If you were thinking about setting up shop in the tech capital of the world for your first office or your fourteenth it’d be wise to take a moment and ask one crucial question: Is it really worth it?
Sure, you’d be at the epicenter of innovation, surrounded by brilliant minds, mega-corporations and venture capital heavyweights begging to get involved, but you’d also be facing some of the highest living and operating costs in America. And nothing bogs-down a business like lots of overhead.
San Francisco and San Jose ranked Nos. 3 and 4, respectively, on Kiplinger’s list of most expensive cities in the U.S. And according to the San Francisco Business Times, the average cost of commercial real estate in the Golden Gate City is at an all-time high.
So what’s your next-best option? (Hint: It’s not Boston or New York. Both east coast innovation hubs landed on Inc.‘s list of the five most-expensive U.S. cities to open a new business).
Savvy entrepreneurs will do well to check out one of the following four emerging tech hubs all of which leverage tech ancestry and a unique combination of socio-economic ingredients to create the ideal environment for startup success.
Outside of the usual suspects, San Diego, Los Angeles, Denver and Seattle have all seen best-in-class growth in startup funding. Combined, the four emerging tech hubs have seen more than $1.5 billion in venture capital pour into their businesses.
Mashable caught up with economic development officials from each city to help unpack what makes these Silicon Valley alternatives so special.
1. San Diego, CA
Why tech lives here:
Once a military town, San Diego is now a global leader in biotech and life sciences, mobile technology and aerospace research.
Sean Barr, SVP at the San Diego Economic Development Corporation (EDC), says the city’s innovation economy “grew out of necessity,” following the Cold War, when it became clear that the city needed to reduce its reliance on defense contracts. “There was a concerted effort to diversify the economy and build the required workforce and research [facilities] that the community would need to compete,” Barr explains.
The result was the creation of the UC San Diego which, today, graduates more engineers every year than Stanford and Cal-Berkley combined as well as rezoned business districts that paved the way for research giants like the Salk Institute and Qualcomm to take root. The largest district is the Torrey Pines Mesa, home to the Salk Institute and 80 additional public and private research institutions.
Why entrepreneurs come here:
Talent pool: “Everything we hear about why people continue to grow and invest in San Diego begins and it ends with workforce and talented people that are here,” he says. Barr credits the local universities with supplying annual crops of talent, but also acknowledges how San Diego’s institutions both the military and R&D-focused organizations continually attract bright minds to the area. In fact, a San Diego Regional EDC study showed that the city has the second-highest concentration of science and engineering professionals in the country, making the Southern California metropolis a recruiting gold mine.
Resources: “In a community like San Diego, you can get a meeting with [Qualcomm co-founder] Irwin Jacobs, you can get a meeting with the CEO of the Salk Institute, you can speak to the chancellor of UC San Diego they’re out in the community, they’re active. Through a couple degrees of separation, you get to know everybody pretty quickly.”
Workspaces: “We’re positioned on the southern border in a way that I think is very unique,” Barr says, in describing San Diego’s proximity to production resources in Northern Baja and Tijuana. “One can have a world-class research and development center [in San Diego] within a 15 minute drive of a world-class manufacturing facility [in Tijuana]. You can have the best of all worlds here in this bi-national mega-region, and be able to take advantage of a workforce that not only can create the IP you need to compete, but can also build it locally.”
Lifestyle: “70 to 75 degrees all year round affords a certain kind of lifestyle, attracts a certain type of person that cares about engaging in the community and cares about being active,” Barr says. But the “happiness quotient” isn’t just tied to the weather San Diego boasts the lowest commute times in the country, with annual delay times (in hours) nearly half that of San Francisco.
2. Los Angeles, CA
Why tech lives here:
Chris Rico, director of innovation at the Los Angeles County Economic Development Corporation, calls LA, “the creative capital of the planet,” but admits there was a time when the City of Angels was a “one-story town,” purely focused on Hollywood.
Today, however, LA is shifting its focus. “All of this creative talent is now branching out beyond film and television into these industries of convergence, like drone technology, virtual reality and autonomous vehicles,” Rico says.
“[Los Angeles] is where Howard Hughes started, and it’s where Walt Disney started,” he says. “This has always been the place where people came to make their dreams happen. And people are moving from New York and the Bay Area to bring their startups here.”
Why entrepreneurs come here:
Talent pool: “Silicon Valley may continue to be what people think of when they think ‘technological innovation,’ but LA is where you come to innovate anything and because we have this massive creative talent, it allows you to push in so many different directions,” Rico says. He also explains how LA’s talent pool is reaching “critical mass” thanks to early LA adopters like Snapchat and SpaceX. “There’s a big talent gold rush happening here,” he says. “Once you get a foothold, it starts supporting the broader ecosystem. And then it grows.”
Resources: “Because of the diversity of assets and resources and ideas here, you’re going to have so much more opportunity to have creative collisions, and maybe take your product in directions you didn’t anticipate,” Rico says. “This younger demographic that works in the tech-startup culture, they’re very good at self-organizing and having meet-ups and building a community where they share ideas and resources.” In this regard, LA offers a variety of neighborhood-specific networking organizations, like Digital LA on the West Side, Startups in the Sky in the downtown area and Pasadena Connect to the north.
