This article was written by Adeo Ressi, Founder & CEO of the Founder Institute.
I work with entrepreneurs from all across the globe, and there is one question founders ask me more than any other:
“Should I move to Silicon Valley to start my company?”
For idea and early-stage founders, my answer to this questions is almost always “No”.
Here is why:
1. There are Great Entrepreneurs Everywhere
Through the Founder Institute, we have tested over 30,000 aspiring entrepreneurs across the globe since 2009 using advanced social science techniques.
Our data shows that there are talented entrepreneurs everywhere, and that each region has unique entrepreneurial strengths.
Here are just a few examples of what our data has shown across over 110 cities and six continents:
- Latin America has the most “Conscientious” founders in the world. Conscientiousness is a “Big 5 Personality Trait” for people that are organized, self-disciplined, diligent, and hard-working. Cities outside of LATAM that also ranked extremely high for Conscientiousness include Kabul, Chengdu, Abidjan, and Lagos.
- Founders from Singapore have shown the highest “Fluid Intelligence” in the world. Fluid Intelligence measures someone’s ability to quickly learn a new ruleset, and then adapt that ruleset towards solving problems. After Singapore, Munich, Hong Kong, Moscow, and Tokyo round out the top 5 globally for this trait.
- Founders from India have shown the highest “Agreeableness” in the world. Agreeableness is a “Big Five” personality trait that measures cooperation versus antagonism. It can be synonymous with compassion, and being kind, sympathetic, cooperative, warm and considerate — or, conversely, with suspicion.
- Founders from Australia have shown the highest “Emotional Stability” in the world. Emotional Stability is related to neuroticism (another “Big 5 Personality Trait”), and people with high emotional stability have high impulse control and can remain calm in stressful situations.
- Founders from Europe have shown the highest “Openness” in the world. Openness is another “Big Five” trait for people who are intellectually curious, creative, risk-taking, and willing to try new things.
- Founders from Athens have shown the highest “Overall Predictive Entrepreneurship Score” in the world. The “Overall Predict Score” is a combination score of many traits that the Founder Institute has found to correlate with entrepreneurial success, and it is the main criteria in our global admissions. After Athens, Tel Aviv, Rome, Perth, and Denver round out the top 5 globally.
- Silicon Valley is not in the Top 10 globally on any of these rankings.
No matter where you go, there are highly-motivated people with the raw skills necessary to be successful entrepreneurs.
2. Great Companies are Being Built Everywhere
In 2006, Paul Graham said that you only need “rich people” and “nerds” to create a tech hub. I couldn’t agree with him more, and since that statement:
- The supply of angel capital has exploded.
- New tools like AngelList and Gust have made connecting the “nerds” and the “rich people” easier than ever.
- Money has become increasingly global, as professional investors now open offices and hire reps overseas to find new talent.
- Crowdfunding, along with pre-sales platforms like Kickstarter, have emerged as a viable global alternative to traditional equity or debt funding.
As a result, you are seeing amazing companies come out of markets that many would not expect.
In fact, for the first time ever, the most recent batch of billion dollar companies from the United States dipped below 50% of the number of billion dollar companies worldwide.
I believe this trend will continue, and I would even go so far as to say that starting this year and into next year, more billion dollar tech companies will be built outside of the United States by a huge margin.
3. Your Chances of Raising Money Will Not Increase by Moving to Silicon Valley
Usually when a Founder asks if they should move to Silicon Valley, it is because they can’t raise money for their company back home.
However, if you can’t raise seed or early-stage money for your startup back home, or using online networks and tools, then the chances of you moving to Silicon Valley and raising money with the same team, product, and traction is very, very unlikely.
When you come to Silicon Valley you become a small fish in a very big pond, and I can tell you from experience that strong ideas and teams will get funded whether you are in Silicon Valley or not.
If you build a strong company, the funding will follow (or, you may not need funding at all).
What you should do instead:
Instead of looking to move your company and focusing on what your local startup market does not have, focus on what it does have.
For example, even in developing nations with little to no opportunity for local investment, founders can leverage the low cost of labor to build products cheaply. Or, if there is zero startup ecosystem in your region, there is a great opportunity to create one yourself by running startup events, curating a mailing list, and coordinating with your local government. Being first is a good thing, and it will position you as a local startup leader as both your company and your market grows.
I work with founders from Silicon Valley to Afghanistan and beyond, and I can promise you that every market has distinct advantages to building a business, and the best founders identify and leverage those advantages.
Don’t be so fast to look elsewhere to build your company — looking in the mirror and focusing on building an enduring company at home is usually the right decision.