By: Sonny Patel, Founder and CEO of Insurmi
We hear it time and time again: in the race to become the next unicorn, throngs of entrepreneurs pick up shop to relocate to one of the major tech hubs like Silicon Valley or Boston in pursuit of growth and funding opportunities.
While these hubs have proven fruitful for countless tech startups, moving there doesn’t guarantee success. In fact, it can become more of a challenge to grow a business in unknown territory, especially if that territory comes with a soaring cost of living and a high turnover of residents, such as the case with Silicon Valley. That’s one reason why the movement for entrepreneurs to remain between the coasts is gaining momentum.
This trend hasn’t been lost on cities, universities and local leaders, who are actively creating funds and launching initiatives with the purpose of fostering environments where startups can grow, thrive and eventually contribute back to the ecosystem. Such as the case with Phoenix.
Planting seeds for a future of growth
Startups need to build deep, impactful connections within their communities to succeed over the long haul. In major tech regions that are already saturated with competition, this can become a serious challenge with many entrepreneurs feeling isolated and without support, during the stages they need it most.
But if there’s reason to have ties to these regions, it is possible to get the best of both worlds without uprooting your life and business. More and more, founders are choosing to double down on the communities in which they live and simply hop on a plane to access the major tech hubs when necessary.
By choosing to build where you got your start, you can often establish a bigger presence for yourself and your company, stretch your capital further and deepen relationships within an already familiar ecosystem, especially with universities, established entrepreneurs and key community stakeholders.
In Phoenix, we have a robust community of stakeholders who want to see our local startups flourish in their own backyards and pave the way for successive generations. That’s why cities are increasingly focusing more of their economic development efforts on supporting entrepreneurs by creating funds and competitions with the promise of seed money for winners. Universities are creating incubators to help young leaders transition from idea to implementation. This is very much alive in Phoenix –– and we’ve seen more investors enter the market as a result.
Raising money locally makes entrepreneurs more attractive globally
The majority of startups can only bootstrap for so long before they need to seek funding. This is where relationships are so key and why it’s helpful for startups to mature in the environments where they’ve established meaningful connections with investors and other key business leaders who’ve observed their growth. And, these relationships don’t just benefit startup founders –– they’re also fruitful for the investors.
Besides wanting to support and invest in promising startups for their own monetary gain, local investors have another vested interest in getting involved with homegrown startups –– it stimulates regional economic development, which has longer-term gains for everyone. Investing out-of-state means many returns also stay out-of-state. By prioritizing their investments to high-potential startups in their region, investors are directly and positively impacting the area in which they live.
When outside investors find startups buoyed by community support, they see stability and longevity –– two important characteristics that make startups more appealing to invest in. Take, for instance, Steve Case’s “Rise of the Rest” bus tours, which encourages entrepreneurship across the country and specifically outside the major tech hubs. This initiative, with the involvement of big-name investors like Jeff Bezos and Eric Schmidt, recently closed a $150 million seed fund specifically to invest in cities that have been historically overlooked. As cities establish and grow their own entrepreneurial ecosystems, investors from elsewhere can’t help but want to get involved.
Stepping up to raise up entrepreneurial ecosystems
When all hands are on deck and through a continuous commitment to one another, the flywheel model of a community carry begins to gain momentum. The more engaged academic institutions are, the more involved key community partners become, and the more committed local investors are, the more likely startups will be set up to succeed. With this support helping startups thrive, the more the local workforce benefits and the economy will grow. Eventually, more local investments will be made and the circular model will strengthen.
But community carry only works when the startups who benefited from the model take steps to contribute as well. No matter the stage in the cycle, there are a number of ways entrepreneurs and their teams can boost the vitality of their city’s ecosystem. This includes hiring from the local workforce, being a mentor to share lessons learned with those coming up next and choosing local vendors when possible. It also means prioritizing volunteerism and philanthropy and eventually investing in other startups.
Silicon Valley will always be a major draw for entrepreneurs. But with major investors looking to expand their reach and reduce their risk, entrepreneurs could benefit from marinating in their local ecosystems and presenting themselves to investors as the growth drivers within their local ecosystem.
Sonny Patel is the founder and CEO of Insurmi, an AI-based engagement platform for insurance carriers.
He started the company just three years ago at the age of 21 while working as a sales director and financial advisor at a top life insurance company where he realized the process of buying and selling insurance was unnecessarily cumbersome and outdated. He was determined to change this and went to work to develop a solution that would simplify and take the guesswork out of the insurance buying process. That solution would eventually become Insurmi.
Now, Insurmi is being used by a number of top-tier global insurance carriers to easily generate new business online, streamline customer claims, and deliver excellent customer service through conversational AI.