Austen, Texas

Why Businesses Are Moving to Texas From Silicon Valley

  • For years, Silicon Valley was considered the best place in the United States – possibly the world – for up and coming businesses. This was particularly true for those with a tech focus. The high tech college campuses there meant that students were highly trained in technical fields. The focus of big companies like Apple and Microsoft in the area meant that partnerships with huge companies seemed right around the corner.

    But the world has changed since that time and more startups than ever move to Texas because of its low taxes and lax business regulations. The reputation of Silicon Valley has caused such a glut of businesses and aspiring entrepreneurs in that area that costs have skyrocketed, opportunities are hard to come by, and the overall business climate has become almost inhospitable.

    In the meantime, other cities have worked to create and offer more hospitable, engaging environments for growing businesses, claiming a piece of that entrepreneurial spirit for themselves.

    In both Austin and Dallas, Texas has built its own tech hub, and companies are rapidly moving to Texas to build themselves a Texan home. Why?

    Less Expensive

    California is one of the more expensive states in the United States, and its metro areas are particularly expensive. By comparison, the metro areas around Austin and Dallas are significantly less expensive. This offers savings for businesses in many ways; their own operating costs are generally lower, since real estate, utilities, and other such business costs tend to be less expensive. This is one of the most attractive reasons for business to move to business-friendly Texas.

    This also means that companies can offer salaries that are overall lower, but are still competitive within the area market. Attracting high quality employees may also be easier because the cost of housing and overall living is lower.

    Diverse Workforce

    With a large number of top technical schools in the areas surrounding Dallas and Austin, the cities are full of potential employees with diverse technical and social backgrounds. Companies are more and more recognizing the benefits of having a workforce that has a diverse lived experience. Companies that have more ethnically diverse boards, as well as gender diverse boards, perform better over time, take more profitable risks, and generally do better in the marketplace.

    Beyond that, the educational opportunities in these areas of Texas means that students don't just know tech, they know about the music and culture of Austin, the food and history of Dallas, and much more. They bring a wealth of experience to their entrepreneurial ventures. With the increasingly white and male population of Silicon Valley, especially in entrepreneurial circles, that diversity of perspective simply doesn't exist.

    More Interest From Venture Capitalists

    Although many startups move to Texas, there are many other venture capitalists remain centered in Silicon Valley, the area with which they are most familiar, others are finding that this area is fairly well tapped for ideas and experiences. They are actively looking to invest in companies that are growing up outside of the insular culture of San Jose and Palo Alto, looking for new perspectives on old problems. This is especially true since disruption seems to be the key of the digital game right now, with old industries being shaken to the core by new ideas and approaches.

    It's not that businesses outside of Silicon Valley will have an easy time attracting the attention of angel investors, but they may find their company more interesting once they can get that attention.

    Business-Friendly

    California has a lot of infrastructure and investment, but overall, the state itself isn't particularly business friendly. Texas absolutely is, with tax laws and regulations that strongly favor businesses, and many businesses are not ashamed of using that to their advantage. After all, given that nearly 20% of all small businesses close in the first year of their operation, and given that cash flow is often one of the problems that causes those businesses to fail, making sure that cash flows as well as possible makes sense.

    It is also difficult for many businesses to try and navigate the complex rules and regulations that revolve around opening businesses. This can be true in any community, but some states and counties have taken steps in recent years to streamline approval processes, relax unnecessary regulations, and work to make the entire process more user friendly towards companies. The goal is to increase the number of businesses operating in a community, since an active local economy helps a community thrive.

    If you are wondering where to start your startup, don't assume that Silicon Valley is the only place for you to get the support and work you need. Given the digital tools available to connect with workers and mentors around the globe, your business can be anywhere. Texas in particular has several features that make it particularly appealing to small tech companies just getting off the ground – and growing at a rapid pace.