Important Factors in Choosing a Startup Location

If you’re planning a tech startup, then the first place that comes to mind as an ideal location might be Silicon Valley. Certainly, it’s still a solid choice, and probably the most tech-oriented region in the world.

But nowadays, Silicon Valley is far from the only choice, as around the globe, vibrant tech hubs are forming, and ambitious, entrepreneurial communities are taking shape. Whether it’s startups from Cape Town, Korean social media disruptors, or blockchain enthusiasts in Poland, many of these places have distinct advantages over Silicon Valley, and represent doing things in a fresh way.

Location is a critical choice when beginning a venture, and is relatively difficult to adjust later (although easier than it once was), so it’s important to make a well-informed decision. With that in mind, what are the key factors in picking your ideal startup spot?

A Supportive Culture

While you want your business to stand out, you certainly wouldn’t want to be a fish out of water. Challenges are amplified when you’re going against the grain, immersed in customs and ways of thinking that don’t support your ambition.

For this reason, look for places that are on your wavelength, and are friendly to innovation and entrepreneurship. Some of this is clearly measurable. Are there tax incentives for startups? Do the authorities make it easy for skilled workers to relocate to the area and acquire visas, if necessary? Do local politicians and bureaucrats promote messages in line with good business leadership?

Other aspects are less quantifiable, but still important. Is there a general culture in which original thinking and startup philosophy are understood and encouraged? Is there an energetic atmosphere, with people who are open to new ideas? It sounds a little vague, and it’s not always the biggest cities that are the best fit, but try to figure out if there’s the right kind of buzz, and if in doubt, get a second (or third and fourth) opinion.

Low Costs

This is a fundamental metric, easy to grasp, and can make all the difference to your business. If you can’t afford the rent, the overheads, and the salaries, or you can, but you’ll be living off noodles, then it might not be the right place for your startup.

Even if a location is within your budget, but pushing at the financial seams, you might want to reconsider. Every penny saved is cash that can be redirected into the business, and it’s advantageous to have all the liquidity you can get, especially during the launch phase.

This is not to say that you should save money just for the sake of it, and end up in a sub-optimal place. Paying more for a better spot is, if planned carefully, an investment in the business. But this is a balancing act, so make sure you’re not paying more for nothing of substance.

And, additionally, look ahead: if you can find a cheap location that is filled with potential and primed for growth, then you might have struck gold.

Higher Education

Are you nearby universities and higher education facilities? Such institutions are excellent markers of a location with potential. Many higher education facilities run programs designed to produce future business innovators, and may be open to partnering with local ventures.

What’s more, if you’re looking for interns and ambitious, well educated new staff, then it makes sense then to be in a location where there is a constant flow of new talent, who are learning every day and preparing to start their careers.

Also, in general, areas that contain universities tend to have a high standard of living, and are good environments in which to stay and work.

Local Demographics

This means considering both your clients and your workforce, and again, looking to the future. Are you surrounded by people who would use your business? Does there appear to be a pool of nearby talent from which you can recruit?

Even if you’re not hiring right now, you hopefully will be in the not-too-distant future, as your business grows. Would someone be willing to relocate to work with you? Is it an attractive area that a new employee would look forward to being in?

And importantly, what will the area look like five years from now? Is there a young population, and are people moving in, or going away? Businesses rely on people, both users and employees, so if you’re not in a place where the demographics match up with your brand, then you might struggle.


You need to weigh up who else is operating in the area. Again, this is a balancing act. On the one hand, you want to be in a place that is friendly to business, and which has a buzz. That means somewhere with commercial activity, or, at least, the potential for such activity. And, on the positive side, business communities support one another and grow as a network, so you should avoid being isolated.

On the other hand, though, you don’t want to have too much direct competition, and be crowded out of the market before you’ve even got started. This is another consideration where it pays to do your research thoroughly before jumping in.

Take all these factors in to account, and you should be able to locate the prime spot in which your enterprise can thrive.


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