I recently read a post written by Christopher Griffin in which he was discussing Ron Conway’s views from an angel panel at Techcrunch50. The takeaway for Griffin was clear: “if you aren’t moving to the Valley, you can’t complain about a lack of capital.”

Whoa, hold on there. First, everyone has a right to complain – the question is if the complaint is valid – and I believe that it is.  Why?  Because I believe that there is a fundamental flaw in thinking that entrepreneurs should just “get moving.”

Certainly, I agree with the statement that there is a large talent pool, investable dollars, and a plethora of big companies situated in the Valley, but I disagree with the thinking that a company’s success in raising venture capital funding is based upon their ability to move to where “everyone else” is.

What if I were to say, “if you want some good beef, go where the best is, in Kansas, or else you are out of luck. Stop complaining and start moving.”  While that metaphor is apples to oranges, the point is that moving should never be a necessity to find a quality product or a prerequisite to garner a fruitful investment.

I agree with Griffin’s comment that a company has to make a decision regarding whether location is holding them back from acquiring the funding they need to move forward with success, but what if we turn the scenario around?  Could it be, not that the company is being held back, but that the VC firm may be held back in bringing a return on investment if they are not branching outside of a specific geographic location?

Let’s sit and think logically about the relocation scenario. If the sole goal is to raise capital, the business needs to keep costs low in order to build the product/service to the point of being able to secure funding. Funding takes time (unless you are a lucky one).

Typically, in situations where funding is necessary (not just a perk to instill more capital in your already flourishing business in order to expand), the founders/employees will likely be working within a small window of opportunity.

If this is the case, isn’t it fiscally irresponsible for a company to move from say, Austin or Kansas City, to the Valley?  In addition to the capital needed to physically relocate, the cost of living could be a detriment to the company’s ability to continue to push towards funding due to the approximately 35% increase in costs. That puts a company whose working capital may have been a window of six months into a position of having only three-plus months of working capital or less.

What if the founders were running their business based upon the income generated by their significant other?  A move would then cripple the business if that family member had to leave their existing job to make the move.

As a VC, can you legitimately expect that from a company?  Or even require it?

I am not going to pretend that I understand the ins and outs of the VC world – I don’t.  Simply as an outsider, I would view a company in a location such as Austin or Kansas City or Omaha, assuming the product/service they are offering is of value, would seem to be a more advantageous investment.

This isn’t simply because of their product/service, but also because of the fact that they can run their business at a 35% lower cost than a Valley company could right out of the gate. That is – potentially – a 35% lower investment from the VC or a 35% higher return.

I know that the economics are not that simple, but the fact is that maybe VCs should start focusing in other areas and not lose sight of the fact that the Valley is getting crowded. Remember, it is a large world out there and there are a lot of smart people building great products outside the valley.

Maybe it is time for the VCs to “get moving.”