Silicon Valley as the center of the universe for venture capital and value creation is both an objective truism and a victim of confirmation bias. The origin story of Silicon Valley as the epicenter of innovation began ~70 years ago in 1955 with Shockley Semiconductors Laboratory. Since then, it has served as the de facto magnet for top talent from all over the world interested in building new technology.
On one hand, it is easy to agree Silicon Valley will continue to serve as the global center of startups and venture capital. It has a multi-decade lead on every other hopeful ecosystem and consistently produces world-changing solutions to problems of all shapes and sizes. On the other hand, it remains geographically isolated from the vast majority of the U.S. population, and therefore customers and talent.
How could every viable idea originate from a relatively limited geographic footprint lacking meaningful connectivity with the rest of the sprawling U.S. economy?
In 2020-2021, the U.S. experienced a watershed moment with 56 million people redistributing across the U.S. in ‘The Great Relocation’. Many thousands of people from across Silicon Valley’s elaborate ecosystem dispersed across the country for the first time in a post-technology world, a marked change from an otherwise consistent story of ecosystem growth since 1955.
In short, knowledge and networks broken off from Silicon Valley’s motherboard arrived post-COVID in metropolitan areas spanning the U.S., primarily the South.
Experienced CEOs, startup founders, angel investors, corporate executives, VCs, PE investors, academics, scientists, product leaders, marketers, technologists, sales leaders, and so forth landed in places like Nashville, Raleigh-Durham, Atlanta, Austin, Dallas-Ft. Worth, Charlotte, and the list continues. LinkedIn profiles may still read ‘San Francisco’ or ‘New York’ though home and work are now many miles away.
The rearrangement of talent nationally will produce a 2.0 era of company building across the U.S. Localized networks are maturing to create something entirely new and at a different scale.
With the surge of interest in A.I., there is a renewed energy in and around places like San Francisco and New York, which is generally a good thing for our innovation economy. We need our globally renowned hubs to be alive and well. However, pieces to those puzzles continue to extend South in the form of distributed teams and offices, customer footprints, warehouse and manufacturing facilities, and more.
Rise of the New American South
Despite the headlines, the majority of relocated talent is staying put, enabled by homes purchased, newfound proximity to family and friends, a shift in lifestyle needs and preferences, and more conveniences of home extending to these growing metropolitan cities.
The total number of cities perceived by entrepreneurs and tech talent as viable options for living and building companies has changed forever. The "n" changed in terms of the overall number of cities talent will continue to choose between in the decades ahead.
Prior to COVID, there was a seemingly perpetual shuffling of talent between New York and Los Angeles, or San Francisco and New York, then increasingly Los Angeles and San Francisco. Many found themselves splitting time between 2 metros. Now, a growing population of top-tier operators view places like Nashville, Raleigh-Durham, Dallas, Tampa, and more as part of the migration conversation.
This perspective extends to cities far beyond the false binary choice between Austin and Miami fueled by VC Twitter in 2020.
A greater number of entrepreneurs building in places like the New American South requires a greater number of stage-appropriate investors to fuel solutions for our collective future. Forming collaborative networks spanning all corners of private capital is imperative to closing the funding gap long-experienced by entrepreneurs between the coasts. This is enabled by the unique accessibility of the geography, connected by an efficient system of interstates and short, inexpensive flights.
Introducing Daytrip Ventures
Daytrip invests in pre-scale (pre-seed and seed) companies building in proximity to the New American South, the fastest growing economy in the U.S. We are building a new kind of network to support pre-Series A companies along their journeys.
To learn more about us, check out: Introducing Daytrip Ventures.