Why should I move?

I recently met with a company based in Southeast US and we started discussing that challenges the company might have in raising capital from Venture Capital firms.  Part of the dialogue revolved around the fact that the company is not in a “convenient” location for the VCs.

If you look at which geographic areas that most Bay Area VCs invest in, it is primarily in the Bay Area, followed by Southern California and Northwest US (Seattle and Portland).  The company indicated that they would like to stay in the Southeast as the cost of labor is much more cheaper than the Bay Area and it would not be financial wise to relocate to the Bay Area.  The team indicated a willingness to fly to the Bay Area for board meetings, but my feedback to them was this would not solve their geographic “challenge”.  The fact that a VC needs to get on a plane and fly out of the area make it very inconvenient, which is understandable.  However, the broader issue I believe is primarily a mental barrier, meaning most VCs would like to have the ability to meet with the team at any given moment and not having this option is a challenge.  The fact is, many VCs don’t spend a lot of time physically (besides board meetings) in front of their portfolio companies, majority of the communication is done via email, phone, skype, etc.   That being said, companies that are seeking funding, need to be close to the money.

The are certainly a lof of VCs around the country, but the majority of VC funding is made to Bay Area companies, so if you have the ability to move the management team to the Bay Area, it is a wise move.

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