My City Just Lost A Startup To Silicon Valley. Tell Me Again Why That’s A Bad Thing?

Last month, Cleveland startup Phenom got some great news. It was accepted into prestigious Silicon Valley accelerator 500 startups. The catch? The founders had to leave Northeast Ohio and move to San Francisco in order to make this happen.

A low grumble rose up as local pundits lamented the fact that a startup had to move in order to get into this prestigious West Coast accelerator program.

Buried behind the pessimism were the actual comments of Phenom’s founders, whose long-term goal is to return to Cleveland and share what they’ve learned in Silicon Valley. Buried even further was the real takeaway: 15 years ago Cleveland’s startup culture did not even have a recognizable pulse, let alone the kind of entrepreneurial ecosystem that could spin out startups worthy of accelerators like 500 Startups.

I was raised in Northeast Ohio, so I can say with confidence that far too many of us get caught up in these kinds of “woe is [insert your hometown]” stories. Even worse, some of us still haven’t accepted the reality that great companies — the kind of companies we all want to see created — are great mostly because they think of themselves as globally relevant, not just a “Cleveland” or “Silicon Valley” venture.

Isn’t it time to stop treating the U.S. economy as if it ends at our city limits and start thinking the way growing startups do?

Truth is, there’s nothing upsetting about Phenom getting accepted to 500 Startups. In fact, the founders’ willingness to go where they have the best chance of success is exactly the kind of entrepreneurial hustle our city, state, and country need right now.

Phenom is a mobile app company born in a city that is not yet known as a world-class software player, particularly when it comes B2C software. Sure, we’ve had some software success with homegrown startups like Explorys and my firm’s portfolio company CoverMyMeds. But on the whole, Northeast Ohio is still heavily focused on biotech and other B2B enterprise businesses, which only makes sense given our world-class healthcare institutions.

Do we need to diversify? Absolutely. Should we spiral into a depression every time a young B2C startup does what it has to do to take its business to the next level? Absolutely not.

Why brood when you can build?

Instead of wringing our hands and gazing longingly toward the Pacific Ocean, how about doubling down on our efforts to commercialize more disruptive technologies and help more entrepreneurs turn them into strong products and homegrown companies?

Or how about looking at this situation as another opportunity to tackle the widening Series A funding gap that continues to hold us back? Our lack of early-stage capital is a real challenge across the entire Midwest, and we’ll need to address it soon if we hope to create a climate where a company like Phenom can go from launch to exit without ever leaving our borders.

We’ve come a very long way in the last 15 years. We must never stop improving, but we also shouldn’t be ignoring the fact that Cleveland and Northeast Ohio today are more entrepreneurial than they have been in decades.

We’re not the only region that occasionally needs this reminder. All over the country, it seems like some people can’t help but focus on what we lack instead of what we have.

To them I simply say this: Pessimism is easy, but it has never helped build anything that lasts.

Today, there are hundreds of startup entrepreneurs working on great ideas in our city. Losing a few to San Francisco (whether it’s for a few months or forever) is far from the end of the world.

The post originally appeared in Venture Beat on March 20, 2016


Posted in Access To Capital, Economic Development, Thought Leadership