VC’s Say Your Startup’s Location Still Matters

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Pictured: Apple’s Upcoming Massive 5-Story Shanghai Apple Store

At this morning’s TechCrunch Disrupt, Michael Arrington sat down with nearly half a dozen VC’s, including Joe Kraus (Google Ventures), Rich Wong (Accel Partners), Shervin Pishevar (Menlo Ventures), George Zachary (CRV) and James Slavet (Greylock Partners). The investors shared their thoughts on the state of investing, general industry trends, the increasing speed of VC investments as they try to compete with angels and much more.

But one interesting thing that came up was whether or not a startup’s location still matters as much as it did before. Do entrepreneurs need to be based in the Valley? Said the VCs: Yes.

Mike asked the panel about the subject, and they all agreed – location was a very important factor for startups to consider. Kraus of Google Ventures was the most vocal in the matter. He explained that if a successful New York-based entrepreneur moves to Silicon Valley, they then have the same chance of success as a new startup based here. It’s hard to hire, it’s hard to grow your network, he said.

When Mike pressed him for stats on this, Kraus says that numerous research studies on network centrality have proven this to be true.

But great startups have come from outside the Valley, as we all know. Kraus agreed, but said while there are exceptions to every rule, he still firmly believed this was the case. Accel’s Wong added that many of the large cap acquirers are in the Valley, which is another reason why entrepreneurs should be based here.

Mike then polled the audience to see what they thought about the matter. Does the audience agree?, he queried, asking for a show of hands.

Few hands were raised.

“I agree with them,” said Mike. “There are some bad-ass companies coming out of Israel.”