Here’s this week’s dish on the booming ed tech sector, how other communities can contend with Silicon Valley and the realities of startup relocation. Check out more in this series here.
Silicon Valley is the “center of the new-business universe,” according to Dileep Rao, a professor of entrepreneurship at Florida International University. That statement is backed by some impressive figures:
- 49 of the top 50 venture capitalists call Silicon Valley home.
- The top 50 VCs earn about $0.66 of every $1.00 of IPO profits.
- 20 percent of entrepreneurs with a billion-dollar or more net worth are headquartered in the Bay Area.
Startups not in Silicon Valley can look forward to a harder fight every step of the way. So, how do they win? By being better than anything coming out of the Bay Area. Startups not in the Golden State will win by having better ideas, better tech, better talent and better businesses.
9 out of 10 Silicon Valley startups accept VC cash. With 80 percent of billion-dollar startups still launching outside the bay area, it may come as a surprise that only one out of 10 of these entrepreneurs uses venture capital. They made it by building better businesses from the ground up.
Crain’s Cleveland Business — Sad truth: Leaving Ohio helped Phenom get into 500 Startups
One of the reasons Acre Designs won’t be coming back to Kansas City after Y Combinator is because they can no longer fight the local risk-averse investment climate. That problem is not unique to Kansas City.
Phenom, a tech startup that launched in Ohio, relocated to San Francisco to access Silicon Valley capital. The founders said raising capital was too difficult without developing face-to-face relationships.
For startups wanting to stay in Ohio, it isn’t all bad news. Similar to Kansas City, venture capital has been on the rise as local startups begin to mature out of the high-risk stage.
The New York Times: Education technology graduates from the classroom to the boardroom
These days, it’s rare to find a kid that isn’t plugged into social media, a smartphone, tablet, game consoles and TV. Kids are absorbing information completely differently than even 10 years ago. And schools are scrambling to catch up.
The industry for education tech is booming. There are nearly 4,000 apps for classroom management and other software services. Ed tech startups raised more $2.98 billion last year, up from $1.87 billion in 2014. For you math whizzes, that’s a 30 percent increase in one year.
For startups hoping to bite into the ed tech apple, they may want to focus on their business models. Schools have trouble quantifying a return on investment when kids won’t enter the workforce for another decade. And there’s the challenge of individually selling to the more than 13,500 districts.