Why 100 Miles and 160 Kilometers Are Vitally Important for Your Business
What if most startups had the ability to start a successful company close to home, without leaving their families or friends behind?
At least once or twice a week, I talk with a startup in Europe, the Middle East, or somewhere in the middle part of the States. So many of them have this belief that, if they move to San Francisco — home of $24B in venture capital spending in 2017 — they’ll get the money they need. They’ll be “okay.” And they might even be “as successful as Uber.”
The impression is that San Francisco is where you get funded. It’s where all of the VCs are. It’s where you have the best chance of launching your company.
And let’s be honest. Many, many startups have launched successfully in San Francisco. I’m thankful (almost daily) for companies like Dropbox, Airbnb, and Postmates. Those companies have made my life easier and more efficient.
But founders desperately need to realize what’s already happening within 100 miles (160 kilometers) of exactly where they call currently call home.
Using Data to Make My Case
Each year, we survey accelerators in the GAN Community — now up to 94 in total — and ask them to tell us what’s happening in the 149 cities where they operate. These are cities as small as 2,000 people (like Telluride, Colorado) and as large as 22 million people (like Beijing, China). And the median city size where GAN Accelerators operate is 600,000 people. For reference, that’s around the size of most medium metropolitan areas in the world, like Austin, Seattle, or Portland here in the U.S., or Amsterdam, Helsinki, or Glasgow in Europe.
Here’s what we found out…
If you have an accelerator that’s local to you, there’s a good chance they’ll accept you. Across the world, 57% of the startups that were accepted into an accelerator were already living within 100 miles of the program.
And that’s not just true of the amazing, top-performing accelerators in the GAN Community who have been around awhile. We’re seeing it across the board. Accelerators operating for two years or under accepted 61% of startups from their backyard while accelerators who have been around for two years or more accepted 65% of startups located within 100 miles of their office.
A whopping 69% of startups that were accepted into accelerators were put on the accelerator’s radar because of an introduction from one of the program’s mentors, investors, or alumni. So it should be no surprise when you hear where these mentors, investors, and startup alumni live:
- 71% of mentors live within 100 miles of the accelerator.
- 70% of startups that went through an accelerator live within 100 miles of the accelerator.
- 54% of the investors providing funding to startups live within 100 miles of the accelerator.
And let’s talk about those investors. They’re putting in an average of $712K and a median of $475K per startup in the 12 months after that startup went through the accelerator. They’re actually investing…locally.
Local. Local. Local.
I know, it’s a lot of stats. But you can see my point. The facts point to a seismic change. We’re getting very close to a place where most startups can stay — and grow — their companies wherever they already are.
Why Does this Matter?
A few months ago, I shared this graph about why I get up in the morning. It was all about how the only net new jobs that have been created between 1988 and 2012 have come from companies who are five years old or younger. So startups are the ones fueling local job growth. Which means that, if cities are going to grow, they need people who stay and work in them, and startups are largely the ones providing those opportunities.
Want more proof?
- GAN Startups (those that have been through a GAN Accelerator) employ an average of 4.4 jobs.
- Those startups actually have solid revenue. When they do have revenue (which a majority of them do), they make an average of $813K and median of $549K annually.
- And they’re staying in business 85% of the time — even while staying “local.”
In case you haven’t caught on: The reason they’re so successful? Because they’re getting investments and have revenue…from local sources.
What Can You Do?
As you build your company, take a minute to look around. Then ask some questions:
Which accelerators are local to you? What is their success rate for local startups? Which investors are local to you?
What kind of success are they seeing out of their local startup investments?
Originally published at www.gan.co on April 10, 2018.