Fourth, Financing has always been a headache for start-ups, and yet financing is essential for any business venture, and for startups, securing enough capital to become operational and profitable is often challenging. While bootstrapping and dabbling with crowd funding might jumpstart a new business in the long run, startups need access to traditional capital sources. By fostering a sustainable startup environment that includes the three factors of a strong infrastructure (regulatory, legal and economic), outstanding research universities, and a high quality work-force, a startup hub will automatically attract capital. Startup hubs, either well-established or newly emerging, will attract equity investors (angel investors or venture capital), and Banks and Grants, all of which are the mainstay of a strong investment climate. Equity investors are crucial to startup finance—particularly among technology, energy technology and biotech startups. Businesses are developed around the goal of securing substantial equity investment. Bank financing is an attractive option for funding a startup. Typically, bank financing for startups is available to only the most creditworthy. Governments and businesses award grants to startups that in alignment with other projects they are working on or with a larger strategic mission. All three funding sources are more plentiful in a strong startup environment.
Take a look at any startup hub (Seattle, Bay Area (Silicon Valley), Austin, TX, Boston (Waltham Mass, North Carolina and you will see that the four factors of infrastructure, outstanding educational institutions, the ability to attract a talented and diverse workforce, and access to capital are present. Other areas of the country—even rural or economically depressed areas—have the potential to develop a successful startup hub, but first they must establish the three factors of infrastructure, universities and a quality labor force in order to attract investors. No small challenge! I don’t want to get political here, but it’s unavoidable; many of the political red zones of the U.S. need to develop strong startup hubs because the jobs in manufacturing and agriculture are dead and they’re not coming back, not now, not ever. The real threat to the red zones is technology and lack of relevant education, not China and Mexico. The labor force in these areas needs to be educated and retrained for the jobs of the future.
Patricia Vaccarino has over 25 years' expertise working with a wide range of national and international clients, in all areas of public relations: managing worldwide campaigns for global companies and developing strategy for small companies, startup ventures, and individuals. She has written award-winning film scripts, press materials, articles, speeches, Web content, marketing collateral, and six books. Please see her press kit.