Why Seed Funding Isn't A Regional Business
jasonlbaptiste.com
jasonlbaptiste.com
Within just the SW/webapps space, it doesn't much sense to have a YC clone in every US city. But it still would make sense to have a YC clone in -say- India or China which focuses on the unique needs of its market. (I suspect these already exist but most of us YC-fundees or YC-wannabe-fundees haven't heard of them and wouldn't care if we did.)
Great companies have been started, funded and grown outside the valley. Microsoft, MySQl, Skype, 37Signals, etc. There are more examples than you might think.
Also, while I'm sure there is a lot of engineering talent in the valley it isn't unique. Finland, Denmark, India and the baltic states have awesome programmers and engineers. And they're a lot cheaper, especially in the former eastern bloc.
fogbugz, Alcatel/Lucent, Ericsson, Nokia, Siemens, Avid, IBM, Ubisoft, Research in motion, Sierra, Kazaa, Joost, Dell.
The tech-world doesn't revolve around Silicon Valley. There are actually other tech hubs, and there are important tech companies being started in other parts of the world. The valley is important, but not that important.
But sometimes it's not even about having enough talent or enough gasoline. Sometimes, sociological reasons prohibits the growth of multiple fledgling startups in area.
One bit of data I want to offer is Pittsburgh, PA. Pittsburgh has both the distinction of having two top-notch universities (CMU and Pitt) and an emerging early-stage seed incubator. But they're having trouble getting the startup culture going because the talented engineers and developers just don't plain don't want to stay in the city, or they get hired for research/corporate work right away. Those college grads actually prefer _that_ rather than working in a startup. You can try to sell them the Silicon Valley dream without the Silicon Valley all you want but if the mentality isn't there it's going to take a lot more convincing than from just the school, the city, or the investors. The rest that do stay have to compete that much harder to deal with external factors affecting their success than they would get instead of just moving to Silicon Valley in the first place.
But you're definitely right: time is the only thing that will change this.
I'm not so sure it is that as much as...
they get hired for research/corporate work ... actually prefer _that_ rather than working in a startup
Most of the CMU nerds want to work at the best companies for stimulating their intellectual minds. I suspect people who get accepted to CMU recognize its capacity for strengthening your inner nerd, and so those are the types who go there: people who can maximize their time thinking about difficult computer science problems.
AlphaLab, I presume the seed funding organization you refer to, is going about it all wrong. They are trying to be a copy of YCombinator, and I'll challenge them to a debate if they think otherwise. What they ought to be doing is being more open to the startup community at large to the point where all of the startups in Pittsburgh and all of the investors in Pittsburgh are in one room hobnobbing. So far I have yet to even have met anyone affiliated with AlphaLab. They had some lame happy hour kind of event at their facility once in the last few months, but I left when the director started to waste our time with a presentation which I could have (already had) absorbed via the information on their website.
I've overheard a few comments from investors here. One said something along the lines of, "AlphaLab expects you to invest a couple million in some companies who give 10 minute presentations? Get real." This tells me the adaption to the trend of angel investing isn't happening here. Another investor, when I mentioned the startups in Pittsburgh he replied, "Yeah. There are not enough."
One solution, as I mentioned, is creating the illusion of a startup scene. Just have weekly events and do what you have to that people will actually go to them. Don't waste their time. Carnegie Mellon has a Pre-college program. These are kids who end up going to UPenn, MIT, Stanford, Cornell and so on. That is, they are there because CMU is one of the best schools for computer science so why not get a sample of what it is like there. So, if incubators like AlphaLab actually helped the startup scene seem as though it exists, those Pre-college students may decide they like it and choose to go to CMU over MIT (let's say Stanford rejected them by chance) because they feel a strong sense of a startup environment.