2010 Startup Moves from Boston to San Francisco Offer Insights to the Perennial Coast vs. Coast Debate
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our Series A in December, our lead investors—who are from the Bay Area—preferred for us to base our headquarters there. Seeing as we planned for San Francisco to be our second city for expansion anyway, it made sense to move the HQ there.”
ThredUP, which moved to San Francisco in part so founder and CEO James Reinhart could be closer to his family, got a Series A investment from East Coast investors as well as Menlo Park, CA-based Trinity Ventures. West Coast investors weren’t necessarily more hospitable to a company like thredUP, a Web-based platform for swapping used children’s clothing. “I think all investors look for promising markets and good teams,” he says. Trinity was a good fit for thredUP, not because of its location, but because of its experience in backing companies focused on moms, says Reinhart.
A moved to the Valley doesn’t necessarily solve all money problems for startups, though, Reinhart says. The competition for engineering talent in San Francisco is thick—and pricey, he says. The same could be said, to a slightly lesser extent, of Boston and other innovation communities, but thredUP didn’t feel the pain here because it wasn’t adding engineers at the pace it is in the Bay Area.
The startup moves over the past year don’t necessarily mean that Boston is lacking, but they do say something about what types of startups each community is fueling.
Pieri says San Francisco investors and entrepreneurs were familiar with the “collaborative consumption” notion—where consumers use technology to share services—which RelayRides has built itself on. “They were able to very quickly get their minds around the concept,” he says.
Overall, the Bay Area has a louder crowd of companies in the fashion, gaming, and consumer services spaces, making investors more comfortable investing in those industries, Rodenstein says.
“The more companies in a given space in the local area, the more likely that the investor will have seen related companies and thus be educated enough to feel like they can make the call, [and] the better the network they’ll have to pull in talent, partnerships, or executive relationships to help a company along,” he says. “Outside of a deal’s intrinsic properties—team experience and qualities, opportunity size and feasibility, et cetera—the above factors are key to an investor’s decision whether to take the plunge or not.”