SV Entrepreneurs Flock to Smaller, More Affordable Markets

Silicon Valley’s reputation as the hub for the world’s most progressive innovators is slipping.

Accusations of sexism, sexual misconduct and the marginalization of women have tarnished the Valley’s shiny reputation, says Silicon Valley consultant Angela Ruth in Entrepreneur.

On top of that, Silicon Valley’s success has led to exorbitant real estate prices which is, in turn, driving away talent.

Why Founders Were Looking Elsewhere

Silicon Valley’s advantages are real: the investors, the big tech employers, the universities and a deep pool of people who’ve built companies before. But those same advantages push up the cost of everything. When engineers’ salaries, office rents and home prices all climb together, a young company spends more of every dollar it raises just to exist there.

For a founder, that changes the maths. A seed round that pays for a year in San Francisco might pay for considerably longer in a city where rent and wages are lower. And for employees, the chance to own a home or have a shorter commute can matter as much as a pay rise.

The good news is that a lot of smaller markets have the talent and investment potential to someday challenge for the tech throne.

Tech talent is flocking to these seven smaller — and more affordable — U.S. markets, according to Entrepreneur:

Salt Lake City, Utah

• Startup ecosystem worth $12B
• Ranked No. 1 in innovation and entrepreneurship by the U.S. Chamber of Commerce

Tampa, Florida

• Bill Gates’ Cascade Investment is pumping $2B into the city to prepare it for growth

Huntsville, Alabama

• 309 percent growth in tech jobs over the past year
• Nearly 17 percent of the workforce is employed in a science, tech, engineering or math-related job

St. Louis, Missouri

• Home of the Ameren Accelerator, which aims to help drive innovation in the energy industry

Seattle, Washington

• Seeing big growth in space startups

Phoenix, Arizona

• 188 percent growth in tech jobs in the last year

Albany, New York

• 161 percent growth in tech jobs over the past year
• Universities supply a well educated talent pool

What Happened Next in These Cities

Several of these markets went on to produce exactly the kind of milestones the list was hinting at.

Utah got its landmark exit the following year. In November 2018, SAP agreed to buy Qualtrics for $8 billion, just before the survey software company’s planned IPO. After the deal, Qualtrics kept headquarters in Provo, Utah, as well as Seattle.

In Tampa, the Cascade money was tied to Water Street Tampa, a waterfront development led by Strategic Property Partners, a joint venture between Cascade and Tampa Bay Lightning owner Jeff Vinik. Later reporting put the project at about $3.5 billion across roughly 50 acres of downtown, including office space, housing and the University of South Florida’s medical school.

Huntsville’s link to the space and defence industries grew stronger. In September 2025, President Donald Trump announced that U.S. Space Command would move from Colorado to Redstone Arsenal in Huntsville. Colorado officials opposed the decision.

The Pandemic Speeds Things Up

The trend this article described in 2017 got a sudden push in 2020. When the pandemic sent office workers home, many tech employees found they no longer had to live near the office at all.

The Bay Area felt it most. San Francisco lost about 6.3% of its population between July 2020 and July 2021, according to census estimates, the largest percentage drop among major U.S. cities. Experts tied much of that to remote work in the tech industry, along with the area’s high housing costs.

Investors Follow the Talent

Money also started paying more attention to cities outside the usual hubs. In December 2017, a few months after this article, AOL co-founder Steve Case’s firm Revolution launched a $150 million Rise of the Rest Seed Fund, backed by investors including Jeff Bezos and Eric Schmidt, to back startups in cities outside the usual tech hubs.

None of this means the Valley has been replaced. But the idea that you have to be in the Bay Area to build a serious tech company is much weaker than it was in 2017.

What It Means for Founders

Choosing where to build a company is a trade-off. A big hub offers investors, experienced hires and customers close by. A smaller market offers lower costs, less competition for talent and often more support from local governments and universities keen to grow their tech scene.

The cities on this list each had a specific strength, whether that was a university pipeline, a defence and space cluster or a big local investor. For founders, the useful question isn’t “Which city is the next Silicon Valley?” but “Which city has the people, customers and backers my company actually needs?”