Betting on Las Vegas, cultivating Des Moines: Where is America’s next Silicon Valley?

January 15, 2013

In the years ahead, Steve Case expects there to be much more dice rolling in Las Vegas.

Not by gamblers in the casinos, but by outside investors betting on the city’s start-ups.

“Some of the things that are happening in Las Vegas... are remarkable,” said Case, chief executive of Washington-based Revolution LLC and chairman of Startup America .

Case outlined his predictions during a media call on Monday, forecasting what he calls the imminent “Rise of the Rest” – an emergence of entrepreneurial hubs in cities and regions across the country not traditionally known for producing promising, fast-growing businesses.

Las Vegas “really is an all-in on the idea that, while ideas are important and capital is important, ultimately, talent is the most critical,” he said of a recent boom in entrepreneurial projects there, noting that the city doesn’t boast a strong venture capital industry or esteemed research universities. “If you’re able to figure out ways to get people to believe in a particular region and work together in a collaborative way and become a magnet for entrepreneurs who would consider moving there to start their companies, a lot of great things can happen.”

Gallery: Venture capital dollars invested outside the Valley

The former chief executive of America Online and part of President Obama’s Council on Jobs and Competitiveness, Case explained that innovations like cloud computing, which have lowered the financial barrier to entry for many young firms, and policy changes like the coming implementation of crowdfunding, which is expected to direct more capital to entrepreneurs via small doses of online investments, have rendered the idea of starting and growing a business more plausible outside of start-up hotbeds like New York City, Boston and Silicon Valley. While he predicts those traditional tech centers will continue to attract many of the world’s brightest entrepreneurs, he expects cities such as Raleigh, N.C., Chicago, Ill., and Washington, D.C. to continue closing the gap in 2013.

“Many of these regions—the D.C. region, New York, Southern California—are well developed, and what we expect is really just an acceleration of the activity there,” Case said. “They already have some robust momentum, we just think there will be an acceleration, so on a relative basis, they will wind up creating more companies over the next decade than they have as a percentage over the last decade.”

The same thing is happening in places like Atlanta, Burlington, Vt., and Grand Rapids, Mich., as well as cities across the Midwest such as Des Moines, Iowa and Omaha, Neb., that have collectively adopted the name “Silicon Prairie.” Case noted that many of them are now looking for one or two companies to break through and scale their businesses, citing examples like LivingSocial in Washington (in which his company is a leading investor) and Groupon in Chicago, which he believes accelerated a boom in start-up development in each of their respective hometowns.

“Once you have a strong company that has had momentum, inevitably, you will see some spin-off things happening,” he said.

More broadly, their successes and others around the country encourage investors to look beyond Google’s and Facebook’s backyard when searching for the next promising young company.

“Ten years from now, venture firms will have regional strategies,” he said. “And our country will be better off for it.”

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J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he runs the On Small Business blog.
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