The reason so many of the startups we funded left Boston was that we flew them out to Silicon Valley to demo to investors there. If you don't introduce the startups you fund to investors from other towns, then of course more of them will end up staying wherever they were. But you're not exactly doing them a favor in that case.
I'm one of the Shotput partners. I'm not sure if the implication here is that we specifically didn't intro our companies to investors from outside of the southeast. If so, that is entirely not the case. Myself and other partners continue to work with our companies to make valuable introductions for them - both in terms of clients as well as investors.
But I'll assume you were speaking in general terms in which case, I think all of the partners at Shotput would wholeheartedly agree.
I didn't mean that you didn't introduce your companies to investors from other places, just that without the mechanism of a demo day you couldn't introduce them, in person, to hundreds of such investors.
Totally get you and you're totally right. I wish things like demo day existed when I was funding my company. Would have saved me from talking to 200+ investors over a 10 month time span.
It will be interesting to see if the ones that stay in Atlanta can get funded as well as the ones that are getting SV intros (a Shotput Ventures partner lives in SF and 2 Shotput companies moved West). It's early, we will need to do an update in 90 days.
You were dead on in your comment that Y Combinator style seed funding is not regional:
I am not personally involved with Shotput Ventures, but I know that the people involved are fairly connected and I am sure would introduce startups to anyone who would provide funding including valley investors. Not to mention they are financially motivated to do everything they can to maximize the probability of a successful exit and their returns upon such an exit.
Sure, they may not be as connected to SV investors as YC is.
If email introductions worked as well as demos followed by in-person conversations, neither we nor any of the ycomorphs would have Demo Days in the first place.
You couldn't physically make that many email intros. We had 24 startups demoing to 210 investors. We couldn't make 5040 intros.
This is true, not to mention a demo is obviously much more effective than an email introduction.
I am not disputing the fact that YC's physical presence in the valley and your connections give you a big advantage with investors in the valley.
I am only pointing out that there is no reason Shotput would not introduce their startups to those valley investors they can. I am sure they would invite all the valley investors they know to attend demo day in person and flying their startups out to meet investors in the valley or anywhere else also sounds like a great suggestion. I'd love it if I was in that batch.
I had a debate with pg over 5 months ago about how many startups from Atlanta seed fund Shotput ventures would stay back after the program was over. The program got over 3 weeks ago and as of now, three out of the eight startups are in Atlanta. I know that at least one (and probably more than one) of the startups were originally from elsewhere but even if you ignore that, the current retention rate is 37%.
pg, based on his larger data set, had predicted a 2-3% retention rate. As Lance mentions, it's early days, but I have a hunch Atlanta is going to maintain the higher retention rate. Why? Because we are working hard to make it so: http://academicvc.com/2009/05/entrepreneurial-atlanta-2/
Addendum: Let me restate what I said in that thread. I am not saying people should not move to the valley if that's the best thing for them. I am saying that building an ecology that supports startups in cities outside the valley is possible and it's a good thing. There are many people who don't want to or cannot move to the valley.
My guess is there's a huge sample bias here. PG was probably assuming a similar applicant pool to what YC gets (ie if YC ran a summer in Atlanta, almost all of them would move away after) but the reality is that Shotput's starting pool is much different and shall we say less "serious", by which I mean talented and motivated.
Not too be elitist, but YC is clearly the top of the food chain in the micro-angel funding niche, where the most motivated founders go first. It was the only one we applied to, and if I were doing it over again it still would be. Then there's a couple others a rung below it, like TechStars, and a rung below that with a couple players like LaunchBox and maybe Shotput. (I've actually never heard of them, which is hard to accomplish in this industry, but I'll assume they're pretty decent and it's just because I've been working too hard lately).
So the startup founders move their way down the chain from the top, with the best x% being selected at every tier. At the YC level, you've got the highest quality and most motivated talent pool. At the bottom levels you've probably got the people who either whiffed their way down the chain, or just are looking for one near where they live. If I lived in Atlanta (which I could, it's a great city) and wanted to do a startup but wasn't particularly keen on relocating I might give it a go, assuming the Shotput guys brought enough to the table to make up for the small equity stake.
I'd guess PG wasn't taking that into account with his initial comment. I'd love to know what % of their funded startups have founders who lived within driving distance beforehand.
