Raising in the valley as an Austin company

I recently wrote about my YC application experience, which has generate a significant number of questions about our company being based in Austin.  There is a lot of interest out there from great companies in other parts of the country on what it’s like raising in the bay while living elsewhere. I’ll address the most common questions I’ve gotten here.

Did you tell Y Combinator that you would move to San Francisco?

No, we were very clear that we were not considering moving to the bay area. Our application did not leave much room for confusion:

Was it hard to get into Y Combinator while being an Austin company?

It was not an area of discussion during our interview. I can’t recall having been questioned about this by any YC partner ever. Furthermore there were a number of fantastic companies in our batch that were not based from San Francisco (Datarank and Estimote come to mind). A few weeks after graduation when I was saying goodbye to the partners I remember some being surprised that I was based out of Austin.

How was raising money in the bay while being based in Austin?

Literally every investor asked me why I was based out of Austin, and if I intended to move to the bay area. Before attempting to raise I reached out to my friend Lloyd of OwnLocal who has done this before – he also lives in Austin and is funded from the bay.  His advice was to prepare a strong business justification for your location.

I was able to prepare a succinct answer that is both true and convincing. It was essentially: I built and sold a company here and then ran a large engineering team for years after the acquisition. For us, living in Austin is a competitive advantage because I can tap my network to hire incredibly strong people for 2/3 of the cost in the bay area. I’d also already raised money in Austin and had a strong network because of the Capital Factory.

I left out the personal reasons: that Austin is my home, it’s where my wife and house are, and it’s where my family lives. (It’s also awesome.)

Had I not been prepared for this with a compelling business answer, I don’t think it would have gone as well. I know others that have been successful by justifying their location on the grounds of competitive advantage or proximity to key clients.