was newly wed at the time and hungry for a better work-life bal-
ance—or, as he calls it, “tech and babies.” There was plenty of talent
to hire in Madison, and for far cheaper than he’d get in Boston. And
the economics just made sense. “Our rent was going to be one-tenth
what we’d get in Boston for a comparable space,” he says. “We saw we
could dramatically increase our runway, basically increase the life of
the company by a year, by moving to Wisconsin.”
So in February 2016, Understory came home. And across the
nation, many others just like Understor y have followed.
There’s no place like home. Dorothy knew it. So do entre-
preneurs—but for a long time, there was no place to get funded like in
California, Massachusetts, and New York, where companies receive
80 percent of the nation’s total venture capital. So the great startup
migration was born. Founders would move to the coasts, enduring
high operating costs in exchange for access to investors and top talent.
But in the past few years, smaller cities across the country have
gone through the same transformation that Madison did. “There’s
typically a small band of really highly influential and dedicated peo-
ple who push through this groundswell of attention around startups
in their community, and it starts to fall like dominoes,” says David
Hall, partner at Revolution’s Rise of the Rest, a
seed fund that focuses on startups in smaller
markets. It could be a politician, a university, an
accelerator, an incubator, a corporation, a private
investor, or an influential founder. In each city,
some combination of these parties comes together
to foster the growth of its own ecosystem—
investors, founders, and talented employees inter-
ested in the startup world.
And that, Hall says, has begun to reverse the
migration. Some startups that left town are com-
ing back home. And the next generation of found-
ers aren’t all leaving in the first place. Last year, VC
investment rose in 33 states and Washington, D.C.
Hall is a big fan of this change. “If you’re going
to start a company, and given the strong and
harsh demands of entrepreneurship, you want to
start it in the easiest, most flexible, and cheapest
place possible. And I think going home enables
you to do that,” he says. When founders move to
the Valley or New York, they often think they’re
going to build a great network—but, Hall says, it’s
often extremely difficult to connect in these areas,
where scores of entrepreneurs are clamoring for
access to the same people. Back home, however?
Founders are already deeply networked. And
networks, he says, are one of the most overlooked
tools in building a business.
That’s why Maxeme “Max” Tuchman kept
her company in Miami. She’s the cofounder and
CEO of Caribu, a video-sharing platform that
allows caregivers and kids to read books together
remotely. When she began fund-raising, she went
to San Francisco to meet investors—and each one
of them required her to move to the Bay Area. She
was tempted; she really wanted the money. But
then she considered what she’d be giving up.
“I knew the woman who was writing about tech at
the Miami Herald. I knew the woman who was run-
ning the Cambridge Innovation Center in Miami,”
she says. And it went on: She knew the heads of local
incubators and conferences; she was connected to local immigrant and
female entrepreneur communities with fierce hustle, which she knew
she wouldn’t find in the notoriously white, male Silicon Valley. “They
were all part of my network from growing up,” says Tuchman. “And I
was like, ‘We need to build and grow here. We have so many resources
at our fingertips.’ ”
So she stayed—becoming, as she says in her very South Floridian
way, “a big dolphin in a small pond.” It’s meant getting less invest-
ment money, but she sees the trade-off as well worth it. “Why would
I give that up to live in cities I can’t afford to live in, where the talent
is too expensive and leaves me the second a better job comes along,
where half the money I raised goes to office space?”
Detroit native Nathan Labenz went through a similar realization.
He left town for Harvard in 2002, with no intention of moving back.
(Detroit, after all, wasn’t looking good back then.) He eventually
made his way to San Francisco, where in 2012 he founded Waymark,
an online “make your own commercial” video template company,
with a quarter million dollars of Silicon Valley legend Tim Draper’s
money. Four employees later and halfway through a $2 million seed
fund-raising goal, Labenz was shocked to read that Twitter was
opening an office in, of all places, Detroit. He dug deeper and found40 / ENTREPRENEUR.COM / September 2019→ SKY’S THE LIMIT
Understory
cofounders Bryan
Dow (left) and Kubicek
are back to help
Madison’s boom.