If you ask 10 different startup entrepreneurs what their biggest dream is, they very likely would answer “Run a startup in Silicon Valley.” Here, in this article, we explain the reasons why not to focus your startup on the Silicon Valley.
All right, Silicon Valley is one of the most innovative ecosystems in the world. This region, composed of many cities in California, gathers world-class research universities and private institutions. It also includes significant federal R&D investment, the world’s top technology companies, and countless successful entrepreneurs, all in the same place.
It sounds amazing to be there, but does it really worth it? Is it intelligent for a new business to challenge the most competitive region on the planet even without any previous international experience? Is the Valley the best opportunity to start global operations?
In our opinion, the Silicon Valley definitely IS NOT the best option and should not be considered. Especially when we talk about the early stages of ideas and businesses that were born in developing countries, such as Brazil and India.
The Valley, actually the whole North-American market, should be the startup’s final goal, and not the first one. The USA is for sure one of the best markets and will help your business to excel as any other one would. However, we suggest that you start aiming for this country only after you have tested & validated your product and had some experience in other nations.
We listed 7 reasons to show you why we think this way:
1) Cost of life
It is a dream to believe that you will find an investor in the streets during your first week in the Valley and receive 1 million dollars right away. It is a hard task to raise funds there, and it takes a lot of time and commitment. If you accept the challenge, it is possible that you will have to spend at least 6 months to be investment-ready.
The problem is that San Francisco, the most famous city in the Valley, is one of the most expensive cities in the United States, maybe even in the whole world. If you are looking for a simple life, what is probably your case now if you are a startup owner? You will probably spend at least 3,000 dollars per month only on rent. Add that to other costs, such as meals, transport, and working space and you will get what we are discussing here…
2) Unbelievable competition
As we said before, the Valley gathers fantastic opportunities for startups. The problem is that everyone knows about it! Because of that, it became one of the most competitive regions in the world. It is bringing the most brilliant minds and ideas from all over the world competing for space.
We are not saying that you may not be one of these brilliant entrepreneurs. But don’t you agree that it is smarter if you gather some experience first to become more competitive over there? Increase your international knowledge and improve your product to its maximum potential can be decisive to conquer your space in the Valley!
3) Language Barriers
This is a complex problem, but if you are not from an English speaking country, you will understand what we are saying. I am sure that you know at least a little bit of English because you are reading this post, but a little bit is not enough!
We had already seen many entrepreneurs that learned the language when was younger. But they hadn’t practiced the language for almost 10 years and thought that it would be ok to pitch in the Valley like this. Do I need to say what happened?
Fluency requires daily, or at least weekly, practice! Considering that we are talking about one of the most expensive cities in the world, it is smarter if you improve your English with classes in your home country than in San Francisco. Underestimating the language, which is one of the localization’s needs, is one of the 5 common mistakes when expanding internationally.
4) Your client is not North-American
This is a classic mistake. Most startups create their products based on local needs. Therefore they tend to forget that the American market can be entirely different. You can defend your idea with all your strengths.
You can also prove that people in your country have one huge problem and that you developed the perfect solution for them. But it will be useless if it’s not interesting in the USA or does not have Global applications.
Another problem that we have already heard about Silicon Valley is that the market there is unique. In other words, you have the chance of adapting your product into something that does not represent America’s or even the world’s reality.
5) Legal aspects
You will have a really hard time gathering investment in the USA if you are not generating enough revenue yet or prove to have a profitable idea. It means that you have to place your company in American soil – and that is where the problems start.
Which kind of company are you going to open? C corporation or LLC? Delaware or Wyoming? Technically, it can be easier to open your business over there than in other countries. But are you prepared to deal with American law? They are known to be extremely restricted, so Just one little mistake and you can have huge arrears – not to mention costs with the lawyer.
6) American Visa
This is the biggest challenge faced by millions of people that have the dream to become American citizens. There are many different visas that you can apply as an entrepreneur, but all of them are considerably complicated and can cost you a lot of money (and time).
7) High demand for developers
A good programmer can make up to US$220,000 per year in Silicon Valley, not to mention bonuses, equity’s share, and other benefits. And can you believe that there’s still a lot of demand for these professionals?!
Bearing that in mind, let’s suppose that you and your developer, an excellent one, are going to the Silicon Valley. How are you going to keep this professional working for you if Google, Apple, or Netflix see his/her potential and like it? We are talking only about huge companies here, but there are thousands of other startups operating there that are also looking for developers… Risky, isn’t it? Now you can understand why you should not focus your startup on the Silicon Valley!
Ok, we listed here a lot of reasons why you should not focus your startup on the Silicon Valley. But where do we suggest you go instead?
We separated 10 innovation ecosystems that you must check before starting your internationalization! These countries will provide your business with countless benefits and the necessary experience to reach the Valley when the time is right. Check it out!