You live in Akron, nobody is going to call you an elitist. :)
Being the folks to come up with the concept and having $2 million in backing from Sequoia clearly puts YC at the top heap. Clearly gives YC more choice. There are however plenty of talented and motivated people in all parts of the world.
One is willing to go to the place of highest potential for success in order to... maximize one's potential for success. Come hell or high water. You do what you have to do.
So perhaps talent is not the right word, but it is rather motivation. And motivation may well be a larger determining factor than talent in the success of a startup.
I remain amused by the casual bigotry exhibited by so many Silicon Valley denizens that OF COURSE all the smart, motivated, ambitious entrepreneurs will move to the Valley. Most of them would be incensed if a colleague displayed a comparable level of bigotry about race, or sex, or national background, or the rest of the litany. But it's socially acceptable -- at least west of I-5 -- to dismiss 99% of the country as full of failures. "Sure, maybe they did great in AAA ball, but they couldn't make it in the Big Show."
Which has led to the Valley being a hothouse of artificially-compressed geniuses building products for each other instead of for the real world.
But not everyone is a brilliant 23-year-old willing to share a flophouse with three other geniuses while coding 20 hours a day. In the real world, people have spouses... kids... mortgages... elderly parents... heck, maybe they just like sweet tea! There are all sorts of reasons that they won't move to the Valley, even if they have plenty of talent to compete at that level.
I submit that looking for the best of the best among that 99% of the country is a heck of a good way to make money. It's harder, because you can't sit on Sand Hill Road and watch the universe rotate around you. But with some hustle and some brains, there's plenty of opportunity for non-Valley entrepreneurs, and non-Valley investors, to do very very well.
I'm not going to try to embed a picture here on HN, but check out the link and let me know if you want a button! (I think Fred Wilson would wear one; I doubt that Paul Graham would.)
It's not bigotry at all; it's just the logical conclusion from a set of premises. If Silicon Valley is provably the best place for a technology startup to be, then the people who want their companies to succeed the most will go there. The factors you mention are things that affect one's motivation to do anything it takes to succeed. No one is saying people who don't move to Silicon Valley are untalented. The comment you replied to specifically said that, so I don't see how the talent issue was brought back up.
> But not everyone is a brilliant 23-year-old willing to share a flophouse with three other geniuses while coding 20 hours a day. In the real world, people have spouses... kids... mortgages... elderly parents... heck, maybe they just like sweet tea! There are all sorts of reasons that they won't move to the Valley, even if they have plenty of talent to compete at that level.
In short, they have other priorities. (BTW - Lots of Valley folk are not 23-year-olds.) Maybe that won't matter, but ....
No one is saying that folks can't succeed elsewhere or that there aren't opportunities elsewhere. (FWIW, I've found that people who attack strawmen are fighting at the level that they think they can win....) Instead, they're saying that the valley has some unique properties wrt certain kinds of success.
If those properties or that kind of success isn't relevant or important to you, the valley isn't for you. There's nothing wrong with making other choices, but there are consequences. If you like the ones somewhere else, go for it.
Atlanta is sufficiently cosmopolitan and citylike, yet considerably cheaper than almost any other metro area in the US with a significant technology sector. This means you get both (comparative) affordability and the benefits of being in an IT-savvy city. Sure, it's pretty ass-backward compared to, say, the Valley or NYC, but it's highly functional as an urban technology space. Don't underestimate it.
That alone can be a huge advantage to a startup, especially those going the bootstrap route who are not nearly as dependent on the systemic VC ecosystem but highly dependent on being close to other technology companies and/or corporate customers.
It's also a major telecom hub. That's why I stay here.
From the comments: "Four companies from Atlanta, two from Boston, two virtual entered the Shotput program. Three from Atlanta stayed. Three went back home, and two are trying their play in SV. One of the virtuals is considering moving back to Atlanta."
People from Atlanta stayed in Atlanta. Why is this remarkable?
I don't think that's what those people meant. YC-style investments were seen by many as a way to attract talent to an area. I viewed such predictions as saying that regional YC's would fail to attract talent. I don't see why anyone would think that people who are already in the city would all leave just because they've participated in such a program. If anything, it would make them less likely. Having to leave an investor is a disincentive to moving.
