Why set up shop in Silicon Valley? High technology companies are keen to establish their U.S. presence in Silicon Valley for many reasons.
Certainly, one reason is the widely available access here to specialized resources that high-tech companies need to start and build their businesses quickly. These resources include an established, talented labor pool and established, knowledgeable vendor companies that specialize in serving high-tech startups in the areas of finance, marketing, software development, engineering and law.
Another attraction to Silicon Valley is access to other cutting edge companies in the same industry and complementary industries. Having thousands of related startups in close physical proximity creates both formal and informal opportunities for gathering useful competitive information. Additionally, being in the same locale can generate a healthy buzz of energy around the business and the engineers, as well as make available support networks for entrepreneurs. Further, this proximity can provide access the customers that are interested in sophisticated high-tech products: being a local company providing local support for the product makes a difference in attracting buyers.
However, looking solely at the costs of doing business, Silicon Valley ranks high as compared to other regions, based on labor, housing and office space costs. Nonetheless, success in the high-tech industry often has less to do with costs and more to do with getting new products in front of the right customers. Silicon Valley culture and resources frequently give companies a strategic edge in this regard.
Top Ten Surprises for Non-U.S. Companies Starting a Business in Silicon Valley:
1. Culture shock: despite its international workforce, Silicon Valley is provincial
2. High cost of housing and office space
3. High expectations of local employees for both salaries and share options
4. Marketing is very sophisticated -- and expensive
5. The US market is huge, but also very regionally divided and highly competitive: markets must be targeted well
6. More time than you think may be required to make the first sales
7. Paperwork and bureaucracy take time and patience
8. Taxes, which differ from state to state, and, often from city to city, can be surprising and substantial
9. Access to financing sources (venture capital) can be difficult to tap
10. The legal requirements vary from location to location, and can include establishing a business entity, obtaining a Federal Employer Identification Number, checking the availability of your desired business names, registration of the business locally, Fictitious Name Registration, and obtaining other permits and licenses.
Business Tips for Non-U.S. Companies Starting a Business in Silicon Valley:
o Network with colleagues in Silicon Valley within and outside of your industry
o Buy support where available (rather than doing it yourself) or hire employees to do it.
Hire local consultants to provide:
o Help finding office space, setting up the office.
o Accountants for bookkeeping, business and networking advice
o Headhunters to find top employees
o Employee Benefit consultants to set up competitive benefit packages
o Have adequate financing arranged before entering the market
o And, of course, hire a good Lawyer to set up and help run the business to help you avoid the US legal minefields
- Global General Counsel
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