Startups aren’t just a coastal phenomenon. While Silicon Valley is often considered the country’s startup mecca, smaller hubs are now emerging in other cities. For instance, Austin, Texas has earned the nickname Silicon Hills for its influx of tech firms. Inc. Magazine reports that Milwaukee, Salt Lake City and Buffalo, New York offer fledging companies an alternative to pricey Silicon Valley.
Where there’s a startup scene, there are often accelerators and incubators, programs designed to grow and nurture the infant businesses. The difference between a startup incubator and an accelerator can be murky, but typically incubators focus on innovation while accelerators focus on scaling up an already existing business. Often these programs have an application process and offer not just guidance, but a communal workspace for the length of the program. (Another hallmark of startup hubs are co-working spaces, where companies can rent desks or offices without being part of an incubator or accelerator program.)
Silicon Valley-based Y Combinator is among the most competitive programs; its business model is investing money in early-stage startups. Founders spend three months working intensively to refine their business model. The process culminates on Demo Day, a common fixture of incubators and accelerators. During this single-day event, startup founders pitch potential investors in short business presentations. TechStars also runs accelerators in several cities, and there are many others catering to niche groups such as female or LGBT entrepreneurs, military veterans, founders of color or businesses that focus on specific social issues.
In addition to programs run by venture capitalists or seed funders, some non-profits and universities also run incubators that may not require founders to give up any equity. The National Business Incubation Association (NBIA) can help you identify others.
Questions to ask in your startup coverage
• Do the incubators or accelerators in your area receive equity from entrepreneurs? Do startups stay local after completing the program or do they tend to relocate to larger cities? How many have gotten funding following Demo Day? How much funding?
• Does your city or state offer any incentives (tax or otherwise) for startups to launch in your area? What are those incentives and how are they being used?
• Do local startups tend to focus on a specific area? For instance, are they mainly B2B tech startups or consumer-focused apps? Why is that? What challenges do startups outside of that mold face?
• How do startups in smaller markets attract talent? Do local startups lure developers from bigger cities with promises of cool perks and a lower cost of living? Do they have relationships with local colleges or coding academies?
• Some startups participate in accelerators or incubators, or rent a co-working space, so those can be good sources for identifying startups in your area, especially if you’re able to attend a Demo Day. Also look at local startup or entrepreneur meetups or see if your city is on Nextplex for more story fodder.
• While shows like “Shark Tank” and a lot of media coverage focus on funding, that’s not the only metric of startup success. Some founders choose to bootstrap rather than giving up equity, so consider other metrics such as monthly active users (for an app) or revenue growth (often measured month-over-month rather than year-over-year for early-stage startups). Forbes explains other startup metrics.
• Recently launched startups may not have much of a track record or many metrics to share. Deepen your coverage of early-stage startups by including insights from those not directly involved. For instance, a business or entrepreneurship professor at a local university could provide context on other companies within that space, how the startup’s approach differs and what challenges they foresee for the company.