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As ideas and side hustles turn into companies, often the company headquarters is simply determined by chance. The city the founder lived in at the time or the location of the incubator or accelerator they joined within the first few months of the company’s life. But occasionally, I meet founders who put more energy into determining where to build their startup and are trying to decide if they should move cities to found their company.
In almost all cases, my answer is no.
If you’re considering starting a company, you likely have some exposure to other startups. You probably live in an entrepreneurial city where other companies have grown-these companies likely played a factor in encouraging you to found your own startup.
Make sure that you want to live in the city you pick! Once your company opens its headquarters there, you’re locked in.
The most important factor to consider is access to local talent – can you find experienced developers and eventually a product team? If you live in a big city that has large companies and/or a city with a top-tier computer science school, you will have access to this talent. In many ways, this is common sense – it’s more challenging to build a meaningful startup in London or Kelowna than building it in Toronto or Vancouver is.
However, you will still interact with other cities regardless of where you’re headquartered! You might choose to incorporate in a different jurisdiction. You might need to open a remote office, especially for talent that’s not as plentiful in your city (think junior sales talent or experienced executives). You will definitely need to travel frequently to build your network. Seek out mentors, investors and early customers in the cities you considered relocating to (there must have been some reason you thought the city was appealing – probably a thriving media/foodtech/SaaS sector) and build a local network on the ground that you can tap into as your references.
There’s no perfect city to live in. Some cities will have larger communities around your industry sector-but you may face higher customer fatigue in that region as they’ve already been pitched other adjacent solutions. You might have easier access to capital in the Bay Area, but it comes at a higher burn rate. Cities with larger talent pools are easier to hire from, but they also come with an increased risk of poaching. Crossing borders might get you your coveted reputation of a Valley startup, but you’ll incur visa costs and headaches, and your close network who otherwise would be early employees may not be willing to join you.
Ultimately, make sure that you want to live in the city you pick! Once your company opens its headquarters there, you’re locked in.
Christian’s Take:
Family and friend support for early-stage founders is vastly underappreciated. You’re best off keeping your business close to home, where you can easily access your support network.
My only exception to that rule is for companies who are focused on being VC-backed, are still sprout or seed stage, and are building a business in a niche industry. A niche industry is one where the customer is non-typically for technology or where the customer base is highly concentrated (and thus capital is concentrated). A couple of random examples: agriculture tech, art tech, entertainment/games, and biotech.
Family and friend support for early-stage founders is vastly underappreciated.
Early stage capital, pre-Series A, is primarily local. A biotech VC fund out of the Boston is unlikely to invest in a $1 million round into biotech located in Australia. Relocation to Boston, even for just a year, wouldn’t be the worst idea for that biotech company.
If you are located in a city with one or fewer funds active or focused on your sector, you should strongly consider relocation. Ideally, your relocation target is in a town with a high concentration of both customers and capital.
Otherwise there is no “best” city. So pick one where your support network is and where you want to live and work.
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Photo via Unsplash.
