In the last decade, the startup space has changed drastically. More recent trends–a burst of venture funding activity, rising startup valuations and slowed exits–have brought about a sense of trepidation: Are we in a bubble? What will happen to these over-valued startups? What does this mean for the future?
According to analysis from PitchBook and the National Venture Capital Association, it seems that venture investors are tightening their purse strings. Last quarter’s numbers showed that venture deal activity has slowed—with angel and seed deals showing the most significant drop; and first financing activity fell for the seventh consecutive quarter. And with over-valued startups now raising follow-on rounds (or exiting) at sub-optimal valuations, all signs point to a continuation of this trend.
The real impact of this trend is on the startup community: Money doesn’t come so easy anymore. And startups—particularly those with outlandish benefits and perks worthy of an Oprah giveaway—are now having to focus on their fundamentals and embrace frugality.
To some this means looking outside of Silicon Valley. In a recent article, Matthew Sniff, Founder and CEO of Map My Customers, described his reasons for moving his startup from Silicon Valley to Research Triangle Park.
“In San Francisco,” Sniff wrote, “I fell in love with the beauty of the area, but became quickly disenchanted with the cost of living, neglect of what seemed like rapidly increasing numbers of inhumanely treated homeless folks, and the mega-monoculture (of technology) that was breeding in the area.”
In considering other areas, Sniff had a list of requirements: a low cost, high quality of living, access to qualified and affordable talent, as well as the overall health of the startup ecosystem—he needed a place with a vibrant, growing startup culture, in an area that made sense to VC investors.
“I needed to ultimately pick a place that could work well for living as well as working ,” Sniff wrote. “It had to be a large, metro region so that we could effectively hire the best people. It had to be an area with a low cost of living so that we could extend our runway for our bootstrapped company. It also had to be a place I would enjoy living — in short, a place that would feel like home.”
After considering Portland, Denver, Bozeman, Austin, Nashville and Richmond, Sniff finally settled on Raleigh-Durham, joining a growing list of tech startups and other venture-backed companies that have expanded their operations—or relocated completely to North Carolina (see also: Trilliant). Upon arriving here, here’s what he found.
- Talent: With 53 colleges and universities (including UNC-Chapel Hill, Duke, N.C. State, Wake Forest, Davidson… the list goes on) North Carolina is ripe with an overwhelming amount of young, highly qualified talent.
- Low cost, high quality of living: Sniff points out that rental prices in the Triangle are 70 percent cheaper than the Bay Area.
- Access to venture capital: Even though most VC activity is still geared toward the West Coast, we’re also seeing what some have called the “Rise of the Rest” —the emergence of other startup ecosystems with plenty to offer these companies, North Carolina included.
So, what does North Carolina’s startup ecosystem look like? Using data from PitchBook, the NVCA and Durham’s Center for Entrepreneurial Development, here’s a snapshot:
About the Author
Alyssa Riddle is a Marketing Strategist at the Economic Development Partnership of North Carolina. A native North Carolinian, Alyssa grew up in Raleigh and attended North Carolina State University where she earned her undergraduate degree in Communication Media.
Prior to joining EDPNC, Alyssa held marketing roles in the technology and non-profit space. She spent the last five years on the West Coast—in San Francisco, California and Seattle, Washington. While in Seattle, she obtained her Masters in Communication from the University of Washington’s Communication Leadership program.
Alyssa is glad to be back in North Carolina and now enjoys spending her time rediscovering all the great things our state has to offer.