This is a hard one. For starters, we’re living in a very different reality than we were a year ago. Remote work is here for now, and likely here to stay. Like every other industry, venture capital has had to adjust to remote work. That means that the long-term answer to our question, “does location matter for your fundraise”, is a resounding, TBD?
For now, here’s the inside scoop on location. For some VCs the location of your company matters - a lot. If you are just getting started, it might be one of the most important criteria in targeting lead investors. Why? Because at such an early stage, you’re a higher risk for them and face-to-face meetings are still one of the best ways to stay connected and get things done.
In fact, the data tells us that for seed stage and angel investors being close to the portfolio company is of particular importance.
As your company matures, location starts to take a backseat. Why? Because you’ve been able to grow and validate your performance with current and future investors. You’re a more solid bet, and therefore need less oversight.
What the data goes on to show in the TechCrunch article above is how location impacts who is most likely to invest in your company. There’s a heavy bias of venture funds to invest in companies in their home region. When they do decide to go outside of it, they typically invest in companies located on the coasts, the more traditional startup markets. Funds based in the West invest in Northeastern companies most frequently, and vice versa. Even for Midwestern and Southern based funds, who have the most geographically diverse portfolios, investors tend to bias towards the West whenever they go outside of their home region.
For now, the location of your startup does impact the funds you should consider adding to your lead investor list, especially if this is your first equity round. Time will only tell how our increasingly remote reality will speed the shift to location agnostic funding.
At FundBoard, we’re on a mission to make every founder an insider. We match founders with the right investors at the right funds to invest in your idea. We add crucial hours back into your day and change the probability that your fundraise gets done.