Silicon Valley venture capitalist: Investment in Sioux Falls is likely

This piece is presented by the Zeal Center for Entrepreneurship.

When Paul Singh started investing in tech startups, people told him, “You have to be in Silicon Valley.”

Singh wasn’t so sure.

So from about 2009 until 2015, he would get on a plane and start visiting places where others weren’t looking for investments.

Recently, he took his search for startups outside Silicon Valley a step farther. Instead of flying in and out, Singh is driving around the country. He’s parking for a week, bringing others with him, and seeking out tech entrepreneurs in communities nationwide.

He will be in Sioux Falls the week of April 24, visiting businesses and holding events throughout town including at the Zeal Center for Entrepreneurship. We caught up with him for a preview.

You’ve driven more than 35,000 miles and visited 47 cities in just over a year. What was your biggest surprise along the way?

It’s almost embarrassing to say, but it’s a weekly reminder there are great companies anywhere. But seven years ago, when I started investing in companies, people throughout the Midwest would say, ‘We have to figure out how to get Silicon Valley investors to come to our town,’ but that’s not what ended up happening. I’ve followed SEC filings for new venture funds around the country, and by the end of 2015 there were 370 micro VCs (venture capitalists) and another 300 people registered. So the biggest surprise has been with my own eyes seeing venture capital being filled in around the country. That doesn’t mean it couldn’t be better, but you’ve got funds in places like Iowa and Montana, and it’s just interesting to see that.

As we drive around, it’s not ambition or skills that are lacking. I think it’s just a disconnect. I can bet we’ll say the same thing in Sioux Falls as 47 other cities. These people are just as smart and ambitious as their peers, and the only reason more money isn’t flowing into places like Sioux Falls is, from the outside, people don’t know where to look and get on the radar and figure out which entrepreneurs are going places. When you’re building your company, it’s easy to start talking to your local peers. That concept of “Midwest nice” kind of holds entrepreneurs back. The industry wants to know what’s happening in Sioux Falls because they have to write checks. You can’t sit on the money. So my hope is in the “worst case” we all leave with a better understand of what’s happening there but also leave with personal relationships. Hopefully, we get a sense of what others there have their pulse on. The best-case scenario is we find someone right away and close a deal immediately.

Have you been to Sioux Falls before?

No, but we’ve driven through. The only place we’ve been to is Mount Rushmore, and our “visit” to Sioux Falls doesn’t count because we were driving through.

Do you have any perceptions of it ahead of your visit?

When we drove through, I guess I thought when I looked up Sioux Falls on Wikipedia it sounded like a small town in the middle of South Dakota, and when we drove through it felt like a bigger place. Driving from one side of town to another as we came through must have taken half an hour. And for us sitting on the coast, we don’t know what these places are like. It’s easy to look at these cities in the Midwest and say it must be this dusty old town, but having driven through we noticed it’s huge, and we’ve been around doing this long enough to understand there are a couple leading indicators of entrepreneurial capabilities.

What are some things you look for in a community to tell if it’s a supportive environment for startups?

At a high level, the thing we’re looking for to figure out if someone is ready for someone like us to come through is places that have a co-working space, a code school or two and an angel group. We went to some cities that didn’t have any of those, and they weren’t ready. My bet is the entrepreneurial community in Sioux Falls is further along that most people realize. In most Midwestern cities, they’re harsher to themselves than people from the outside.

Augustana hosts free event with Singh

You’ve visited tons of incubators and co-working spaces. What are some things entrepreneurs should look for in assessing whether one is a good fit for them?

Community matters. A lot of time, people get stuck on perks – the beer or whatever. But if you’re transitioning from the local Starbucks or home office, community is the most important thing. These days we spend more time in co-working spaces because that’s where investable companies tend to be. As an industry, we used to have to say no to a lot of good companies because they didn’t fit our venture model. One thing we’re doing different is we’re trying to invest in companies where they’re not quite ready for a bank to write them a loan or going the “go big or go home” route, and we’re not the only ones doing that. I think that will be a huge trend.

If I could pound my fist on the table for one thing before I show up, it would be that this whole “Midwest nice” thing – and by that I mean everything west of Washington, D.C., to San Francisco – a lot of people will build relationships first and then talk about their business. And even though I’m there a week, unfortunately there’s not time for that. What I encourage people to do is lead with the traction. That doesn’t mean brag or name drop but make sure the broadest set of people understands what they do. If you want to raise money from the coasts, you have to talk more like your coastal peers. When you try to get local investors to do more local investing, it rarely works. There’s no science to this, but nobody is a big deal in their hometown. We need to get the local entrepreneurs to talk like their peers in Silicon Valley and New York. It doesn’t mean sell out from your Midwestern values but understand we’re living in an attention economy. It’s an entrepreneur’s responsibility to always be humble bragging and telling people you actually have customers.

So are you finding investment opportunities as you visit cities? Is that something you’re looking for in Sioux Falls?

One hundred percent. And it happens. I can’t promise that, but statistically there’s always at least one if not more. We’re just trying to meet as many people as we can. There will be a team that is ready for a venture investment. I don’t want it to feel like a game show. But the short answer is yes – our entire business is built around investing in companies, and that’s what we’re coming to do.

Singh will be at Zeal on April 27. He will speak at 3 p.m. and hold office hours throughout the day plus be at social events.

To find out more about the visit go to siouxfallstour.com.

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Silicon Valley venture capitalist: Investment in Sioux Falls is likely

When Paul Singh started investing in tech startups, people told him, “You have to be in Silicon Valley.” Singh wasn’t so sure.

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