Is “Geography” a Cliché in Venture Capital?

Most entrepreneurs who have raised venture capital have heard the popular cliché: Venture capitalists only invest in their backyard. The venture press and popular media are full of interviews with venture capitalists who emphatically state they’ll only invest in companies that are within driving distance, live in the same area code/zip code, or belong to the same golf club.

While there are often plenty of reasons for us not to invest in a given startup, geography (or, more specifically, lack of physical proximity to us) generally isn’t one of them. As we’ve already discussed in a prior post, Foundry Group takes a thematic view of investing. If we then further layer a geographic filter on top of our thematic approach, the potential universe of investment opportunities shrinks dramatically—too dramatically, we think.

Our goal as thematic investors is to back the best entrepreneurs and companies within our themes, not just the ones with locations that are most convenient to us. All of us at Foundry Group have come to accept that travel is simply part of our work (even if our loved ones haven’t embraced our travel schedules so readily). Our location in Colorado certainly works to our advantage here—travel to most places in North America (we don’t invest outside of North America) is rarely an all-day commitment like it can be for an investor whose office is on one of the coasts.

Our geography-agnostic approach also signals one of our core beliefs: We believe it’s a common venture capital fallacy that an investor must be constantly present physically to “manage” a portfolio company. Foundry Group isn’t in the business of investing in entrepreneurs who need to be micromanaged or who need us camping out in their offices to make stuff happen. And we suspect that really great entrepreneurs don’t want their investors stopping by in person for daily updates any more than we do (all you entrepreneurs, tell us if we’re off base here…). Between well-timed, in-person board meetings and all the great technology we have at our fingertips, geography really isn’t a barrier to effective communication and collaboration between a company and its investors, and we think our experience bears this out.

Nonetheless, we’ll admit that there are advantages to investing “locally.” Whether it’s helping our portfolio companies recruit new hires or minimizing the brain damage of hiring lawyers, accountants or other service providers, we like to leverage our local knowledge as much as the next guy. More importantly, local knowledge can pay off in vetting the entrepreneurs we invest in. Simply put, no amount of due diligence can substitute for really knowing an entrepreneur over an extended period of time. Having an entrepreneur in our backyard improves the likelihood of that kind of knowledge. So, as previously discussed, there are times when we’ll invest outside of our themes; often we’ll do so because of our “local” knowledge of a terrific entrepreneur.

To be clear, however, we don’t view Colorado as our only “backyard.” Brad lived in Boston for a dozen years before moving to Colorado, and both Ryan and Jason each lived in Silicon Valley for 10+ years. We have numerous investments in pockets around the country, and we like to use those investments as springboards to build deeper relationships with other investors and entrepreneurs in those regions. As a result, we’re often able to get to know high quality entrepreneurs well before their fundraising process begins.

So if geography isn’t about avoiding travel or having physical access to manage an investment, when does geography become a filter for us? A company’s physical location becomes a concern for us when it limits that company’s future potential. Maybe it’s the lack of a local talent pool to recruit from as the company grows or being in a location that makes it really difficult to attract talent from outside the region. Or, it might be that a company is too removed from key customers or partners to efficiently scale the business. We want the companies we invest in to win, so if geography is likely to reduce a company’s odds of success, that’s when it becomes a concern for us.

  • Berislav Lopac

    I'm sorry, but how can you call yourself “geography-agnostic” and state “we don’t invest outside of North America” in the span of two sentences?

    • Chris Wand

      It's a bit of a nuance, but the reason we don't invest outside North America has more to do with our view of the differences in culture and market needs/opportunities that foreign markets present than with the travel logistics and geographical distance. Simply put, we believe that investing in foreign markets requires a significant level of market intelligence that can't be easily gained through a smattering of foreign investments.

    • sethlevine

      While there are clearly opportunities outside of the US, we believe that our experience, network of contacts and thematic focus come together to best serve our investors when we focus our investment efforts in the US. As for being “geography-agnostic”, this very well describes our approach to investing – we don't use geography as a filter when considering investment opportunities. While that doesn't include areas outside of the US, we believe the opportunity here in the states is extremely large.

  • Anonymous_until_furt

    Because of this particular post, I am inlove with The Foundry Group already

    South Africa ;)

  • Mat


    It isn't just venture capital that can be geography agnostic. At we have built and launched a great product with a team in London, Dublin and Poland. With the use of Skype, Central Desktop, Trac and Gmail we work well across time zones and and geographies. Sure, there are times when a snap face-to-face meeting would help, but that's offset by minimising the interruption factor that is a deadly time-suck in most offices.

    As you pointed out, judicious use of face-time helps maintain and cement relationships. We aim to get together one every couple of months for planning, strategy and fun!

  • Derek Scruggs

    Good post. Do you find, though, that certain locations have higher risks? For instance, when I lived in Chicago in the 90s, the perception among VCs seemed to be that Chicago was not a very good entrepreneurial environment (except for consulting firms). Part of it stemmed from the fact that there weren't many top-tier VC funds there, so the East & West Coast VCs had a very limited pool of local potential co-investors that they felt they could trust.

    • Chris Wand

      Certain locations probably do have higher risks, whether it's the risk that a company might not be able to attract future follow-on capital or that it might have a harder time recruiting great talent to join the team. Our view is that, while it can be helpful to have local co-investors, we don't view local co-investors as a universal requirement for our investments. The greater risks (from our perspective) have to do with the other “inputs” a startup requires–access to top-notch talent, a supportive infrastructure, etc.

      Chicago does have the reputation in some circles as being an under-served area from a venture perspective (where the primary rap is that there aren't a lot of local venture firms), but there's also a lot of great activity there if you scratch the surface. The success of one our prior investments, Feedburner (, which was HQ'd in Chicago, is excellent proof of that! That's one of the reasons we tend not to use geography as a primary filter. The benefit, of course, is we're more likely to find some hidden gems that others missed because of their geography blinders.

  • Evert Bopp

    Being involved in ventures on both sides of the Atlantic I have experienced that there is still a reluctance for VC capital to move across the ocean. In a time of cheap air fares, conference calls and other technologies that make this planet a smaller arena to work in I am still surprised by this…
    In my book a solid investment opportunity is just that no matter where it's based…

  • Fda pharmaceutical

    Good post, Great thoughts and more informative for Geography ……..