Workspaces: The innovation renaissance isn’t just happening in one part of LA it’s taking hold from Pasadena to Santa Monica to Playa Vista. Rico says a huge driver of the city’s commercial expansion has been the introduction of 70 co-working spaces. “El Segundo, Culver City there are co-working spaces popping up in every part of this county now. These are the little ecosystems where entrepreneurs incubate and grow their companies.” The co-working phenomenon has caught hold in tech communities like LA because the spaces provide opportunities to collaborate across business while avoiding the price tags of traditional office spaces.
Lifestyle: It almost goes without saying that LA’s weather is a major asset, but Rico thinks it’s more than that: LA weather can actually make businesses run better. “The fact that it’s 72 degrees and sunny in Los Angeles, you’d think it’s a good draw for quality of life and lifestyle,” he says. “But in places where it gets dreary, [as soon as] it gets nice, people are terribly unproductive. Here, because it’s consistent, people are really productive.”
3. Denver, CO
Why tech lives here:
Until recently, the Denver tech “scene” had been confined to an industrial park near the southern limits of the city called, the Denver Tech Center (DTC). Now, thanks to the cooperative efforts of the city government, Denver is a startup haven.
Paul Washington, executive director of the Denver Office of Economic Development, says the city has made, “important and intentional investments in infrastructure,” spanning from the transit system to the central business district in order to accommodate the growth of innovative businesses and attract a highly educated workforce.
“Denver has earned a reputation as a center of innovation, Washington says. “The administration is viewed as true partner not only of entrepreneurship but of the technology scene, in everything from consistent tax policies to removing regulatory barriers where they’re unnecessary.”
Why entrepreneurs come here:
Talent pool: Washington believes that Denver’s startup ethos is rooted in experimentation and boundary-pushing, where a healthy celebration of failure inspires new attempts to be successful. He sees this come alive in what he calls, Denver’s “navigable social infrastructure,” in which communal learning is encouraged. “You can pick up the phone and talk to a very successful entrepreneur,” he says. “I don’t know how we came about that culture, but it exists, and I think it’s very important.
Resources: Washington and the Office of Economic Development aren’t out to replicate Silicon Valley. Instead, they want to be a partner to build a unique startup environment that leverages the city’s unique resources and assets. And that’s why Denver entrepreneurship has its own distinct flavor. “Our greatest role is to allow a fair amount of organic growth and put ourselves in a position to recognize when things are emerging and use our assets to put fuel to the fire,” he says. “What we try to do is figure out what’s happening and how we can accelerate that growth.”
Workspaces: One of Denver’s biggest accomplishments in the startup arena has been sponsoring the retrofitting of workspaces for the use of small companies. These Innovation Centers help startups get off the ground without the burden of the full office set-up. “They just need to come in and focus on innovating and growing their business, and can scale up and down very quickly,” Washington says. “It allows entrepreneurs to really thrive.”
Lifestyle: How do companies convince top talent to move to, and stay in Denver? Give them an experience they can’t turn down. “You start by being an attractive place for smart young people to want to live whatever it takes,” Washington says. “Denver is aesthetically very beautiful and we not only offer an authentic urban experience, but because of the investments we’ve made, Denver is easily navigable. Within a mile radius of downtown, you have access to all of the cultural and sports facilities.”
4. Seattle, WA
Why tech lives here:
David Harris, startup advocate for the City of Seattle’s Office of Economic Development, says the Emerald City has always been entrepreneurial from the early days of the maritime economy, to the industrial era of Boeing, to Microsoft’s tech takeover while keeping a “big small town” feel.
But although it may feel small, Seattle has a global footprint. It’s widely considered the cloud computing capital of the world, and is poised for massive growth in virtual reality, life sciences, aerospace technology and ecommerce sectors.
“While we might not be as well known in the tech sector as Silicon Valley, and might have some different attributes than Austin or Boston or New York, I think the world is definitely going to be taking notice a lot more in the next five years,” Harris says.
Why entrepreneurs come here:
Talent pool: Aside from feeder schools like the University of Washington, Harris claims that Amazon.com contributes to the largest influx of Seattle tech talent, many of whom may leave the ecommerce behemoth to help power local startups. “Amazon hires throngs of people from all over the country, and they’re highly talented,” he says. “So there have been companies that set up shop literally across the street from Amazon because they know that’s where their folks are, that’s where they run into them at lunch.”
Resources: In addition to being tight-knit, Harris says that Seattle’s laid-back community has attracted businesses that prioritize a mission over money. “Here, it’s about, ‘How can we do something cool together? How can I help you? How can we connect, collaborate?’ You don’t see a lot of capitalism-driven intentions out here,” he says. “And when you mix that with the smart people that are here, it makes a cool environment.”
Opportunity: Seattle’s purpose-based community extends to city hall, where Harris describes an administration that is committed to shared prosperity. “Seattle was just designated as a Tech Hire city a couple weeks ago it’s a White House initiative,” he says. “Right now, as in other cities, there is not a great representation of people of color and women in tech jobs, and that’s something our city is taking on. We’re going to use things like Tech Hire to try to make some changes.” With Tech Hire working in the city’s favor, Seattle startups will be able to attract some of the America’s most talented and diverse workers.
Lifestyle: As Harris and anyone who’s been to Seattle will tell you, the city itself is the main event. A multicultural hub of activity surrounded by the serene Peugeot Sound and lofty alpine skylines, Seattle is quite the sight to behold. There’s also plenty to do for those who wish to venture outside the city: “In Washington state there are five climate zones, so you go skiing, you can go to a rainforest, you can go to the desert, you can get to Canada three hours north and Portland three hours south,” he says.
