Source | FastCompany : By ERIK BENSON
Building a successful startup outside Silicon Valley has its challenges, but people do it all the time. One of the biggest hurdles is raising early-stage VC money. Since so many investors are clustered in and around the Bay Area, companies that aren’t can find themselves struggling to draw their attention.
But the good news is that, once you do, you’ll get more runway out of those dollars than your Silicon Valley counterparts will. According to one recent study, the Bay Area is home to the two most expensive cities in the country in which to start a new business. While founders of early-stage startups based in the Valley are struggling to pay exorbitant rents and sky-high salaries, you’ll have the relative luxury of a slower burn rate as you continue to scale.
As an investor based outside Silicon Valley, here are a few tips for entrepreneurs attracting VC funds further afield.
Too often, entrepreneurs get narrowly focused on VCs in the Valley without considering the benefits of staying closer to home. That’s a mistake. Deliberately seek out a firm—or at least one of the VC partners—that’s based in your city or region.
Not only will local investors be more motivated to put dollars to work in their own communities, but a good VC will value the opportunity to regularly meet with you face to face. The best VCs are those who not only fund your operation but who also serve as mentors to guide you in areas like go-to-market strategy and building the right team. There’s no substitute for proximity here. Having the ability to meet without hopping on a plane fuels your relationship at a time when you’ll need it the most.
Taking advantage of being a fish in the proverbial smaller pond can help you make long-lasting connections. After all, raising money is as much a relationship game as it is differentiating your business to the VC. If you choose to see it this way, being outside the Bay Area is an advantage, simply because you’re competing with fewer startups for investors’ attention.
In a smaller market like Seattle or Portland, where it seems like everyone knows everyone, chances are you and your prospective VC have someone in common. I get hundreds of emails every month from entrepreneurs interested in a meeting, so a recommendation from a shared contact can go a long way toward putting you on my radar and establishing a level of credibility.