Which City Will Be Silicon Valley 2.0?

For the past 40 years the southern portion of the San Francisco Bay Area has been the dominant hotbed for technology and software companies. Now, the once-frantic, fast-paced culture of Silicon Valley has begun to slow.

While Silicon Valley is still one of the top areas in the U.S. that companies target when looking to start up or relocate, but in the past half dozen years, two more cities have presented viable options for emerging tech companies, or established companies looking to move off the West Coast: New York City and Austin, Texas.

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Austin: The Opportunistic Up-and-Comer

Austin may not be the first place that comes to mind when you think of technology meccas. For years it was the home of the University of Texas Longhorns, the Live Music Capital of the World and "that place where Dell started." But Austin has quietly grown into a city that attracts -- and produces -- some of the most innovative companies in the country.

This year, technology powerhouses Facebook and LegalZoom opted to expand out of Silicon Valley and opened offices in Austin. Facebook's Austin location is the social media giant's first major presence outside of California. Texas Governor Rick Perry offered monetary incentives to Facebook to launch a new 200-employee sales and operations office in the state's capital.

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"There is plenty of high-tech talent in Austin, from engineers to marketers to executives," said Kenneth Cho, co-founder of Spredfast, an Austin-based startup that helps companies and organizations fully capitalize on social media outlets. "The University of Texas has a lot of young talent who are willing to take a lower salary to stay in Austin."

Cho, who received his MBA from UT, added that Austin is a great place to stay and raise a family, with nationally accredited schools, lower living costs and a highly educated population. According to the city's chamber of commerce, 38 percent of the 6 million people who live in the greater Austin area have a bachelor's degree. That's more than twice the national rate of 15.5 percent who hold bachelor's degree, according to the U.S. Census Bureau.

Difficulties In Building Capital

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"Our tagline here is 'Austin: The Human Capital,'" said Susan Davenport, vice president of business retention and expansion with Austin's chamber of commerce.

Yet despite the push from Austin's civic boosters, building capital, especially for tech companies focused on new and social media, can be difficult. When he first began gathering funds to launch Spredfast, Cho said he had trouble convincing investors to buy into his company.

"Much of the money out here comes from older individuals who made their money working for Dell years ago," Cho said. "I found they don't quite 'get' social or new media quite yet. They are hesitant still of its long-term opportunities. If you don't have direct connections with [where the money is], you might have to work harder than expected to raise funds."

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