Houston Voices

Siliconned: Leaving Silicon Valley for universities

Tech startups are leaving Silicon Valley in droves — and some are finding benefits in heading back to school. Miguel Tovar/University of Houston

Silicon Valley has been a tech startup paradise for decades. It has been described as the modern day Florence in the Renaissance. Tech gods from Apple and Google to Facebook and Twitter were born here. We can credit Silicon Valley as the birthplace for such world-changing innovations like smartphones, microprocessor chips, Tesla automation, and WIFI-enabled teapots.

Okay, so maybe that last one isn't changing the world, but it was created in the Valley and it's changed my life, for whatever that's worth. If Silicon Valley were a country, it would have the 19th-biggest economy on the planet. There's no doubt it is an engineer's dream. A techie's haven. A capitalist's utopia. A beacon of the modern world.

Or at least, it used to be.

Now leaving the Bay Area

There is an exodus in Silicon Valley. It's been happening for about three years. For instance, according to a 2018 poll conducted by the Bay Area Council, 46 percent of survey takers admit they plan to leave the Bay Area in the next year. Couple that with the fact that Silicon Valley investors have allocated 66 percent of their funds into startups outside of Silicon Valley, compared with 50 percent just six years ago, and you have a recipe for a great exodus to other markets around the country.

Now, just for kicks, add to all of this that the Kauffman Foundation's research has pegged Miami-Fort Lauderdale as the number one city in America for startup activity. Where does Silicon Valley's Bay Area, formerly the world's preeminent hub for tech startups, rank? Fourteenth. How the mighty have fallen.

So, to what exactly can this mass egress be attributed?

Insufficient funds

The biggest reason is cost.

The cost of living in the Bay Area is one of the steepest on the planet. Startups in the Valley pay four times what they would in any other city in the country. In fact, just last year the California Association of Realtors reported that a typical family in San Francisco has to make over $300,000 a year in order to afford a median-priced house tagged at just over a million dollars. That includes a 20 percent down payment and an $8,000 monthly payment. Because most of the startups in Silicon Valley are in their infancies, the engineers, programmers, and non-technical employees don't get compensated enough to afford such a living. As a result, they are leaving the Bay Area in droves for places where the cost of living is manageable.

One location that tech startup entrepreneurs are flocking to is the university. Universities are also retaining tech wunderkinds on campus to blossom their startups, rather than seeing them leave for the microprocessor motherland known as Silicon Valley.

Now entering university life

One of the biggest reasons universities have become hotbeds for tech startups is that campuses provide a means for people with multidisciplinary backgrounds to intermingle within the same space. A chemical engineering student with a great idea might meet an MBA during a startup launch party. Together they can build and market the second iteration of "Secret Stuff" from Space Jam, or whatever that student has in mind.

The point is that universities position aspiring entrepreneurs to network with the right people for building their company from the ground up. Even the Innovation Leadership Forum attests that innovation is born when different ways of thinking clash. That is precisely what happens on campuses every day.

Furthermore, college students also have more room to take risks. Most aspiring entrepreneurs in college between 18 and 25 are not married, do not have kids, mortgages, or any other major financial responsibilities. This allows them to have the luxury of leeway when it comes to experimenting and trial and error.

The ecosystem of innovation

In essence, academic incubators are courting tech entrepreneurs because universities offer an ecosystem designed to support and grow startups from conception to commercialization. This ecosystem includes a space where researchers, faculty, and students of all disciplines interact and form working relationships. In many cases, it also includes university owned equipment and laboratories for use by startup researchers.

There is, of course, incentive for universities to concentrate so many resources to building incubators and luring startup entrepreneurs. There is an inherent sense of responsibility that universities have to create an academic climate that encourages students to explore new ideas. A sense of responsibility that encourages them to take more risks; to be fearless in their quest to use their intellect to enrich lives; to dream.

Moreover, university incubators also position schools as progressive institutions. Such positioning attracts elite researchers and enhances a university's reputation. Further, these incubators forge a bridge that links industry and academia in a way that Silicon Valley does not. That's because with academic incubators, startups are a stone's throw away from a place teeming with researchers, scientists, hungry students, and aspiring entrepreneurs: the university campus.

Consequently, it is no wonder that tech startups are leaving Silicon Valley for universities. It's also no surprise that students who have graduated are staying with their university's incubators to develop their companies. There, they have a place that cultivates innovation, encourages risk-taking, and is set up specifically to help them bring their tech to the world. In short, the university has become a hub set up to be conducive to thriving tech startups. And tech entrepreneurs have noticed.

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This article originally appeared on the University of Houston's The Big Idea.

Rene Cantu is the writer and editor at UH Division of Research.

