I’ve worked closely with many startup companies for over 25 years and have observed what factors create a successful climate for startups to succeed. The creation of a strong environment for startups requires four major components: infrastructure, outstanding educational institutions, the ability to attract a talented and diverse workforce, and access to capital.
First, there must be a regulatory, legal, and economic infrastructure in place that both encourages and supports an entrepreneurial culture. Second, there have to be outstanding research universities that provide top talent and innovative intellectual properties from their technology transfer programs. Third, a strong startup hub must be able to attract a talented and diverse workforce. Clusters of affluent creative and technology professionals must be offered access to high quality urban resources that will allow them to achieve autonomy and professional growth, including health care and education; the construction of better and affordable housing for the urban population; a transportation infrastructure that will ensure their mobility or ease to travel both locally and nationally; the development of urban economies to provide better jobs; an increased supply and domestic demand for goods and services; and sophisticated networks to access energy and telecommunications, i.e., connectivity. Believe it or not, there are still remote areas of the U.S that lack telecom and are still using dial-up to access the internet.
Fourth, Financing has always been a headache for start-ups, and yet financing is essential for any business venture, and for startups, securing enough capital to become operational and profitable is often challenging. While bootstrapping and dabbling with crowd funding might jumpstart a new business in the long run, startups need access to traditional capital sources. By fostering a sustainable startup environment that includes the three factors of a strong infrastructure (regulatory, legal and economic), outstanding research universities, and a high quality work-force, a startup hub will automatically attract capital. Startup hubs, either well-established or newly emerging, will attract equity investors (angel investors or venture capital), and Banks and Grants, all of which are the mainstay of a strong investment climate. Equity investors are crucial to startup finance—particularly among technology, energy technology and biotech startups. Businesses are developed around the goal of securing substantial equity investment. Bank financing is an attractive option for funding a startup. Typically, bank financing for startups is available to only the most creditworthy. Governments and businesses award grants to startups that in alignment with other projects they are working on or with a larger strategic mission. All three funding sources are more plentiful in a strong startup environment.
Take a look at any startup hub (Seattle, Bay Area (Silicon Valley), Austin, TX, Boston (Waltham Mass), North Carolina and you will see that the four factors of infrastructure, outstanding educational institutions, the ability to attract a talented and diverse workforce, and access to capital are present. Other areas of the country—even rural or economically depressed areas—have the potential to develop a successful startup hub, but first they must establish the three factors of infrastructure, universities and a quality labor force in order to attract investors. No small challenge! I don’t want to get political here, but it’s unavoidable; many of the political red zones of the U.S. need to develop strong startup hubs because the jobs in manufacturing and agriculture are dead and they’re not coming back, not now, not ever. The real threat to the red zones is technology and lack of relevant education, not China and Mexico. The labor force in these areas needs to be educated and retrained for the jobs of the future.
Patricia Vaccarino has over 25 years' expertise working with a wide range of national and international clients, in all areas of public relations: managing worldwide campaigns for global companies and developing strategy for small companies, startup ventures, and individuals. She has written award-winning film scripts, press materials, articles, speeches, Web content, marketing collateral, and seven books. Please see her press kit: https://www.prforpeople.com/patriciavaccarino