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Just because you are not in a “startup hub” does not mean your business can not thrive

As the founder of a Philadelphia-based startup, I have fielded the same question countless times as Leadnomics has grown: “Why haven’t you moved West?”

Silicon Valley, along with other big startup hubs like New York and Chicago, has held the reputation as the most promising place to build a company (especially in tech) for decades.

However, recent trends among an increasingly large sector of young entrepreneurs are redefining the optimal location to grow a company, making it even easier to answer: “Why not California?”

As a result, a new model of startup hubs are popping up in what are considered “secondary markets” across the country, equipped with a set of advantages unique from Silicon Valley, many of which I have experienced first-hand:

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Cost of living (and working)

First, rent and the overall cost of living are cheaper in secondary markets, which is not only appealing to young startups that want to use early funding on more than just rent but also to young, educated talent deciding where to begin their adult lives.

It was tough deciding where to settle Leadnomics. We greatly valued things like cost of living and lower taxes, but New York still had its draw for us because, well, it is New York. It had all the pros of being a major magnet city, especially for our industry. But after giving it some thought, we realised that Philadelphia had more to offer us at our size.

Now, I am just grateful we recognised those advantages early on, because staying in Philly has felt like a blessing in disguise. This city has more to offer us now than when we first moved here. For example, when we outgrew our co-working space, the city’s Department of Commerce helped us navigate tax credits to pin down an affordable new office space that could accommodate our growth.

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Growth of dedicated young talent

Silicon Valley’s failure by local government and companies to ensure that housing supply can meet demand has left the region vulnerable to talent poaching from more affordable markets. According to an October 2014 report by City Observatory, young college grads are looking beyond predictable magnet cities like New York and San Francisco, and smaller cities like Denver, Portland and Nashville are welcoming these residents at their highest rates to date.

Personally, I am not surprised. For the past few years, Philly has been making great strides to close all the gaps that have made it seem a ‘lesser’ city than other east coast hubs like New York or Boston. Not only has the city improved infrastructure to support young companies like Leadnomics, it has also facilitated improvement to non-work life, like entertainment and nightlife. It is awesome to see more young people realising that cities like Philly are not constrained, and that they actually offer great opportunity.

The talent pools for tech in secondary markets may still be smaller than in Silicon Valley, but startup employers have less competition in these cities when it comes to recruiting local talent. There are also more people in emerging cities that have moved there for reasons other than to climb what has become a fairly established tech ladder in Silicon Valley, so the talent is often more likely to be dedicated to a company rather than jumping from one startup to another.

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Support beyond investors

Young companies in secondary markets also tend to have stronger support from their surrounding community. In an emerging city, local startups are not a dime a dozen, and the prospect of job creation makes them part of a larger movement connected to the city, so the community wants to see them succeed.

Leadnomics’ office is located in Philly’s University City neighbourhood, and we can literally see the growth of Philly’s talent pipeline being built around us. Universities and the city government are investing in programmes and institutions to connect students to local startups and early stage capital. The city wants people to be able to stay here and be successful, and we get to be a part of that growing momentum.

Zach Robbins is an entrepreneur and expert in performance marketing, website optimization, lead generation, and marketing technology. In 2007, Zach founded Leadnomics, a digital marketing and technology company. Under Zach’s leadership as CEO, Leadnomics has grown from its successful business service roots to become a parent company for a growing number of marketing and customer acquisition firms.

The Young Entrepreneur Council (YEC) is an invite-only organisation comprising the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship programme that helps millions of entrepreneurs start and grow businesses.

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