Crowdfunding Companies Are Not Flocking to the Coasts

08/15/2014 01:37 pm ET | Updated Oct 15, 2014

Until about four years ago, if you wanted to start a company -- especially one with a business model that was not strongly associated with a geographic location -- it would have been prudent for you to move to one of the hot spots for startups in the country: New York, Chicago, Silicon Valley, Austin. These were the cities that most Internet-based startups turned to not only for exposure and resources but also because of the capital that is accessible there.

Over the past few years, however, there has been a noticeable shift in the crowdfunding startup landscape. The Internet is doing to the crowdfunding industry what it has done to countless other industries in the economy: democratizing the process and making geographical barriers irrelevant. Crowdfunding for businesses is aimed at opening up capital formation across the country by pulling it into the new age. Now, many companies operating in the crowdfunding space are thriving in locations such as Cleveland (Crowdentials, Vestor, Crowdfund Insider), Salt Lake City (Crowdengine) and Nashville (InCrowd). These companies -- though they are strictly Internet based -- have no direct affinity for the coasts or major cities.

With any other industry, this would merely be an interesting side story. But with crowdfunding, this even spread of industry participants across the country directly affects the entire startup environment.

The tides are shifting within the startup community and as the SEC finalizes more regulations and the crowdfunding industry continues to grow, more unexpected trends are likely to develop.

The infographic below illustrates how spread out the companies are in this new industry.