Does Location Matter When It Comes to Venture Capital

Welcome to this week’s installment on raising capital for your small business! Head over to our Youtube channel and take a look at this article from Forbes learn more.

We saw a great article in Forbes about the question: does your location matter when trying to raise capital? There have been some recent studies uh by, and as you might expect, yes and no. It actually sort of depends on the industry that your business is in. It does seem that it is more important if you are a tech company to be in one of the well-known tech hubs. Perhaps that’s a research triangle in North Carolina, Austin, Texas, or of course Silicon Valley. Then there are other different kinds of money centers, such as Nashville and Atlanta and Chicago and, of course, New York for banking and finance.

Why does location matter? Essentially, the article concludes that raising capital from professional investors, like all professional services, is essentially a relationship business, and the closer you are in proximity, the easier it is to maintain a work relationship. Another facet to that is that while your investors may not be in the same city or state or across the country from you, they are evaluating whether your proximity with your team (because ultimately almost all professional investors will invest in the people first, the business second, and the industry third) and they will evaluate whether your team is remote, whether you’re in the same place, whether you get together in an office.

Of course COVID-19 has thrown all of this upside down, but some teams have shown themselves to be very effective working remotely, while others have floundered. A lot of that has to do with leadership style, as well as, of course, the business that they’re in.

We found this an interesting read! It’s not completely conclusive, but takes us back to sort of tried and true sage understandings: it’s relationships. Almost all of life has to do with relationships, and investing and being invested in is very much like a marriage, so you’ve got to choose your partners well. That begins with relationship.

As always, if there’s any way we can help you evaluate your capital needs or just general advice for your business, let us know!

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