What mayor wouldn’t want his or her city to be the next Silicon Valley? The area has reached an almost mythical level for all things innovative and is held up as the gold standard for high technology companies around the world. Local government officials dream of a similar entrepreneurial environment that creates jobs, new businesses and increased revenue streams in the form of taxes on young high wage workers. In an effort to fulfill this dream, governments tend to fund research efforts within their cities. Columbia is no exception.
Earlier this year the University of South Carolina, in combination with IBM, opened the Center for Applied Innovation across the street from the Strom Thurmond Wellness Fitness Center. The center’s goal is to foster an environment for technological innovation and research in the hopes of improving local communities and our school. Building this space seems like a great idea, but is it destined to fail?
There is no doubt that the new facility will be beneficial to researchers by providing them the guidance and support of IBM specialists, but the outlook is less rosy for the city of Columbia itself. Let’s say that you create some device or app that is going to change the world while working in this facility. Fulfilling the goal of both the school and IBM, you decide to start your own business around your ground breaking idea. Like any good entrepreneur, you know that to get started you need two things: smart workers and money. Where are you going to find these in Columbia?
Most likely you haven’t been alone in developing this idea, so starting the business with your friends seems pretty logical. You know a few people in the engineering and business schools and they have helped you create your device and a sound business plan, but your friends aren’t experts. There is no guarantee they have any knowledge of the industry or what it means to run a company.
And even more importantly, you need capital. A lot of capital. A majority of startups fail and one of the leading causes for failure is that the new company simply runs out of money. Because you are a college student with no income, you need people to invest in your idea. Your parents, who in the best case scenario are helping pay for your education, are extremely supportive of your endeavor but are unlikely to have a couple hundred thousand dollars lying around. Getting a loan from the bank seems like an obvious choice, but banks are naturally risk-averse and the process for applying for a loan can be lengthy and difficult. Crowdfunding is too unreliable and you don’t have the house or car for equity financing, so where can you turn for the money? Venture capitalists, who will invest in a startup in hopes that it will make it big and give them a profit, and angel investors, who will invest in a startup without regards to their own profit.
These are your best bets for turning your small idea into multimillion dollar gold to hopefully be bought up by one of the big tech companies in the future. Unfortunately, Columbia is not known for its wealth of venture capital, and you may struggle to find any willing angel investors in the area. So you decide to move your business to the place where you know you will find the money and the minds that you need: Silicon Valley.
That is the struggle for cities across America. They all wish to create an atmosphere for innovation and job creation but if the financial systems are not in place it makes the task of being Silicon Valley 2.0 that much more difficult. There is no doubt that the new innovation center will lead to exciting research opportunities and the chance to grow innovative ideas into new businesses. The true challenge will be to convince entrepreneurs that Columbia, South Carolina, is a better place to be than Silicon Valley.