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Why Entrepreneurs Tend To Choose Silicon Valley

This article is written by Mohammad Eslim, a Contributor Author at Startup Istanbul.

Zaya Kadyrova is the Principal at EBRD Venture Capital, a €100 million dedicated fund which invests in early-stage technology companies in Central and Eastern Europe, Greece, Turkey, the Middle East and North Africa.

Andy Tsao is a Managing Director and leads SVB’s Global Gateway, which assists innovation companies in the emerging markets with their US and international market expansion. He brings more than 20 years of experience banking dynamic companies in technology industries worldwide.

Eamonn Carey is the Managing Director at Techstars London. He was previously MD at Techstars Connection in partnership with AB InBev in New York, and has been a long-term mentor, advisor and angel investor in Europe, the Middle East, Asia and the US.

Bill Kenney is the founder of the CT Entrepreneurial Event Calendar, CT Entrepreneurial Mentor Cooperative, and CT Entrepreneur Awards (Connecticut).

When you take the choice of venturing in the Valley; extremely high living expenses, the cost of engineers, cost of running startups, cost of turnovers and staff are not close to being cheap! Add to that the problem caused by all the money chasing deals, this problem, from a valuation perspective, depends on what side of the equation are you on and the highest valuation you are going to pay as an investor in the Valley.

Despite all those challenges the Valley is still chosen by businessmen and entrepreneurs from all around the world, this brings us the facts as of why the Valley is sought by many. Silicon Valley is by far the most matured innovation ecosystem in the world, and given its size, breadth and depth there was not really a better suitable place to grow or scale a global business.

Of course, there are now various ecosystems naturally developing in many places such as London, Berlin and Dubai; but what extra advantage Silicon Valley has to those still evolving ecosystems is that once you start in the Valley is that from day one you are in a geographically homogeneous market where everyone speaks English and is faced with the same labor loss you are facing. There, you are immediately tapping into a large market where you can prove your model very fast and because there are a lot of capital in the Valley, you can achieve success in the U.S then you are ready to move into the global market outside the United States.

When asked about what makes the Valley’s ecosystem catalyzing for the ventures, Andy Tsao answered that Silicon Valley, being the active market that it is, has so much capital available not only obtained from VCs but we are talking about angels and the whole virtuous cycle. This circle has happened so often that when people come into the liquidity they get back into investing in technology companies. As a result, some of the assets the Valley has is all accumulated experience that keeps applying to this virtuous cycle; to top that, the Valley has achieved the status as the world’s leading technology hub. Also, the Valley has the reputation that the brightest and best of people come to be investors and entrepreneurs. In fact, numbers show that %42-43 of the founders of Silicon Valley are from different places from around the globe.

Even though the technology is globalizing very quickly there are things that still make the Valley a special place, listing them briefly:

1.The big technology in Bay Area. If you are an entrepreneur in need to leverage big technology, whether it is through partnerships or distribution, there is no better place in terms of accessing those kind of partners.

2. Strong research universities. Universities, which have excellent education and support innovative ideas, like Berkeley and Stanford make such an impact on innovation.

3. Experienced investors.

4. Management talent. There are service providers that all their focus is on successfully launching startups and working with scaling technology companies.

5. Great weather.

6. Collaborative environment. It is a quality you don’t probably find anywhere, the people there help one another in the Valley as everyone there knows what you are going through in business. If you need to scale then you will find a cadre of investors who will gladly help you scale your business globally.

Completion. How can competition make the business in the Valley beneficial? Simply because competition brings the best out of people, so make your own noise when marketing your own product to establish your place among them. Starting small in a competitive environment helps you evolve and develop in the market in terms of networking and experience.

All of these points gives as an overlook on why Silicon Valley is sought out for ventures and business scaling. However, in no way it’s the only place to launch your business or growing it as the technology is globalizing around the world rapidly which developed many ecosystems naturally and away from the Valley.

─ April 4, 2019