Forums: Discussions for entrepreneurs and small business.

We are thinking of moving from North Carolina to the Bay Area because there basically seems to be strong entrepreneurial buzz, a great talent pool and from what I have read and heard (even from one angel personally) angel investors like to invest locally (or at the very least regionally).

Some angel investor group won`t even talk to you if you are not already located in their area. We are at a point where we would really like angel investor level monies ($250K to $500K) to explode our growth and build the technological infrastructure and add key core staff.

We are not afraid of the move but would really like to have some feedback and stories from people who may have done similar preemptive moves without a real (or any) commitment from an investor and maybe some tips (aside from the obvious things like it is markedly more expensive to live out there).

Thanks in advance.

 



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President

BeachSales.com
Your Online Destination for Coastal Real Estate.

While it is true that many of the "professional" angels prefer to invest in "local"  businesses, I would recommend against relocating solely for the purpose of attracting angel capital.

I don`t know where you presently reside, but for the amount you describe -there are probably quite a few possible investors in your backyard.

While it may be more challenging, generally a good capital ready situation should be able to attract investors without relocating.

Since a "personal" introduction is by far the best way to approach them, moving to a place where you have no connections could be more of a detriment..

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Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

Relocating solely to find an angel for a project that is only looking for a $250,000-$500,000 investment?  Hmmmm.... Maybe better to put your energy into networking in your own area or online networking.  With many angels location isn`t always as important as you and your project being in a ready position.

Thanks for the feedback, guys.

There is quite a bit of money here (in the Raleigh Area and definitely Charlotte). My thinking was that it is spread about a lot of other areas of investment and that the Bay Area is sort of better primed but you both make good points.

We haven`t really put out the full-court press locally, just pondering different strategies. Thanks. Looking forward to more thoughts.



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President

BeachSales.com
Your Online Destination for Coastal Real Estate.

Paul Graham is a very smart guy with a lot of experience with startups. He founded a company back in the dotcom days that allowed non-technical people to set up online stores; it got sold for a bunch of money to Yahoo and is now the basis for Yahoo stores. He now runs Y Combinator, a company that makes tiny investments in very cool startups, and helps them to network to the next levels of investment. Some very nifty companies have come out of Y Combinator.

Y Combinator invests solely in Boston and the Bay Area. He`s very much of the opinion that tech startups need to be in one of those two areas, preferably the Bay Area. Here`s his article on it:

http://paulgraham.com/startuphubs.html

I ran a small startup company in the Bay Area once, and I`m not totally sold that Graham is right. I think it really depends on the kind of company you have. 

I think Graham is right if you are talking about a company whose competitive advantage has to do with software or electrical engineering (and, to be fair to him, these are the kinds of companies he funds and is talking about.) There is deep expertise in the Bay Area in technology and financing, and if that`s what you need to get you to the next level, it`s a good place to be. There are also a wealth of service providers that can ease the path - rent-a-CFO companies, attorneys experienced at the VC dance, former startup CEOs that will coach and mentor out of kindness or for a fee, banks that understand start up needs, places that will sell you someone else`s used startup furniture, and so on. They understand the challenges start ups face, and have an infrastructure in place.

For a lot of that, it helps if you have someone to introduce you so you can start networking. It`s not a closed community, in that it is more open to talent and creativity than maybe anywhere, ever, but it`s a busy community with no time to waste, and getting started with the people who can help you is easier said than done.

There are downsides that can outweigh all the advantages if your company doesn`t need what the Bay Area offers. The cost of everything is very high there, which is a problem if you are trying to eke out your cash as long as possible. There are a ton of opportunities for everyone on your team, which makes hiring and retaining really good staff a challenge, unless you are really good at selling people on the vision.

One more thing about the startup hubs that I think can matter - the level of the game is pretty high there.

Think of it like basketball. If you go to the local court for a pick up game in a place where no one else plays very well, they aren`t going to test you. If you go to a court where they really can play, either you step up your game or go home. It may be that improving your basketball game is not what you really care about - just breaking a good sweat and seeing some buddies - so you would rather be on the less competitive court.

The start up hubs can be like the competitive basketball court. Even at the cocktail party / drinking at the bar level, if you show up and your game isn`t there, you will get the message by the time you finish describing what you do. If you are running a site that could have been done in 1998, you will get no respect.

That can be good or bad. If what your site needs to succeed is Ajax / Ruby on Rails / Widgets / Mashups / Social Networking, the start up hubs will push you to be at 21st century levels. If what you need is a boring old LAMP technical platform populating template pages from a database,  and the business success turns on a whole lot of shoe leather sales and marketing, the start up hubs will just increase your costs of doing business and give your technical staff a case of software envy.

Thanks for these different perspectives. It has definitely provided me with some things to think about.


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President

BeachSales.com
Your Online Destination for Coastal Real Estate.

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Owner/Inventor:
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Dougster,

There are a number of capital sources for sporting goods and/or games.

What level of investment are you seeking?

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Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com