A few weeks back, I served on a panel for Triangle Entrepreneur Week titled “How to Foster a Community for Entrepreneurs.” Joining me on the panel were Matthew Coppedge of Downtown Durham, Inc., Mary Ann Baldwin, Raleigh City Council member, Derek Minor of the Downtown Raleigh Alliance, and Jeff Singh, CEO of Vybee.com, a Startup Stampede 2.0 company. One topic that was on everyone’s mind was the issue of funding (or lack thereof) for startups. I spend a lot of time addressing this issue with area entrepreneurs who are looking to scale here. When you look at the amount of venture capital invested in technology companies, the Triangle trails Silicon Valley, Austin, Boston and New York City by a good bit. Everyone has their hypothesis as to why this is the case and what we need to do to change the pattern, so for today’s post I thought I’d take a crack at it.
The first thing everyone mentions is the lack of a direct flight from RDU to Silicon Valley. I think this is a major obstacle to overcome. Investors sinking millions of dollars into a company want quick access to the CEO and founding team and usually want to meet face-to-face. Right now, a West Coast investor has to spend a full day getting here and a full day traveling home to visit a local company. That’s a deal-breaker from the start. I think we have to address this issue if we are going to have success in the coming years.
But, I also don’t think a flight is going to solve all our problems. Instead, I think we ought to focus on creating an area that produces a dozen or more companies that are revenue positive and earning somewhere around $5-15 million in revenue and growing. I call this a “Singles and Doubles” strategy. Rather than focusing on knocking one or two companies out of the park by securing huge rounds of institutional investment, I think Durham ought to put its chips on these smaller companies that have raised local investment or have bootstrapped their concept along. These companies might not be as flashy, but they are built on solid business fundamentals, have a good product that people are buying, and are thriving in our area. (Side note: there is an excellent event being put on by Southern Capitol Ventures on December 6 covering how you bootstrap a business. For more check out http://eseriesdec11.eventbrite.com/.)
Over time, as we grow a stable of these “singles and doubles”, I’m confident we’ll gain the attention of West Coast investors. These investors will see a track record of healthy growth and an area that continues to produce sharp entrepreneurs. And since investors talk with each other, word of Durham’s rise will spread quickly. A “singles and doubles” strategy also creates a number of individuals in the area who have built excellent companies who may then invest in other area entrepreneurs or join their boards. In short, it’s a strategy that focuses on what we do have (smart entrepreneurs, a pipeline of talent, and low cost of doing business) and sets our sights on success not just now but well into the future.