Mainsail conducted the Bootstrapped Sentiment Survey for the 9th consecutive year at the end of 2019. As we first did two years ago, this year we surveyed entrepreneurs on the role that geography plays in the success of their company. Based on the results, we have highlighted what we believe are the ten best metropolitan areas in the country to bootstrap a company. These markets were selected based on entrepreneur sentiment in each market as well as an analysis of third-party data. This included metrics to assess both the cost and accessibility of engineering talent, as well as a proprietary STEM (Science, Technology, Engineering and Mathematics) index, which factors in growth in the number of graduates from STEM programs and the quality of the programs.
Hover over the chart to see how each city we assessed ranks and read about our nominees for the best places to bootstrap a company below.
In addition to providing perspective into geography, entrepreneurs also provided insights into the growth strategies they’re investing in to bootstrap and grow their businesses. You can access those results here.
In the past three years, Denver has attracted significant outside investments, drawing $2.3 billion from VC funds. It’s no wonder that ~80% of survey respondents from Denver anticipate that their business will grow faster in 2020. Denver also has one of the highest scores on Mainsail’s STEM index, a proprietary metric that takes into account post-secondary STEM growth and presence in each city.
Though Houston is the 4th largest city in the US, it falls in the 40th percentile for median home price ($178,000 compared to $400,000 in NYC), making it an excellent place for bootstrappers to settle down. The city is also ranked in the top ten for number of STEM graduates produced each year, so it is no surprise that 100% of entrepreneurs from Houston responded that they have access to top talent for some or all open positions.
With its low corporate tax rates and affordable cost of living, Charlotte continues to offer a strong foothold for bootstrapped companies. The Survey found that 25% of Charlotte-based respondents are considering making an acquisition in 2020, as compared to only ~7% of all respondents. Don’t forget that Charlotte is home to one of the largest M&A advisory banks in the world—Bank of America.
The entrepreneurial community in Baltimore has high expectations for a strong future. 80% of Baltimore-based respondents predict their companies will grow faster and hire more talent this year as compared to last (69% shared this optimism nationwide). Additionally, entrepreneurs in Baltimore view their location as an asset with 50% giving the highest possible rating for how much their geography contributes to their success.
Columbus is quickly emerging as one of the hottest cities for tech entrepreneurs. Although cost of living has risen in Columbus over the past 5 years, it’s still affordable compared to other major cities in the Midwest. The median home price in Chicago is still ~40% higher than Columbus ($241,000 vs. $169,000).
Music City continues to establish itself as a top destination for healthcare entrepreneurs. In 2019, the city of Nashville estimated that healthcare companies generated nearly $39 billion of economic benefits, a number that continues to grow. Half of our survey respondents in Nashville reported being in healthcare, compared to a quarter of respondents overall.
Home to the University of Wisconsin-Madison, this college town has a steady supply of up-and-coming talent. In 2019, the university saw a 4% growth in STEM enrollment, compared to a flattening of growth nationally. What’s more, this talent is affordable as the average developer salary in Madison is $87,000 compared to the country’s large-city average of $108,000. In addition, ~100% of respondents from Madison list investing in development as a top investment area for 2020.
If you’re looking for a readily available and highly educated labor force, the Research Triangle has a lot to offer. In Raleigh, 80% of entrepreneurs say they have access to top talent at every position, compared to 63% nationwide. Plus, a low cost of living makes for high quality of life. It’s no surprise that startups in North Carolina raised have been raising an average of $1.5 billion every year for the past 3 years.
Perhaps it’s the Midwest work ethic permeating the city’s business culture, but we found Minneapolis’s bootstrapped entrepreneurs to be uniquely focused on employing product strategies in 2020. Compared to only ~40-50% of entrepreneurs definitely employing product strategies in 2020, over 80% of Minneapolis based entrepreneurs are definitely implementing product strategies such as building complementary products and enhancing existing products in 2020.
The survey was conducted between November 20 – December 29, 2019 and resulted in a total of 313 responses. This is the ninth annual Mainsail survey and is intended to help us continue to understand the needs and perspectives of companies that Mainsail invests in and helps to grow. The survey was conducted via an online survey sent to entrepreneurs and senior executives at U.S.-based companies.
For the purposes of this survey, “bootstrapped companies” are defined as businesses which have taken no previous capital from venture capital firms, or other institutional investors. Qualification as a bootstrapped company was verified through a qualifying question.
The third-party data used to determine the number of developers and the average developer salary came from the Bureau of Labor Statistics and the American Community Survey. The STEM index data was sourced from IPEDs secondary school database and US News.
Mainsail Partners is a San Francisco-based growth equity firm that invests exclusively in fast-growing, bootstrapped software companies. Since 2003, the firm has invested in more than 50 growing companies. Mainsail prioritizes investments in growing B2B software companies with compelling business models and at least $4 million in recurring revenue. The firm’s approach to driving value creation is anchored in a dedicated Operations Team which is purpose-built to help exceptional founders scale their businesses and accelerate growth. These women and men include former software company operators who leverage real world experience, repeatable best practices, and a true partnership ethos to support founders and management teams.