Finding Founder-Market-Geography Fit
At Rise of the Rest, we’ve spent years traversing the country, spotlighting emerging startup hubs, and building a network of entrepreneurial champions and ecosystem builders beyond Silicon Valley, New York City, and Boston. At first, we primarily played an advocacy and convening role, working with policymakers and administrations, organizing bus tours, and telling the stories of the entrepreneurs we met along the way.
In 2017, we partnered with iconic leaders in American business to turn the thesis we developed on the road — that great companies can start and scale anywhere when given a chance — into an investment vehicle. It was an opportunity to generate significant returns, momentum for rising startup markets, and innovation that would strengthen America’s dynamism and competitiveness.
In the last decade, we’ve socialized several Rise of the Rest-isms to describe investments that check those boxes. One is “tentpole company,” or a category-defining startup that helps put their hometown on the map, both for investors and future generations of founders. We dive deeper into the definition in our 2022 Annual Report. Tentpole companies often have a connection to the legacy industry or some other unique advantage their HQ location offers. Internally, we’ve begun using the term “founder-market-geography fit” to describe this idea.
Every investor is looking for the right team to build a business, but we go a step further: “Is this the right team in the right place at the right time to build this business?” Said another way, how can location be a strategic and competitive advantage for a company taking on often more amply-funded players headquartered in established tech hubs? Let’s get into it.
What is Founder-Market-Geography Fit?
Founder-market-geography fit refers to the optimal alignment of three critical dimensions: the founding team’s competencies, the market demand for the startup’s solution, and the geographic location where the startup is based. This trifecta serves as a catalyst for accelerated growth and long-term viability. Specifically:
- Founder: The team possesses the necessary skills, temperament, and experience to execute the startup’s vision. Often, that experience is influenced by the legacy industries of a region that help entrepreneurs develop expertise and networks related to their new company.
- Market: The startup is addressing a significant, often underserved, need or problem in the market. Place comes into play here, too. Why? Because people in different places experience different pain points, and that diversity in lived experience results in new, better solutions.
- Geography: The startup is situated in a location that offers competitive advantages for its specific business model. This could mean proximity to key customers, suppliers, or talent, as well as favorable regulatory environments, or access to essential infrastructure. This is where we lean in as we look beyond established startup hubs.
When these three elements are in harmony, a startup is not only better positioned for success but also more likely to attract investment, secure partnerships, and achieve sustainable growth. In a rapidly evolving business landscape, founder-market-geography fit serves as a multifaceted framework for assessing a startup’s potential. Below are a few companies we backed with a strong “who,” “what,” and “where.”
Stord, Vizion: Atlanta, GA
Atlanta, Georgia is a historic epicenter for supply chain and logistics, strengthened by its strategic geography, robust multi-modal infrastructure, and business-friendly regulatory environment. Sean Henry, CEO of Stord (and Georgia Tech alum), and Kyle Henderson, CEO of Vizion, have both rooted their companies in Atlanta to leverage its extensive logistics expertise and infrastructure. Stord offers a suite of end-to-end supply chain solutions, enhanced by specialized OMS and WMS software, aimed at serving high-volume, omnichannel brands. Vizion focuses on ocean freight data integration through its API, thereby augmenting enterprise systems and customer experiences for stakeholders in the logistics and cargo sectors.
Extensive Supply Chain Infrastructure Network
- Hartsfield-Jackson Atlanta International Airport: One of the busiest airports in the world, ATL provides robust air cargo services.
- Interstate System: Atlanta is a nexus for major interstates like I-20, I-75, and I-85, allowing for efficient road transport.
- Rail Network: Atlanta offers access to both Norfolk Southern and CSX Transportation.
- Inland Ports: The availability of inland ports like the Appalachian Regional Port provides intermodal transfer options.
- Proximity to Manufacturing Hubs: Atlanta is close to automotive and aerospace manufacturing centers in the South.
Well-Resourced Logistics Ecosystem
- Corporate Presence: Atlanta is home to the UPS headquarters and numerous other supply chain and logistics companies.
- Warehousing and Fulfillment: There is extensive availability of warehousing space with state-of-the-art logistics capabilities in the region.
Large, Specialized Talent Pool
- Georgia Tech: The public research university offers top-rated programs in logistics and supply chain management, ensuring a continuous talent pipeline. Sean from Stord and Charu Thomas from Ox are both Yellow Jackets — #StingEm.
- Specialized Training Centers: Institutions like Clayton State University have programs tailored to logistics and supply chain needs.
