Boston. Los Angeles. London. New York. San Francisco. Five cities well-known for catering to the elite of high finance are diversifying by embracing a different brand of finance: venture capital. In the process, they're giving life to vibrant startup ecosystems.
The Makings of a Startup Ecosystem
You can see it in the corporates moving significant operations to these cities. Earlier this year, General Electric and its GE Ventures arm took up residence in Boston's Seaport district. GV (formerly known as Google Ventures) has its New York City headquarters located right along 8th Avenue in Chelsea, while Comcast Ventures has set up shop in San Francisco. Disney's Steamboat Ventures makes its home in the L.A. suburb of Burbank and Unilever Ventures keeps a portion of its investment team in London, which also happens to be home to the annual symposium put on by Global Corporate Venturing, a publisher tracking the corporate venturing business around the world.
Each firm has its reasons for locating where they do, of course, and most are in multiple locations. Wilson Sonsini Goodrich & Rosati, a law firm with a long history of serving both tech entrepreneurs and investors, now has offices in Boston and L.A., as well as the burgeoning tech hub of Austin, TX. Having a presence in cities that provide opportunities for investors, entrepreneurs, service providers, and students to mix regularly and share ideas is a strategic asset to the firm's clients.
Bobby Franklin, president and CEO of the National Venture Capital Association (NVCA), speaks to this dynamic in a May 2016 article in Venture Capital Journal. Interaction between different startup constituencies, he says, can help to fortify ecosystems and provide a "base for growth and expansion."
Communications consultant Constance Aguilar gets more specific in a column for Entrepreneur, explaining that strong ecosystems are formed from civic involvement, access to resources, local university support and investment, a thriving creative community, and a vibrant, eclectic culture.
Five Big Cities Playing Host to Little Companies
So what unique things are these five one-time hubs of white shoe finance doing to attract startups, corporates, and venture investors? Let's take each city one-by-one, starting with the one that gets the most investment of all.
1. San Francisco - 15.4 percent of global venture capital investment
Land of the stock options gold rush and just north of Silicon Valley, San Francisco owes a lot to startups and still plays host to companies that started there and then went on to become behemoths, such as salesforce.com. But that can't be surprising. Close proximity to advanced research facilities such as Xerox PARC, elite universities such as UC Berkeley and Stanford, and some of the world's best-known venture investors (i.e., Sequoia, KPCB) as well deep-pocketed corporates (i.e., GV) combine to create the perfect setting for new ventures. So pervasive is startup culture in San Francisco that it's easy to forget the city is also home to one of the world's most successful banks: Wells Fargo.
2. Boston - 7.5 percent of global venture capital investment
Home of MIT, Harvard, and the Route 128 tech corridor where the now-legendary Digital Equipment Corp. (DEC) was born, Boston has tech roots that run deep. Facebook was born here too, in a dorm room. And while GE Ventures is making its mark as the latest corporate entrant, there's no shortage of traditional venture capitalists in and around the region. Charles River Ventures has been funding new ideas since 1970. Battery Ventures has been in business since 1983. Both have created room for regional up-and-comers, such as Spark Capital. Culturally, Boston is a working-class, intellectual town where you're just as likely to see a rare Van Gogh hanging on the wall of one of the city's treasured museums as you are to see a bare-knuckles fight break out on the ice during a Bruins game at the Boston Garden. And like San Francisco, it's also home a storied banking institution: State Street Bank and Trust.
3. New York - 5.0 percent of global venture capital investment
Historically the gravitational center of the banking world thanks to names like Citi and JPMorgan Chase, New York is also home to Union Square Ventures, Thrive Capital, Collaborative Fund, and Insight Venture Partners, among others. Corporates also have operations in the city, and for good reason: there's talent to be found here. In 2013, Yahoo spent over $1 billion to acquire NYC-based Tumblr. Etsy started in the city and is now public with a $1.6 billion market cap. All this growth has spawned an entrepreneurial support system that includes co-working spaces, NYU's Entrepreneurial Institute, and Flatiron School, where aspiring web developers can get formal training in the skills needed to create the next great app. And it's all within a 15-minute subway ride to Wall Street and the New York Stock Exchange.
4. Los Angeles - 3.4 percent of global venture capital investment
Home to not only a diverse culture but also a diverse economy, L.A. probably has more than tech roots than you think thanks to the aerospace industry. Entertainment and media remain the dominant industry, however, so it shouldn't surprise anyone to learn that Snapchat is based in the area. But so is TrueCar, ZipRecruiter, and Dollar Shave Club, which recently secured a billion-dollar buyout offer from Unilever. Upfront Ventures and Rincon Venture Partners also make their home in Southern California, finding and funding talent from top tier area universities such as UCLA and USC. And while L.A. may not have the same tech startup ecosystem as San Francisco or New York, the region has become a haven for remote programmers serving startups in Silicon Valley and Seattle. There's plenty of talent for local entrepreneurs to connect with.
5. London - 2.0 percent of global venture capital investment
Another banking and finance capital whose white shoe residents include Lloyds, Barclays, and the Royal Bank of Scotland, among others, London's startup scene has grown increasingly vibrant in recent years. Notable startups still located in the area include the music-identifying app Shazam and fintech players Funding Circle and TransferWise. A mix of local and U.S. venture capital firms provide funding to the community, which is also rich in startup resources. Up London, TechLondon, and Start Up London are among the meetup groups where those with needs connect with those who have means. Quick proximity to the cultural hubs of Western Europe makes London a unique experience for startup entrepreneurs.
From High Finance to Bottom-Up Businesses
High finance is still high fashion, but in places like San Francisco, Boston, New York, L.A., and London, it's no longer the only option for creatives seeking a lucrative business career. Entrepreneurship has become an equally viable option.
For founders starting up in these regions, that means access to more resources, a bigger talent pool to draw from, and best of all, plenty of capital waiting to be invested. Corporates, in turn, can take advantage of the thriving startup ecosystems in these hubs to find partners or acquisition targets to boost their own innovation efforts.
If you need help identifying the right startup partners, regardless of geography, get in touch with RocketSpace. Our Corporate Innovation Services help corporations tap into the global startup ecosystem. Contact us to learn more.
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