The numbers don’t lie–while the largest startup cities haven’t changed much over the last decade, a significant portion of dollars invested is leaking into the ‘burbs. The reasons behind this trend bear watching.
Case in point: Lucy Beard started her 3D printed shoe company Feetz in startup central—Silicon Valley. The mission: end foot pain forever. Foot pain from badly fitting mass manufactured shoes is an epidemic and Lucy generated a solution capable of not only improving lives, but in doing so, changing a global industry. But amidst the early media attention and inbound calls from potential customers, she realized she had a sizeable hurdle to clear.
“We quickly realized that we couldn’t reinvent consumer manufacturing in the Valley. What I was trying to do didn’t ‘fit the mold.’”
She had hundreds of potential customers eager to buy and needed a more hospitable environment to build out her vision for a breakthrough custom manufacturing approach. She found it at The Company Lab, a startup accelerator in Chattanooga focused on 3D printing and part of Tennessee’s statewide accelerator network, which is managed by Launch Tennessee (LaunchTN).
Earlier this month, Beard closed on a $1.25M round with Khosla Ventures, the JumpFund and Uli Becker as reported by the Wall Street Journal. “In a few weeks, our app will be live and the world’s first 3D printed, custom footwear manufacturing line will be operational here in Chattanooga.”
Main street America success stories like Lucy’s are becoming more common. “Investors like Steve Case and Brad Feld are betting on companies outside Silicon Valley, predicting that “the rise of the rest” will geographically level the entrepreneurial playing field and make startup communities more prevalent throughout the country,” wrote Ian Hathaway in Harvard Business Review. “The data tell a pretty clear story that seems to confirm the ‘growth-focused startups are spreading throughout the country geographically’ narrative.”
Here are three top advantages smaller startup hubs have over larger venture cities for investors:
1) Revolutionary opportunities in legacy industries
Tennessee’s entrepreneurial landscape employs a strong sector focus aspect across each of the accelerator programs. For example, the Northwest TN Entrepreneur Center led NextFarm, a cohort program focused on agricultural innovation.
One of last year’s graduates, AgSmarts, is revolutionizing one of Tennessee’s oldest professions by offering moisture-sensing technology, predictive analytics, and equipment automation that represent a revolution in data-driven agriculture. AgSmarts’ platform combines software and hardware into a versatile tool that real producers can use to preserve resources, control costs, and maximize yield.
2) Runway & talent to scale
Besides serving up the best blues and barbecue, Memphis has intentionally, successfully become one of the country’s epicenters for medical research and medical device manufacturing. Home to several top hospitals and major medical device manufacturers like Medtronic, Smith & Nephew and Wright Medical, Memphis provides an ideal environment to nurture startup medical device companies to success.
Proof it’s working: Memphis Bioworks’ ZeroTo510 medical device accelerator was the 2014 Southeastern Medical Device Association (SEMDA) Spotlight Award winner. More recently, TechCrunch named ZeroTo510 one of the top 20 accelerators in the United States.
Graph Story, a nine month old startup that creates graph databases on demand for enterprise clients like Nissan, is also a product of Memphis’ entrepreneur ecosystem.
“In places like Silicon Valley, attracting and acquiring top talent is tough when you have Facebook and Google in your backyard,” says Graph Story CEO Greg Jordan. “Memphis has become the destination point for tech talent within a very wide radius.”
3) New market opportunities
“Every day we’re innovating and building partnerships with farmers, mills, and brands to achieve our big dream of making pure and vibrant, consistent and scalable bio-based dyes,” says Sarah Bellos, founder and CEO of Stony Creek Colors. Stony Creek is based in Goodlettsville, Tennessee, where Nashville begins to give way to the Tennessee countryside. “Access to these farmers, mills and manufacturers, the true doers, with deep knowledge of the textile and agriculture industry is empowering us to more quickly transform the fashion industry and the world for good.”
Like AgSmarts, Graphy Story and Feetz, Stony Creek Colors is also a member of this year’s LaunchTN master accelerator class The TENN. Opportunities like this–in agriculture, 3D printing, etc.–don’t come as easily in established ecosystems like New York, Boston, and Austin. Look to the heartland this year for new opportunities for innovation–and great places to invest.
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