College Towns Next Big Thing for Startups

@Maria Clara Cobo, Forbes Magazine Contributor Apr 18
1 min. read

With nearly 50% of millennials looking to start their own business in the next three years, it is not a surprise that the new generation of entrepreneurs aren’t based – or even particularly interested – in Silicon Valley. With students and recent graduates all over the country experiencing startup fever, college towns may just be the next big thing for entrepreneurship.

Even though nearly 47% of venture capital deal value in the U.S. goes to the West Coast, other startup hubs are rising. Cities such as Columbus, OH, St. Louis, MO, and Denver, CO, offer burgeoning and diverse economies with a dense concentration of college students – Ohio State, Washington University and the University of Denver, respectively. Along with lower costs of living, the talent and technology emerging from college towns have become a magnet for startups and VC dollars.

The overall cost of living in San Francisco is 60% higher than the national average, according to PayScale, with housing a whopping 165% above the average. Michigan, for example, where the cost of living is 9% lower than the national average, has received $1.4 billion in startup investment in the past five years, according to a Pitchbook Report on VC ecosystems. As the cost of living and job competition increases in Silicon Valley, many companies and venture capitalist firms are investing in college towns.

“There’s so much momentum and excitement around entrepreneurship, startups and small businesses as the back-bone of job creation in the U.S.,” says Mary Grove, a partner at Revolution’s Rise of the Rest Seed Fund – launched in 2017 by billionaire co-founder of AOL Steve Case, with an $150 million early stage fund focused exclusively on startups in overlooked cites such as Memphis and Cincinnati. “We are really excited about what we see from a talent perspective in these cities and I would say that universities certainly play a very fundamental role in that.”

But being strategically located is not enough. Universities must provide programs and resources that promote and foster an entrepreneurial ecosystem.

Student entrepreneurship has increasingly become a value proposition of college in an age where people are questioning the value of higher education. Universities that have strong entrepreneurial ecosystems gain the benefit of being highly desired by college applicants.