Why Silicon Valley?

43% of Q2 2012 venture funding happened within a 30 mile radius centered in Silicon Valley.  The missed opportunity there is huge.  There is no way 43% of the best ideas and 43% of the most talented people reside in this radius.  I can’t think of another region or industry that is so skewed to one geographic region in terms of development – most that were at one time (textiles, etc) have dispersed or disappeared. As a region, the Southeast needs to find a better way to support and nurture our talent.

The common argument made is that the most talented founders will move to Silicon Valley if they want to get funded. A portion will (which certainly indicates that SV should and will continue to retain a disproportionate amount of VC funding), but others will sacrifice to stay where they love.  David Cummings recently wrote about the Southern flavor of startups in Georgia.  While I disagree with nearly everything he wrote, it speaks to the highly individual decision each founder makes when deciding where to locate their company.

Without funding, the South can’t compete for talent, money or innovation.  Smart people like to be surrounded by other smart people.  My belief is that we need to change the way we approach the risk required to invest in these companies.  There is plenty of private capital in the Southeast that could be put toward backing these companies.  Back these companies and they won’t need to relocate for funding or, worse, never realize their full potential.

Why then is there an echo chamber around technology investing? Why does such a significant portion of capital go toward backing companies in one small region? In the long run, will this do more to stifle innovation than promote it? What is the risk of having too much density in one area?

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