that an investor like Kevin helps is in providing smart funding. You'd get access to his network and his experience/advice, however the efficacy of his Silicon Valley network would be of limited use to a startup in Seattle compared to a startup in Silicon Valley.
And if funding is the primary limiting success factor, why don't they just move to where the funding is good?
Knowing what the ecosystem is like in a place like (1) Raleigh, NC; São Paulo, Brazil; and (3) Rio de Janeiro, Brazil; I would suspect that there are a lot more risk factors in Seattle than just lack of funding. Funding helps but it doesn't fix all the weaknesses in an ecosystem.
Good hackers alone does not make it a good ecosystem. How about good UI designers and good bizdev people? Are there plenty of them within the Seattle community? I'd expect that the quality of UI designers and bizdev people contribute more to distinguishing Seattle from Silicon Valley. I know that those were certainly the characteristics distinguishing the three startup ecosystems I am familiar with from Silicon Valley. The presence of UI designers and bizdev people have probably contributed more to the success of NYC as a startup hub than the presence of good hackers. AFAIK, NYC historically didn't have a strong hacker community or culture before it rose to prominence. What it did have is solid base of talented business and design professionals available.
All three markets of those markets had access to terrible funding, but if you were willing to accept the terrible terms, funding could be had.
Where I do agree is that an investor like Kevin helps is in providing smart funding. You'd get access to his network and his experience/advice, however the efficacy of his Silicon Valley network would be of limited use to a startup in Seattle compared to a startup in Silicon Valley.
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Or come to Michigan where you can find startups at 2003 era pricing and few angel investor competitors.
Toronto has favourable taxes for small businesses, and is close to some top engineering / computer science schools in Canada and the world (University of Toronto, Waterloo, Queen's University, McMaster). All of my friends currently working on startups in Toronto (myself included) are all bootstrapped, as there's not a lot of VC money around here.