The answer is: Silicon Valley and why I’ve talked to three Minnesota startups this month whose principals are either heading west to California to relocate their company or are doing so in order to obtain initial funding. There are woefully few angel investors in my state willing to take risks on ideas or concepts.

Heard of Kovio? Didn’t think so since I hadn’t either. Heard of Facebook? Thought so. Both of these companies are examples of startups led west to California to get their "gold" and their respective companies moving (from this article):

The idea underlying this (Kovio) technology was not developed at nearby Stanford or Berkeley, but at the Massachusetts Institute of Technology. But when the professor set out to commercialize it, his venture capitalist, Vinod Khosla of Kleiner Perkins Caufield Byers — whose earlier successes included Sun Microsystems, Juniper Networks and Corvis — insisted that he move the company to Silicon Valley, to tap into the deep well of chip-making talent and plug into Kleiner’s network of managers, academics and financiers.

You’re probably sick of hearing about the bazillions Mark Zuckerberg is now worth and about all the
applications that are suddenly behind the closed doors of this social
networking site platform, but what you might NOT be aware of is this:

A similar story is told of Mark Zuckerberg, the precocious Harvard student who thought he could turn an informal social networking site into a money-making business. After being turned down by East Coast venture capitalists, Zuckerberg headed west and found an angel investor in Peter Thiel, a founder of PayPal. Thiel put $500,000 into Facebook for a 10 percent stake and introduced Zuckerberg to a former PayPal colleague, Steven Chen, who signed on as one of the company’s first engineers.

So it’s not just Bostonian’s wringing their hands over startups leaving but I’m hearing similar tales in my own State of Minnesota, though no bazillionaires have yet been created by the departed.

Why is this happening and how can it change?

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