Want to Start a Successful Business? Go to One of These 10 Cities
Many people dream of becoming successful entrepreneurs. While the ability to use one’s skills and expertise to build a business – and thereby control your own destiny – is inherently woven into the fabric of American life, many entrepreneurs, or would-be entrepreneurs, never see their dream take off. While failure is an inherent risk in any venture, a distinct lack of resources is, more often than not, at the core of most abandoned attempts.
So, how does one get a hold of the resources needed? It seems that if you have one of the most precious commodities, time, you’re strapped for the other: money. And vice versa. Finding a way to have both the time and money to set your entrepreneurial plans in motion requires a tricky balance, and plenty of luck to ensure that you actually make it.
Time is one thing. But money? Well, there are plenty of ways to raise capital and financing for your venture. From crowdfunding to maxing out your credit cards, you can typically scrape together the funding needed to at least get started. One other popular method of financing ventures is by attracting investors – investors who use their own money to fund small enterprises that they think will pay off big down the road. These are venture capitalists.
Venture capitalists, according to a report from the Martin Prosperity Institute, invested $42 billion in 2012 – the most recent year for which data was available. From that report, we know that that money was spread far and wide, to more than 150 cities across the country. The lion’s share of that money went to entrepreneurs in the United States, with Europe and Asia trailing.
If you’re an entrepreneur, or at least someone with an idea looking for funding, this report is relaying an important message: you need to get to where the action is. Just like how actors go to Hollywood, and finance professionals head to Manhattan, startups and small businesses looking for investment dollars should check out these 10 cities, which are magnets for venture capital cash.
Stuck between two other startup hot spots – Vancouver B.C. and Portland, Oregon – Seattle has been attracting more and more attention from established companies, as well as venture capitalists. Being home to big companies like Amazon and Microsoft ensures that there’s plenty of talent, so it shouldn’t come as much surprise. Yet, the amount the area received in 2012 was still minuscule when compared to other cities on the list. VCs sent $727 million, or 1.7% of all global investment, to the Emerald City.
The only Asian city to make the list – and one of only two from outside the United States – Beijing secured 1.8% of total venture capital investment in 2012, or $758 million. This is a number that may rise in coming years, though VCs are becoming increasingly wary of China’s tricky economic reporting. Stateside investments are typically less risky.
8. Washington, D.C.
Not everything is gridlocked in the District of Columbia, where plenty of movers and shakers in the startup and small business scene are evidently making a splash. There are a lot of smart, entrepreneurial-minded people in the area, so it makes sense that great ideas would be in good supply. VCs think so too, throwing $835 million in capital at entrepreneurs in the area in 2012, good for 2% of the total.
London is the second and final non-U.S. city on the list, bagging 2% of the world’s total VC investment in 2012 with $842 million. London is another city rife with sharp folks, big companies, and great ideas, meaning that there are many potential windfalls for investors. The city also has a bustling startup scene that outshines all others on the European continent.
6. San Diego
“California’s second-biggest city,” as it likes to be called, San Diego is often outshined by the other business hotbeds in the state, like Los Angeles and San Francisco. But don’t be fooled – the VC pipelines are shoveling money to San Diego in large supply. $1.41 billion in VC cash made its way to San Diego in 2012, good for 3.3% of the global total.
5. Los Angeles
Speaking of Los Angeles, it barely nudged out San Diego for fifth place on the list. The Los Angeles area is huge, and filled with talented people. That makes it ideal for collaboration and idea generation, and VCs took notice. L.A. received $1.45 billion in funding, or 3.4% of the global total.
4. New York
The biggest city in the U.S., and home to Wall Street, Brooklyn, and the Costanzas, New York City is obviously a key target for venture capitalists – many of whom actually live in the area. New York-area entrepreneurs saw $2.106 billion flow to their operations from venture capitalists in 2012, for 5% of the world’s total.
Is the balance of power shifting from one of America’s newest areas – Silicon Valley – to one of its oldest? Boston area startups received a full billion dollars more than New York City’s, which is really saying something. The Boston area saw a total of $3.144 billion in 2012, for 7.5% of the world’s total.
2. San Jose
Ah, there you are, Silicon Valley. San Jose – one of the world’s largest hubs for tech startups and entrepreneurs – is right down the road from San Francisco, Mountain View, San Mateo, etc. All of which are bustling with tech superstars, and the world’s hottest ideas. That means that a lot of money is headed to San Jose, to the tune of $4.175 billion. That was 9.9% of the global total in 2012.
1. San Francisco
Finally – San Francisco is the reigning king of venture capital. San Francisco-based businesses saw nearly $6.5 billion in venture capital flow into their coffers in 2012, making up a whopping 15.4% of the global total. Clearly, VCs are confident that the area will continue to spawn new ideas and concepts that will earn them tons of money on the back end.
So, if you plan on getting your hands on some funding, these are the cities in which you’ll want to set up camp.