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Renny McPherson Headshot

Choosing Baltimore to Build a Tech Startup

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When debating the merits of various cities in which to locate our tech startup two years ago, the biggest question my co-founders and I asked people was, "What makes a particular city a good place to start a tech company with big ambitions?" The answers that resonated most were 1) access to talent; 2) a hub of other tech companies doing innovative work; 3) proximity to bigger tech companies who could be partners; 4) access to investors with vision; and 5) an entrepreneur-friendly local government. After two years here, I can't imagine a better place to start and grow our company than the one we chose: Baltimore, the Charm City.

True, more established tech scenes have all these ingredients and draw serious talent that produces a virtuous cycle for tech companies. Baltimore may not have reached quite the same critical mass of a San Francisco or New York, but we saw that it had all the right fundamental characteristics, and an emerging start-up scene that would serve us well.

Here's a deeper look at those five fundamental reasons to choose a city in which to start your tech company, and how Baltimore has met each one for us.

1. Access to Talent. Academic institutions like Johns Hopkins, University of Maryland, the Maryland Institute College of Art, and a host of other universities in the nearby Washington, D.C. area mean that there are plenty of engineers and designers graduating with Ph.Ds, master's and bachelor's degrees each year. Many of these graduates would like to stick around, but have historically had to chase jobs in other cities. All we had to do was provide an exciting company and fulfilling work environment, and people were happy to stay in the city and region they care about.

Not only do university graduates abound, but there is a very deep pool of experienced software developers, mathematicians, statisticians, and business executives available as well. As many people know, Baltimore, Northern Virginia, Maryland and Washington, D.C. are the epicenter of government spending, in particular on defense and intelligence programs. The continuing trend towards lower defense spending has created a large supply of mid-career professionals interested in private-sector work.

2. Emerging tech environment and 3. Access to bigger companies. Though we've had more than one set of friends pick up from Maryland to move their companies to Silicon Valley and Boston, our four-floor building in the Federal Hill neighborhood is a testament to Baltimore's emerging tech environment. Our 20+ person startup is housed on the second floor; on the third floor is ZeroFox, another high-growth startup that emerged from its beginnings in the fourth-floor incubator, Betamore. Betamore houses a number of innovative startups, education workshops, happy hours for entrepreneurs, and is also home to the Baltimore detachment of Uber. And it's not just our building. Baltimore has over 60 of Inc. magazine's 5,000 fast-growing companies. SourceFire, based near Baltimore, went public in 2007 and sold for $2.7 billion to Cisco in 2013. In addition, the expansion of established local companies, like apparel-maker Under Armour, has helped draw more talent to our city.

On a deeper level, the people of Baltimore possess the kind of values we try to exhibit at our company. It's a hard-working, humble town with something to prove. People and companies look out for one another here in Baltimore and celebrate each other's accomplishments with (almost) as much enthusiasm as a Ravens playoff run. That's right in line with our company's core values.

4. Proximity to investors. Baltimore-based angels were some of our first investors, and they understood our vision from the start. Early on, they referred technical talent to us, showed up for company strategy sessions, and helped us hone our sales pitch. Local later-stage investors, many of whom were tech bankers at the storied Alex. Brown & Sons bank, have helped us craft our growth strategy and provided us with extensive contacts in prospective partner and client companies.

5. Entrepreneur-friendly government. The state of Maryland announced $84 million in investment for the 'innovation economy' just a month after we settled on Baltimore in March 2012. After that good omen, we entered the inaugural InvestMD challenge in 2013 and won our IT software/hardware category. The competition itself forced us to better define our company strategy, and the $100,000 prize for first place went towards hiring more technical talent. TEDCO's Propel Baltimore Fund also provided early financing for our company, which enabled us to build our product and recruit great talent.

Now two years in, the benefits we hoped for have been exceeded, and we've also realized several other local advantages that have helped us grow.

1) Allowing time for strategy. Staying 'outside the noise' of so many companies scrambling to be heard in other tech hubs has allowed us to plan deeply, and come to market with a product that has been thought through deeply and authentically.

2) Close enough to regularly see our clients -- and co-workers in our satellite office. For in-person meetings, we're just a 2.5 hour train ride from Manhattan, where most of our current clients and many of our prospective targets are headquartered, and less than an hour from Washington DC - when the Beltway is cooperating. We've also created a small satellite office in Lower Manhattan that houses some great NYC-based software developers.

3) Reasonable cost of living. Apartments in San Francisco rent for more than twice as much as apartments in Baltimore, with even higher markups for office space. Even groceries in Boston are almost 20 percent more expensive than in Baltimore.

4) Getting in on the ground floor. Because there are not hundreds of other tech startups vying for influence, talent and attention, being located in Baltimore has allowed us to take on a leading role in the city's emerging startup scene, and be part of the good news coming out of this burgeoning tech hub.

Baltimore is not the first place that jumps to most people's mind when they think of a thriving, early-stage tech ecosystem. And for good reason: It's not an established place for tech entrepreneurship. But with with all of the right elements in place, and a local business environment and government that generously support their neighbors here in Charm City, it is increasingly becoming one.

Further Reading

The Abell Foundation produced a report on entrepreneurial ecosystems that has hundreds of great references in its bibliography: "Learning from Boston: Implications for Baltimore from Comparing the Entrepreneurial Ecosystems of Baltimore and Boston."