Integrated Logistics Innovation Efforts
- Tech Investment: Atlanta’s growing tech scene is increasingly merging with its logistics sector, evident in the rise of logistics tech startups.
- Smart Technology: The adoption of smart logistics solutions like RFID and IoT sensors allows for real-time tracking.
Favorable Regulatory Landscape
- Tax Benefits: Georgia offers tax incentives for companies that contribute to employment and economic development.
- Foreign Trade Zones: Atlanta is home to several FTZs, which allow for duty-free import and export of goods, reducing costs for logistics companies.
Plastomics: St. Louis, MO
St. Louis, Missouri stands as a major hub for the agricultural sector, shaped by its advantageous location, academic institutions, industrial presence, and capital availability. Tania Seger, CEO of Plastomics, leads a company born of deep AgTech expertise in the region. Plastomics is innovating in the space by developing superior methods for integrating biotech traits into staple row crops like corn and soybeans.
Strategic Location
- Proximity to Farmland: Located near the agriculturally rich areas of the Midwest, St. Louis is close to the end-users of agricultural technology.
- River Access: Historically, the Mississippi and Missouri rivers served as conduits for the transportation of agricultural products and inputs. That still continues to this day: 60% of U.S. grain exports are taken by barge down the Mississippi River each year.
Specialized BioTech Academic and Research Institutions
- Donald Danforth Plant Science Center: A cornerstone for plant science research, the institute has been instrumental in agricultural innovation and market-leading research for startups, NGOs, and international food companies.
- Universities: Institutions like Washington University in St. Louis and the University of Missouri-St. Louis offer strong agricultural and biological sciences programs.
A Growing Ecosystem of AgTech Players
- Presence of Monsanto: Now a part of Bayer, Monsanto was headquartered in St. Louis and a major player among the region’s AgTech innovators, cutting the teeth of many talented local industry professionals.
- AgTech Accelerators: The Yield Lab, Biogenerator Labs, and other accelerators are helping startups scale and commercialize their technologies. Notable companies like Benson Hill have come out of these programs.
- BioSTL: BioSTL has introduced nationally acclaimed initiatives in startup creation and investment (BioGenerator), strategic business attraction (GlobalSTL), physical environment (including the Cortex Innovation District and BioGenerator Labs), entrepreneur support, seed and venture capital, workforce diversity, and public policy.
- St. Louis AgriBusiness Club: The organization offers networking opportunities that bring together various stakeholders in the AgTech sector.
Branch: Columbus, OH
Columbus, Ohio has become a significant insurance hub in the United States, an ascent supported by a unique blend of historical, economic, and institutional elements. Steve Lekas, CEO of Branch, and former Allstate/Esurance veteran, chose Columbus as the home base for his company to capitalize on this robust insurance ecosystem. Branch streamlines home and auto insurance using instant-bind technology, leveraging community-driven reciprocal exchanges to offer affordable and easily bundled coverage options.
Historical Insurance Hub
- Early Industry Focus: Insurance companies have been part of Columbus’s business fabric since the 19th century, providing the city with a rich institutional knowledge base in the sector.
- Strategic Location: Columbus’s central location makes it easily accessible, providing companies with a broader reach within the state and country.
Robust Corporate, Education, and Professional InsurTech Networks
- Cluster Advantage: The presence of major insurance companies like Nationwide, Aflac, and others creates a virtuous cycle attracting more companies, suppliers, and specialized services.
- Talent Pool: Proximity to top educational institutions like Ohio State University provides a steady flow of skilled labor specialized in actuarial sciences, risk management, and other insurance-related fields.
- Professional Associations: Columbus is home to various insurance-related professional organizations, further solidifying its status as an industry hub.
An Ecosystem-wide Embrace of Technological Adoption and Innovation
- Tech-Savvy Workforce: The city’s focus on technology education has produced a workforce capable of navigating the increasingly digital landscape of the insurance sector.
- Innovation Labs: Some insurance companies have set up innovation hubs in Columbus, further fueling technological adoption and insurtech startup culture.
So what?
Founders, take note: your startup’s location is a strategic lever. It’s about more than just an address — it’s about tapping into local legacy expertise, proximity to key industry players, or advantageous regulations, to propel your company forward. Building in the same geography as potential partners and end-users helps cultivate and strengthen relationships and, accordingly, creates better outcomes.
For investors, expanding horizons beyond traditional tech hubs can uncover promising opportunities that capitalize on regional strengths. There’s a reason venture capital is considered “risk capital,” but there’s also ample opportunity to look beyond the typical diligence checklist to find factors that de-risk an investment. Founder-market-geography fit is one of those factors.
