Who Wants to Be the Next Silicon Valley?

By Rieva LesonskyBusiness on Main

Programs are popping up across the U.S. encouraging high-tech entrepreneurship in new and unlikely places.

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From Denver to Des Moines, incubators and initiatives are popping up all over the country to encourage high-tech entrepreneurship. What does it take to create the “next Silicon Valley”?

Many ingredients go into the cocktail of creating a Silicon Valley environment:

- Desirable area: It helps if your city has good weather, an affordable cost of living, and fun things to do.

- Colleges and universities: Schools provide opportunities for technology transfer, partnerships and business plan competitions. They also attract young people and churn out skilled labor.

- Support from local government: A hospitable tax and regulatory environment attracts both high-tech startups and big corporations that can be customers or partners.

- Accelerators, incubators and co-working spaces: Programs and locations where entrepreneurs can learn from each other help startups grow.

- Conferences and events: Events that bring entrepreneurs and investors together create partnerships and bring attention to a region.

- Funding sources: Venture capitalists and angel investors are crucial for business growth.

But there’s more to it, says Victor Hwang, managing director of T2 Venture Capital in Silicon Valley and co-author of “The Rainforest: The Secret to Building the Next Silicon Valley.” “Too many people try to emulate only the outward forms of the Valley — capital, universities, skilled labor, geographical proximity — instead of the underlying social interactions that caused its birth in the first place,” Hwang says.

“It’s far harder to create communities of people driven by values like trust, fairness, dreaming big, and willingness to risk and fail.” Get those components right, contends Hwang, and “the flourishing will happen.”

Here are four up-and-coming regions that just might be the next Silicon Valley.

Silicon Prairie

It may not be as sexy as Los Angeles (although Ashton Kutcher’s recent investment in Des Moines-based Dwolla adds Hollywood glamour), but in Silicon Prairie — an area that includes Omaha, Nebraska; Des Moines, Iowa; and Kansas City, Missouri — tech startups are popping up like prairie dogs.

The launch of Kansas City, Missouri-based incubator and accelerator Think Big Partners in 2008 spurred interest in entrepreneurship in this area. Silicon Prairie had quietly been growing tech businesses for decades, but Think Big’s collaborations with entrepreneurial organizations including the Kauffman Foundation, KCSourceLink and PIPELINE took entrepreneurship programs to the next level.

Jeff Slobotski, co-founder of Silicon Prairie News, a website highlighting the region’s burgeoning entrepreneurial ecosystem, says Silicon Prairie’s biggest challenge is the lack of network connectivity between investors, entrepreneurs and mentors. “Our work is focused less around re-creating Silicon Valley, and more around connecting the resources we have to build something unique to the area,” explains Slobotski, who cites finance, agriculture and health care as key industries tech entrepreneurs are building on.

Events such as Thinc Iowa, TechBrew Iowa and Big Omaha are helping connect entrepreneurs. So are the Startup Iowa, Startup Kansas and Startup Nebraska programs recently launched in partnership with the nationwide Startup America program. A low cost of living and slower-paced lifestyle also draw many to the area.

Challenges include access to capital as well as conservative attitudes — or, as Slobotski puts it, “How do we attract the best and the brightest into taking a risk to start or join a team building something outside of the traditional path of working for an established company?”

Silicon Beach

While the Los Angeles region has long sought to replicate the success of its neighbor to the north, Jesse Torres, regional director of the Los Angeles Regional Small Business Development Center Network, believes the area is finally on the cusp of something big. “There’s been a resurgence of energy and momentum in the past six months,” says Torres.

Desirable weather, plenty of universities and a Google campus in Venice, California, help draw qualified labor to the region, home to many serial technology entrepreneurs. Accelerators and incubators such as Amplify, MuckerLab and upStart.LA also contribute to the scene.

Southern California’s biggest challenge is geographic dispersal. “There are pockets of innovation, excitement and entrepreneurship,” says Torres, “but the big difference is we’re not concentrated. Silicon Valley has folks opening their doors to create salons where people can get together and talk about what they’re doing. Here, that communication platform hasn’t been established yet.”

As for funding, Torres says wealthy investors from the entertainment community are stepping up to fund businesses. “What’s uniquely L.A. is that many of them are looking for the double bottom line — socially responsible businesses,” he adds. “I think [Southern California] will become a strong intersection of entertainment, VC and tech innovation.”

Silicon Bayou

In the wake of 2005’s Hurricane Katrina, it was hard to imagine New Orleans would ever recover, much less become a high-tech hotbed — but that’s exactly what happened. “Small business” in New Orleans once meant bars and restaurants, but the region is now home to biotech, clean tech and digital media startups, plus the nation’s third-biggest filmmaking sector.

Generous tax credits have spurred New Orleans’ tech upsurge. Louisiana offers R&D tax credits, digital media incentives, motion picture tax credits and an angel investor tax credit. No wonder the 2011 Kauffman Index of Entrepreneurial Activity ranked Louisiana fourth in the nation in entrepreneurial activity.

Efforts to rebuild after Katrina sparked accelerators, incubators and co-working facilities, including Launch Pad Ignition, New Orleans BioInnovation Center, The Idea Village and Social Entrepreneurs of New Orleans.

New Orleans isn’t perfect — crime, poverty and infrastructure problems persist — and financing is still a weak point. However, the South Coast Angel Fund and the Louisiana Sustainability Fund are among the options popping up, and the area’s low cost of living is a plus.


Denver both benefits and suffers from being in the shadow of Boulder, where pioneering tech accelerator TechStars launched in 2007. Telecommunications, biotech and data storage businesses thrive in Boulder’s high-tech community; now Denver is hoping to borrow a little of Boulder’s mojo.

Colorado is working to encourage high-tech startups; it launched Startup Colorado, part of the nationwide Startup America program, in November. Governor John Hickenlooper is working to make Colorado more business-friendly by improving access to capital, and Facebook has expressed interest in establishing a presence in the state.

Suburban sprawl is a hurdle for Denver’s tech startups, but entrepreneurs, investors and government agencies are working to encourage collaboration through accelerators and incubators such as the Founder Institute and Innovation Pavilion, online community Startup Denver, and events including Boulder and Denver New Tech meetups, Ignite Denver and 360|iDev.

Denver startups benefit from world-class universities and established aerospace, telecom and financial services industries. The region’s open attitudes are also a plus, says Walker Fenton, CEO of Sepia Labs, which created Glassboard, a private group messaging app for companies. “People here talk through ideas openly,” says Fenton, who has been involved in tech startups in Denver for 15 years. “They like to explore ideas together and share experiences with each other.”

Another advantage, says Fenton: “This is a great place to live. While people may ‘do a few years’ in places like New York or San Francisco, people who move to Denver rarely leave.”

Looking for more high-tech hot spots? Also on our radar: Silicon Loop (Chicago, home to Groupon), Silicon Forest (Portland, Oregon) and Silicon Strip (Las Vegas).

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