Skip to main content

Startup Ecosystems

Fred Wilson posted about this yesterday here.

The Lancaster/Central Penn area has suffered from the pull of the Silicon Valley and other tech centers, as entrepreneurs move their startups there and top developers get sucked into those ecosystems with the lure of good jobs at Google, Apple, and other large companies.

CoTweet moved "to be near Twitter". I moved ChiliSoft in 1997 to be near Microsoft. We deliberately located Mission Research in our hometown, but it's possible that might have slowed us down--it's definitely tougher to build tech companies here.

To really create a thriving startup scene and ecosystem in Lancaster, we need outside investment of about $100 million, split into two funds. With Fund 1, expect to lose everything, but fund a lot of startups. Maybe some will make it to a modest exit, maybe they would all fail.

But failure isn't a bad thing. Failure creates experience just as much as success does, and in a lot of cases it strengthens teams.

Fund 2 would be dedicated to investing in experienced teams that came through the first funding. Assuming 3 years of Fund 1 backing, and an average of $80k per employee (loaded), you can fund about 200 startup employees with $50 million. Revenue from those companies would fund more.

Fund 2 would likely produce enough return over the next 7 years to return the full $100 million. And in the meantime, you've created a tech industry where a very small one existed before. You've created the ecosystem of lawyers, accountants, coaches, advisors, seasoned tech entrepreneurs, engineers, developers, and marketers.

From there, Fund 3 can come from outside the area, in the form of investment from the VC industry just up the road in Philly or New York.

So the question is, what are we waiting for? Or maybe it's this: anyone have $100 million to spare?


Popular posts from this blog

Beta Signup

I've been working for quite a while on a new search concept, though the further in I get, the closer the rest of the world gets to what we're doing. So today I'm inviting you to sign up for the rather modest beta, which will be ready soon if we can nail down a few difficult  details. Jawaya is a way of navigating the web and getting better results. And that's as much as I can say right now, because we're not a funded startup, and things are moving really fast in this space--it's going to be very competitive. I predict there will be about 10 funded startups in the next 6 months doing something similar. One of them will be mine, and we aim to make it the best. We're raising a round of capital to fund the team, and are shooting for early sustainability. This is my fifth company; my fourth in the tech space, and my third software company. I think it will be the biggest and can possibly have a positive impact on the world by reducing the amount of time it takes

Where Innovation Happens

As I get closer to a go/no-go decision on a project, I've been thinking about the difference about my vision for the project and the supportive innovations to enable the core innovations The vision combines (in unequal parts) product, core innovation as I imagine it, the application of that core innovation, design, marketing,  developer ecosystem, and business development. The core innovation enables everything else, but it's the application of the innovation that makes it meaningful, useful, and in this case, fun. This week we're testing initial approaches to the implementation for our specific application, and that's where we'll develop the enabling innovations, which is basically where the rubber meets the road. The difference is that the enabling innovation happens at the source of real problems only encountered in the making of something, and in a project like this just getting the essence of it right isn't enough; it also has to be safe, the compone

The Real Jobs Problem

It's the economy, stupid.  Well, yes, it always has been, if you're in the distortion field of politics.  But whose economy? The pundits, the White House, the Republican candidates all miss the mark. They keep talking about debt, taxes, and monetary policy. None of those things tell the real story behind today's economy.  The Old Economy Keynes was right--in the old economy. Economy gets weak, pump some money into the economy through public works projects, which  1) puts people to work, which  2) boosts the economy and  3) generates new tax revenue, while  4) leaving us with another generation of reliable infrastructure to support  5) more growth (for growth's sake, which is another post).  The Beach Ball Imagine a beach ball, partially deflated to represent a recession. Got it? Now imagine the govt pumping that beach ball back up through sensible public investment (which we haven't seen for decades). The New Economy Same beach ball, same pum