St. Louis has nurtured a vibrant startup scene with consistent investments and support organizations. One of the top factors drawing startups to the region may be a legacy of St. Louis’ slow growth since the 1980s, and one we may wish would disappear.
The Anders Startup and Entrepreneurial Services team produced the Anders Startup Funding and Outlook Survey Report earlier this year to explore the region’s current status and future potential as a startup hub. The team held a webinar, Exploring the Anders Startup Funding and Outlook Survey Report: Where is the St. Louis Startup Ecosystem Headed?, to dive into the report’s findings.
Low Cost of Living a Top Attraction for Startups
Survey respondents, which included both startup founders and startup investors, were asked about the top factors drawing them to the St. Louis region. Approximately 44% stated that the area was already home to them, and another 31% indicated that the existing startup ecosystem drew them in. Interestingly, 25% responded that the low cost of living was the factor that attracted them to St. Louis.
Although any factor drawing more startups to the region is welcome, the low cost of living associated with St. Louis may be just as much of a hindrance as it is a benefit. A low cost of living gives fledgling startups the opportunity to stretch their funding, but it could eventually limit their growth potential.
Lack of High Growth Potential Drives Talent and Startups from the Region
Unlike startup hubs like Nashville or Austin, St. Louis isn’t a “high growth” city. As a result, the cost of living is substantially lower, but the trade-off comes at a price. Startups can easily establish themselves in the region but eventually may move to other areas to seek the support, investments and opportunities they couldn’t access here.
Similarly, university students flourish under a low cost of living, which creates an affordable environment where they can support themselves while continuing their studies. Unfortunately, that low cost of living corresponds with lower pay and fewer opportunities than in cities that are considered high growth with a higher cost of living.
Future Impacts on Startups in the St. Louis Region
Hopefully, all of the investments and support organizations will succeed in continuing to grow the startup industry in St. Louis. As that happens, St. Louis’ growth will accelerate, and this “low-cost” advantage St. Louis has will disappear. Although it may be tempting to clutch St. Louis’ reputation for low cost of living close, it’s better to accept the reality that in order for the region to encourage more growth, we will have to offer more than cheap rent and low wages. Doing so will help expand on the region’s startup successes in health care and biotech while improving opportunities for emerging startup industries such as AgTech, enterprise software and geospatial technologies.
The Anders Startup and Entrepreneurial Services team works closely with startups to accelerate growth and help you achieve your funding goals. To learn more about how our advisors can help, and the associated costs, request a meeting with an advisor below.
