Does Location Still Matter for Startups?

I've been handing out my "Sonicbids, Founder & CEO" business card for thirteen years now and just about every time the first reaction and question I get is a reference to where my company is located: "Boston? Why Boston?" (Admittedly, street addresses and even phone numbers are quickly disappearing from startup business cards today, replaced by e-mail addresses and Twitter handles.)

It's a natural reaction, I guess, given that most people expect an online company in the music space to be located in either New York or California. Which naturally leads one to ask: In an era of globalization and telecommuting, does a startup's actual physical location still matter?

The answer is yes -- though less so than even a decade ago. Here's why:

Ongoing Access to Talent
Nothing matters more to a new economy company than access to quality talent. Cities like Boston, home to a large base of leading universities, produce a constant stream of newly minted, top level graduates. Talent is not only a startup's largest cost factor, it's also its most important asset. In the 21st century a company is, after all, just a collection of hearts and minds of talented individuals single-mindedly chasing a common goal.

Entrepreneurial Clustering
Startups beget startups. That's why across the world there are hubs like Silicon Valley, Tel Aviv, Toronto or Sydney. Is a startup not located in one of these hubs doomed? Of course not. However, for young entrepreneurs, being able to rub elbows, get mentored, transact and learn from other fellow founders, can make a big difference in their eventual success and growth prospects.

Active Angel Investor Network
VC's get all the press, but angel investors are the unsung heroes of the startup ecosystem. They not only provide the earliest and riskiest capital to new ventures, but they also act as mentors and make invaluable business introductions for startup founders in an enterprise's treacherous early days. By and large this group tends to invest locally and within their own communities.

Supportive Local Government
I have had the fortunate experience to launch my company in a city that cares about startups. Oft-overlooked government-led initiatives such as creating affordable office space, startup-supportive tax legislation, organization of old-fashioned trade missions, or access to low-interest loans designed to boost hiring can make a vast difference. My company benefitted from all the above, thanks to the foresight of outgoing Boston Mayor Thomas Menino.

Thriving Cultural Scene
According to a study by the Startup Genome Project, there's a direct correlation between a city's cultural scene and its corresponding thriving startup environment. It should come as no surprise. Entrepreneurs and their cohorts don't just live in an office space (though at times I'm sure it feels like it). The environment around a startup -- outdoor activities, music, arts, culinary and general cultural scene -- is a big factor in the quality of life that a company offers to its employees. All are critical factors in a startup's ability to attract, retain and grow a highly productive talent base. Too many times, elected officials forget these "soft" factors when focusing on entrepreneurship-boosting initiatives.