The study demonstrates there is vigorous progress returning to the economy via small-to-medium sized businesses and startups. This acceleration of entrepreneurialism is a sign of post-recession progress with no indication of slowing.
The Census Bureau found that startups create jobs more quickly than larger enterprises and many of those jobs pay above the respective median wage in that region. The question is, will those jobs go to the Bay Area, or find homes elsewhere?
“Startup culture, which began in the garages of Silicon Valley, has spread across the nation,” said Linda Moore, CEO and President of TechNet. “From Provo to Portland and Nashville to New Orleans, entrepreneurs are launching new ventures in the hope that they can become the next big thing.
“Startups like these are the economic engine that drives job creation. In 2014, companies in their first five years of life created 2.2 million jobs, while firms older than five years created only 450,000 jobs. That’s remarkable, and it means that if we put the right policies in place to support startups, we can create one million new, good-paying jobs each year.”
The Silicon Valley Competitiveness and Innovation Project (SVCIP) found that more than 7,600 Silicon Valley residents left the region for other U.S. cities. These results also show that in just a year, home prices increased 13 percent and rent prices 12 percent. These factors, along with climbing commute times in the increasingly congested Bay Area, are driving founders and people looking for work in startups to new cities.
TechNet lists the following metro cities as the ‘Next in Tech’:
- Washington, DC
- Atlanta, GA
- Denver, CO
- Salt Lake City, UT
- Portland, OR
- Dallas, TX
- Raleigh-Durham, NC
- Worcester, MA
- Philadelphia, PA
- Nashville, TN
Dan Schoenbaum CEO of Cooladata, opted to move his business to “Silicon Forest” in Portland, Oregon, because of costs of running a business.
“So many entrepreneurs and venture investors are encountering skyrocketing costs, what I call ‘talent wars’ and are seriously questioning whether it makes sense to start businesses in the Bay Area,” says Schoenbaum.
“Portland, OR, was a no-brainer for my investors and me. A decade ago, it would have been much more difficult to start a company here, but it’s a different story today. Real estate is one-third the cost of San Francisco, and there is an amazing, growing pool of talent here. A huge number of resumes we receive are from people in the Bay Area or the East Coast that want to come here both for the quality of life, but also the burgeoning, exciting work environment.”
Other companies have similar qualms: lack of momentum thanks to an over saturated market, inability to secure A-players at an affordable wage, exorbitant office space rent with extensive lease requirements, and more. TechCrunch reported that as of January 2o17, office rents in San Francisco eclipsed those of New York to become the most expensive in the country.
Particularly for startups, the ability to be competitive is imperative to survival, so locations that are lower-cost with less competition are exactly what companies need to gain momentum and facilitate expansion. There are fewer billion-dollar goliaths to compete with in other metro cities, and while Silicon Valley may remain an international technology hub, startups will continue to leverage the vast opportunities other metro cities vying for their business have to offer.
Read more about other tech hubs around the country at TechCo