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Building Houston

 
 

Support Houston startups by shopping local this holiday season. Photos courtesy

'Tis the season for giving — and what if you could check off your holiday to-do list and simultaneously support some local startups? This year's Houston startup gift guide includes comfortable-yet-stylish heels, culinary treats, and more.

Need some more ideas? Browse last year's roundup of Houston startup-created gift ideas and check out the 2020 and 2019 startup gift guides as well for even more options.

For the family fashionista: All-day comfort shoes

Steffie Tomson founded a company to prioritize comfort — without sacrificing style — for women on the go. Photo via getawaysticks.com

Before starting her business, Houstonian Steffie Tomson ordered $2,000 worth of shoes and sliced them all in half with a bandsaw just to see what was inside. Tomson, a neuroscientist by trade and the founder and CEO of footwear startup Getaway Sticks, had an idea for a different kind of shoe — one that was redesigned to prioritize women’s comfort.

Earlier this year, Tomson shared the Getaway Sticks origin story with InnovationMap. The heels are available online for around $200 per pair.

For the resident chef: Fresh fish delivered

Sugar Land-based Fish Fixe floated their seafood delivery service on Shark Tank last year. Photo via Shark Tank

Houstonians Melissa Harrington and Emily Castro saw how beneficial incorporating fish into your diet can be — so they decided to launch an easier way to do it. They launched Fish Fixe in 2017 to deliver seafood with easy-to-access instructions on storage and thawing — plus cooking recipes that take around 20 minutes.

The duo appeared on the 13th season of Shark Tank last year. In 2020, as InnovationMap reported, the company saw a 400-percent increase in sales. They pitched asking for $200,000 in investment. Lori Greiner, the "queen of QVC," took the bait — and 25 percent equity.

Shoppers can stock up on various boxes from $109 to $219, or opt for a gift card for their loved one.

For the health nut: Sustainably-sourced nutrients

A Houston-based fund has deployed capital into a local nutritional supplement business. Photo via Instagram

Houston--based iwi creates nutritional supplements for the brain and the heart — and they are doing it in a sustainable setting: algae farms. These football field-sized farms operate on desert land using just salt water and sand and produce algae sustainably — all while absorbing CO2. Miguel Calatayud, CEO of the company, tells InnovationMap that the farms even area able to reuse 98 percent of the water involved in the process. Earlier this year, iwi received an investment from a local group in an $8 million deal.

The company has almost a dozen options online for around $30 per canister of supplements.

For your aging loved ones: Afterlife planning and memory keeping

The Postage — a Houston-based company that's streamlining afterlife planning — has rolled out a new app. Photo courtesy of The Postage

There's a lot that goes into legacy and afterlife planning, and a Houston startup has emerged to make the process a whole lot easier. The Postage helps its users generate their wills and organize information to leave behind, the company's founder, Emily Cisek, shares with InnovationMap. The platform also every user to leave messages, photos, and memories in a digital vault that will stand the test of time.

Giving the gift of legacy planning can be an option for anyone in your family — from the grandparents to the newlyweds.

For someone seeking luscious locks: Hair growth tracking kit

This startup is making sure every follicle of hair on your head is counted. Photo via myhaircounts.com

While it might seem odd to gift someone a hair loss tracking kit, this product from a Houston company has helped many men and women suffering from hair density challenges. MyHairCounts created a hair density imaging kit and app based on proprietary and patent-pending software. The kit includes a variety of items such as scalp imaging guides, a comb, and gel to help individuals photograph their hair follicles at specified angles. Users then upload these photographs into the app for analyses which are delivered within 48 hours. These analyses inform the user whether or not their hair regrowth treatment is effective.

The kit itself is just $40 and available online. Users can work with the company on a longer hair growth plan, too.

Bonus: What to bring to the table

Support Houston startups by bringing these goodies to your next festive shindig. Photos courtesy

Sometimes your presence is the present, and if you're headed to some holiday dinner parties, here are some innovative ideas for the potluck.

  • Houston-based Dream Harvest Farming Co., a vertical indoor farming company producing leafy greens and herbs and delivering them locally to grocery stores in Texas and nearby states. Pick up Dream Harvest products at a Whole Foods location, and read more about the company.
  • This year has been a big one for the growing Bread Man Baking Co., as the company expanded from its 5,000-square-foot kitchen and moved its operations into a new 40,000-square-foot facility on the northeast side of Houston. Pick up some of the company's products at Whole Foods or HEB. Read more about the company.
  • A new, “hyperpure” oxygen-enriched water brand has rolled out in Houston in single-serve and subscription options. Dubbed HOW — Hyperpure Oxygenated Water — the award-winning super-filtered water (via a 14-level filtration process that removes impurities down to the nano-level .0001 microns) is now available at 35 specialty retailers around town. Read more about the company.

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