{"id":395,"date":"2016-06-23T12:59:25","date_gmt":"2016-06-23T11:59:25","guid":{"rendered":"https:\/\/blog.iese.edu\/entrepreneurship\/?p=395"},"modified":"2017-05-09T09:16:23","modified_gmt":"2017-05-09T08:16:23","slug":"whats-killing-your-startup-18-mistakes-to-avoid-2-bad-location","status":"publish","type":"post","link":"https:\/\/blog.iese.edu\/entrepreneurship\/2016\/06\/23\/whats-killing-your-startup-18-mistakes-to-avoid-2-bad-location\/","title":{"rendered":"What Mistakes Are Killing Your Startup? #2 Bad Location"},"content":{"rendered":"<p><strong>Starting a company in Abdijan<\/strong> (a yearly destination of mine) <strong>is a far cry from doing so in Barcelona<\/strong> (my home city) or San Francisco. <strong>It sounds obvious\u2026and it is!<\/strong><\/p>\n<p>I\u2019ve identified <strong>four major reasons<\/strong> for this:<\/p>\n<h3><strong>Talent<\/strong><\/h3>\n<p>Talent is <strong>unevenly distributed geographically<\/strong>. There are <strong>clusters of entrepreneurship and innovation<\/strong> that are more attractive than others. Educational institutions and average salaries are strong incentives to attract talent.<\/p>\n<h3><strong>Funding Availability<\/strong><\/h3>\n<p>How strong is the <strong>entrepreneurial financing ecosystem<\/strong> in your area? One thing difficult to achieve is matching the sources of financing available in the marketplace with the needs of startups. <strong>You need a consecutive chain of \u201cfinancing agents\u201d that can assume the different risks<\/strong> related to the growth phases of new ventures.<\/p>\n<p>Let\u2019s take Spain, for example.: <strong>It is not that difficult to start a new company in Barcelona or Madrid<\/strong>. \u00a0<strong>As an entrepreneur you will find startup money<\/strong> thanks to FFF, subventions and Business Angel\u2019s network (that will probably cover the initial risks of product development and early sales). <strong>However, when it comes to securing growth financing, you will face extreme difficulties<\/strong>. On one hand, there are very few VC\u2019s dedicated to early growth, and on the other, not that many BA\u2019s able to assume those kinds of amount of money \/ risk ratios. <strong>The growth financing equity gap is a massive obstacle<\/strong> for comprehensive entrepreneurial ecosystem building.<\/p>\n<p>Even at a country level, this is striking:<\/p>\n<h3><strong>Density<\/strong><\/h3>\n<p><strong>How big and how dense is the ecosystem?<\/strong> Quite simply put, <strong>you need a crowded market place to generate competition between entrepreneurs and financing vehicles<\/strong>. This generates the <strong>right level of innovation<\/strong>. If you want investors to assume a certain level of risk with innovative and disruptive projects (and not just focus on copy-cats), <strong>you need a minimum number of competing investors<\/strong> willing to invest in startups.<\/p>\n<h3><strong>Regulations<\/strong><\/h3>\n<p><strong>The harder it is to register a company<\/strong> (see <a href=\"http:\/\/www.thegedi.org\">www.thegedi.org<\/a>), <strong>the less innovative and entrepreneurial your ecosystem will be<\/strong>. According to the World Bank report, there are three key factors to take into account:<\/p>\n<ul>\n<li><strong> How much does it cost<\/strong> (percentage of the average salary)?<\/li>\n<li><strong>How many administrative steps<\/strong> does it take?<\/li>\n<li>And <strong>how much time<\/strong> does it take?<\/li>\n<\/ul>\n<p>If you can register a company for one monetary unit in two clicks in five minutes you are in a better position than let\u2019s say a country where you will have to invest six months of your average salary, hire a lawyer, meet the notary and sign 10 different papers (the real case in certain countries!).<\/p>\n<p><strong>In Spain, around 95.5 percent of tech is found in Madrid or Barcelona<\/strong> and the remainder dispersed around the rest of the country.<\/p>\n<p>And throughout <strong>Europe<\/strong>, <strong>we find the same pattern<\/strong> (see <a href=\"https:\/\/techcrunch.com\/\">TechCrunch<\/a>).<\/p>\n<p>Nevertheless, <strong>this shouldn\u2019t deter you from starting a company from a remote location. Although you may have to move part of the functions to a more populated area, especially for business development and funding<\/strong>. Either that or spend your life in planes, trains, automobiles and the likes.<\/p>\n<hr \/>\n<p>Posts of the series:<\/p>\n<p><strong><a href=\"https:\/\/blog.iese.edu\/entrepreneurship\/2016\/05\/23\/whats-killing-your-startup-18-mistakes-to-avoid-1-single-founder\/\" target=\"_blank\">#1 Single Founder<\/a><\/strong><\/p>\n<p><strong><a href=\"https:\/\/blog.iese.edu\/entrepreneurship\/2016\/06\/23\/whats-killing-your-startup-18-mistakes-to-avoid-2-bad-location\/\" target=\"_blank\">#2 Bad Location<\/a><\/strong><\/p>\n<p><strong><a href=\"https:\/\/blog.iese.edu\/entrepreneurship\/2016\/09\/15\/whats-killing-your-startup-18-mistakes-to-avoid-3-marginal-niche\/\">#3 Marginal Niche<\/a><\/strong><\/p>\n<p><a href=\"https:\/\/blog.iese.edu\/entrepreneurship\/2016\/10\/20\/whats-killing-your-startup-18-mistakes-to-avoid-4-confusing-an-accessible-market-with-a-potential-one\/\"><strong>#4 Confusing an Accessible Market with a Potential One<\/strong><\/a><\/p>\n<p><strong><a href=\"https:\/\/blog.iese.edu\/entrepreneurship\/2016\/12\/13\/whats-killing-your-startup-18-mistakes-to-avoid-5-and-6-launching-too-early-or-too-late\/\">#5 and #6:\u00a0Launching too Early\u2026 or too Late<\/a><\/strong><\/p>\n<p><a href=\"https:\/\/blog.iese.edu\/entrepreneurship\/2017\/03\/09\/whats-killing-your-startup-mistakes-to-avoid-7-fights-between-founders\/\"><strong>#7: Fights Between Founders<\/strong><\/a><\/p>\n<p><strong><a href=\"https:\/\/blog.iese.edu\/entrepreneurship\/2017\/05\/09\/what-mistakes-are-killing-your-startup-8-obstinacy\/\">#8:\u00a0Obstinacy<\/a><\/strong><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Starting a company in Abdijan (a yearly destination of mine) is a far cry from doing so in Barcelona (my home city) or San Francisco. It sounds obvious\u2026and it is! I\u2019ve identified four major reasons for this: Talent Talent is unevenly distributed geographically. There are clusters of entrepreneurship and innovation that are more attractive than [&hellip;]<\/p>\n","protected":false},"author":1682,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[157,78196],"tags":[95626,89755,95627,80159],"coauthors":[103468],"class_list":["post-395","post","type-post","status-publish","format-standard","hentry","category-entrepreneurship","category-new-ventures","tag-common-mistakes","tag-entrepreneurship","tag-founder","tag-startup","megacategoria-mc-entrepreneurship"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/posts\/395","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/users\/1682"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/comments?post=395"}],"version-history":[{"count":14,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/posts\/395\/revisions"}],"predecessor-version":[{"id":576,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/posts\/395\/revisions\/576"}],"wp:attachment":[{"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/media?parent=395"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/categories?post=395"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/tags?post=395"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/coauthors?post=395"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}