Could St. Louis Become the Next Startup Nation?

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When Atomation, my Internet of Things company, moved its headquarters from Tel Aviv to St. Louis last year, the choice likely puzzled some. Wouldn’t Silicon Valley make more sense for a growing tech company?

On the contrary, St. Louis offers companies like Atomation the right mix of diversity, talent and a strong business ecosystem to foster success. With smart moves to attract talent and forge connections between budding entrepreneurs and investors, St. Louis could in fact become a major tech hub or even the next “startup nation” — the title given to Israel for its prolific startup and innovation activity.

Guy Weitzman, CEO and co-founder of Atomation.

Atomation is proof that St. Louis is fully equipped with the resources necessary for startup success. Since making the move seven months ago, Atomation has seen rapid growth. We recently opened a second round of fundraising, quickly following on the heels of a successful first round of fundraising, which closed ahead of schedule with $2.7 million in investments.

Cost is one major factor in St. Louis’ suitability for tech startups, and a significant factor in Atomation’s decision to call the city home. St. Louis is far less expensive to live, work and operate a business in than nearly anywhere on the West Coast. This can be huge for businesses in the fragile startup stage and, theoretically, the less costly it is to live and work, the easier it is to take the major risks needed for big payoffs.

Once startups are more established, St. Louis’ deep bench of enterprise companies offers opportunities to rapidly expand. Companies such as Monsanto and Emerson have the resources and mindset to take a chance on new technologies. This factor was key for Atomation, which provides IoT solutions specifically for legacy devices.

Although St. Louis already has many conditions in place to make the city a major tech hub, local entrepreneurs and investors need to take additional steps to continue fostering growth and innovation. First, the city’s tech infrastructure needs to become more tolerant to high-risk ideas and high-risk investments. Building a startup is inherently risky – according to research by Harvard Business School, 75 percent of venture-backed companies fail to return cash to investors.

To be a true tech hub, St. Louis also needs to continue its efforts to attract entrepreneurs from beyond St. Louis’ border. BioSTL is already working toward this with its GlobalSTL initiative, which recruits international companies to establish a U.S. office in St. Louis.

Additional steps St. Louis entrepreneurs and investors can take to develop St. Louis into a major tech hub include:

  • Marketing the startups that are already here. Entrepreneurs need to know that other startups have grown and found success in St. Louis. They’ll also be reassured to know they’ll have others around them to swap knowledge with and offer guidance. The startup life can be tough, and no one wants to experience it alone.
  • Help young people see St. Louis as a top-choice city to build a career. Tech relies on young people’s ideas and energy. St. Louis has tons of potential at its fingertips – Washington University and Saint Louis University are here, and the nearby University of Illinois has one of the top engineering schools in the country. But tapping into that resource and preventing talented graduates from moving to Silicon Valley or New York City has proved challenging. The city’s leaders, investors and entrepreneurs need to work together to create a program connecting talented students with St. Louis startups. When I was about to graduate in Israel, for example, I knew of multiple exciting startups I could send my resume to.
  • Create an investor startup hub. Startups cannot exist without investments. Similar to the program needed to connect graduates with startups, St. Louis also needs a program implemented to connect startups with investors and vice versa. In Tel Aviv, it’s easy to meet dozens or even hundreds of potential investors – that access is built into the ecosystem via websites and events and streamlines the path to matching the right investor with the right business.

To be a true startup hub, the city needs to have three things: investment, market leaders and solid startups. St. Louis currently has investors as well as great businesses willing to adapt innovative technology, but it’s somewhat lacking in startup activity and in programs that connect the three together. With such a great foundation in place, however, there’s no reason St. Louis can’t become the next startup nation.

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Guy Weitzman is the CEO and co-founder of Atomation. He served for eight years in intelligence operations and technology with one of the Israeli’s intelligence units. Prior to founding Atomation, Guy spent time in R&D and operations roles for internet, mobile and cellular companies. He also managed M&A and investment deals for Mail.RU, an international internet company. Overall, he has more than 12 years of experience in product, operations and business development in technology, internet and mobile fields.