- Founders in tech hubs outside Silicon Valley could gain a big edge during the remote work era, FilmConnx founder and CEO Carolyn Pitt told Business Insider.
- Pitt, who is located in Atlanta, Georgia, said that many founders outside more traditional networks on the coasts are used to hustling hard to raise money and could have an advantage in the new economic environment.
- However, Pitt said that founders outside Silicon Valley tend to be more diverse and face an uphill battle for venture capital, even in good times. Any pullback could adversely affect those groups, she said.
- Pitt traveled to Washington, DC, to explain the unique needs facing entrepreneurs to lawmakers as they were preparing stimulus funding. Although she’s happy with the ultimate outcome, she says there is still a lot the government needs to do to keep founders like her afloat.
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Venture capitalists looking for resilient businesses in the post-pandemic economy might do well to start looking beyond their own backyards. There they’ll find founders who are no strangers to hardship.
Many VCs have publicly mused about the benefits of starting a company during an economic downturn, and point to companies like Airbnb that were founded during the 2008 recession as proof. After surviving that lean time, founders tend to stay scrappy. Business expenses stay low. The companies themselves are resilient and flexible. Now, startups from a new generation are learning those lessons. It may have taken a potentially catastrophic economic crisis, but Silicon Valley is starting to think long and hard about how to stretch a dollar.
But for other founders, that reality was apparent from the get-go. Those outside major tech hubs like Silicon Valley, Boston, and New York were always particularly hard-pressed to get in front of investors, and win the same deals as their coastal peers.
Now, however, the playing field has leveled off somewhat as the United States continues to explore the feasibility of remote work in the long term. That shift, even if semi-permanent, could mark a massive sea change in which a broader range of founders ultimately get funding.
“Now, we are all relying on Zoom calls, and those of us that are outside those areas have had to utilize those modes since the beginning of time,” FilmConnx founder and CEO Carolyn Pitt told Business Insider.
Pitt, who is located in Atlanta, Georgia, and whose company connects the area’s robust film industry with out-of-state producers, has felt the funding crunch like many other founders across the country as film and TV production ground to a halt. Even so, she is optimistic that it will be founders like her that are able to draw on the skills they’ve had to develop to succeed in the current tough environment. They might even have a leg up on the competition.
“It probably sounds counterintuitive, but if you are accustomed to operating blindfolded with one arm behind your back and then the power goes out, you are better prepared than those that weren’t blindfolded at the start,” she said. “It’s similar to the idea that those of us that are in areas outside Silicon Valley have to be more creative to access capital.”
Once they get funding, however, far-flung founders have to also be creative to make the funding last, Pitt said. Typically, founders outside California’s Bay Area or East Coast cities end up with smaller funding rounds and tend to be more diverse, so they end up making do with less. It’s another struggle that Pitt and her community of founders are making work to their advantage, as VCs start to pull back funding new companies outside their existing portfolios.
“People have to be that much more resilient and make a dollar stretch,” Pitt said. “As a founder outside of Silicon Valley, and a female founder of color, I’ve had to make a dollar stretch already. That’s not a new situation, but now all founders will have to figure that out until the economy rights itself.”
In the immediate term, however, Pitt thinks the government could do more to support entrepreneurs and founders that have so far fallen through the cracks of existing stimulus bills. Programs like the Paycheck Protection Program, intended to help small businesses keep employees on payroll, were so vague that many founders ended up returning the loan after they couldn’t figure out whether or not they qualified for its terms.
Pitt traveled to Washington, DC, to advocate on behalf of founders and entrepreneurs like her as the original CARES Act was moving through Congress, because she felt her community couldn’t stand to be left out of the economic recovery plans.
“The dollars don’t trickle down enough to make a difference,” Pitt said. “There’s an opportunity to still do more.”
That something more could look like additional legislation that specifically targets founders from underrepresented backgrounds and geographies, Pitt said. In the long run, a permanent government-enforced policy could be the biggest benefit to a group that has remained largely disadvantaged in the venture ecosystem.
“I think COVID has revealed inequities across the board, but in venture capital and startup communities, it’s more apparent that founders of color and women don’t have access to capital or networks to easily sustain themselves without a lot of effort,” Pitt said. “Ironically, now we have more access to capital than before because of these extra efforts and stimulus. That’s the irony, that it took an emergency to make it happen.”
The remote work era's big winners may include founders outside major tech hubs like Silicon Valley, who are used to making do with less. Their lean resilience should attract investors, an Atlanta founder says.