Once a business has been formed and funded, the last step in the time line of many successful tech ventures is an exit. That may take the form of an initial public offering, or as is increasingly the case, an acquisition offer from a larger player.
Jonathan Aberman, managing director at Amplifier Ventures, said start-ups here should be building companies to be acquired by the industries that dominate Washington’s economy — government, law, media and hospitality, to name a few. In Silicon Valley, start-ups live alongside some of the Web’s biggest players, including Google, Facebook, Amazon and eBay.
“My argument is if you really want to be like the Valley, you have to understand that what drives behavior in [mergers and acquisitions] is a lot of times proximity, and young companies building technologies that the large companies want to own,” Aberman said.
That prompted real estate search engine HotPads.com to relocate to San Francisco last spring after six years in the District. Chief executive Matt Corgan said at the time that he hoped the move would help the firm recruit engineers.
More than a year later, Corgan said he hasn’t done much hiring from within Silicon Valley — though it’s easier to get engineers to relocate there than the District, he said. Instead, being surrounded by potential acquirers has been the biggest benefit.
“Anyone who would want to purchase HotPads or invest in it further is going to be a large Internet media company most likely and the people who run those companies are either located in San Francisco or very comfortable with it,” Corgan said.
Beyond easier meetings with those strategic partners, Corgan said the business is not all that different today compared to its time in the District. The company’s servers are still located in Virginia and some of its 22 employees still work remotely.
“There’s actually no operational benefit to being here [in the San Francisco Bay area] whatsoever, it’s just the ability to network at the critical times,” he said. “It’s like an hour-a-week type benefit. It’s funny that you have to live here to get that, but it does matter in the end.”
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