MIDDLE AMERICA BECOMING HOME TO MORE START-UPS
From Louisville to Frisco to New Orleans, company founders are finding they don’t have to relocate to pursue their dreams
Kentucky native Ankur Gopal created software company Interapt in Chicago in 2009 after working in Silicon Valley and Washington. In 2011, he went back home to Kentucky to stay with his parents and further develop his dream.
“Historically, success meant getting out of Kentucky,” Gopal says. “I planned to incubate in Kentucky for six months and move to the Valley.”
Then Interapt landed major Louisville-based clients such as health care giant Humana and Yum! Brands. It expanded offerings that include a mix of mobile apps and wearable technology. Gopal started hiring. Now, the company plans a Louisville-area headquarters that aims to eventually create 250 more jobs on top of the company’s existing 55.
For many years, the traditional wisdom was that entrepreneurs had to pack their bags and head to Northern California or the Northeast to find startup success, but more young companies are finding they can build a solid foundation in other regions of the U.S. The number of start-ups outside hubs such as Silicon Valley, New York, and Boston continued to grow in 2016, according to a recently released Kauffman Report. Miami topped rankings for metroarea start-up activity, ousting Austin from the top slot.
In a grouping of smaller states, Nevada, Oklahoma and Wyoming had the largest number of new start-ups. “You’re beginning to see a little bit of a boomerang of talent, where people are moving back,” says Steve Case, the AOL founder and CEO of venture firm Revolution. Through his Rise of the Rest campaign begun in 2014, Case visited 26 cities outside main hubs developing centers for industries from food to energy to manufacturing. He’s highlighting both an urgent need and overlooked opportunity for venture capital. “Most of the big players that are going to revolutionize health care or other sectors are in the middle of the country,” he says. Robbie Vitrano, CEO of nut butter company Good Spread, says a history of natural food company development in the area influenced his decision to move to from Nashville to Boulder, Colo., which is home to veteran successes such as Celestial Seasonings, Silk milks and Bare Naked cereals.
Frisco, Texas, drew Larry Davis and his partner Damon Bryant north of Dallas, where both were working. Their company, Most Valuable Recruit, uses tests designed to eliminate biases to find and hone athletes with “abilities that poverty and lack of access might have hidden.”
They had looked in Boston, where the company had ties, and Austin. Frisco, it turns out, is developing into a sports hub. It’s home to the Dallas Cowboys and Class AA baseball team Rough Riders. The city is also courting other sports-related companies.
“We did a survey of the DFW (Dallas-Fort Worth) area, and suddenly there’s Frisco. We said, ‘Where have you been all my life?’ ” MVR has eight employees and is planning to expand.
Yet venture capital firms are still putting their money mostly on the East and West coasts. The West Coast accounted for 52.5% of venture capital investments in the first three months of 2017, according to the National Venture Capital Association.
A network for start-ups and mature companies can be a draw outside the coasts. In New Orleans, a structure was already in place when Hurricane Katrina hit in 2005. A group of returning natives, including Vitrano, formed Idea Village in 2000 to spark civic engagement in a city then known more for corruption than a place to start a business. The non-profit offers workshops, training, social events, city coordination, advocacy and mentoring for area start-ups.
Brent McCrossen, founder and CEO of Audiosocket, wanted to return home to New Orleans, even as his company founded in Seattle — in the shadow of established tech giants such as Microsoft and Amazon — grew.
Audiosocket licenses the work of musicians from a large database for video, film and audio productions. In 2010, New Orleans issued tax credits that offset a large percentage of expenses for the company. The board “looked at me like I was crazy, like why would you leave the tech hub to go to New Orleans?” he says.
Then he showed them the credits. “They essentially helped me pack my bags.”