Reno, Nevada has experienced a boom in tech startup activity. Why has this smaller market become a high-valued target for tech investors?

Sometimes being the “Biggest Little City in the World” has its advantages, especially when it comes to attracting new business from Silicon Valley.

Reno, Nevada rests on the western side of the state, within an hour of the popular Lake Tahoe tourist area and a half day’s drive from the Bay Area. Its close proximity to traditional Silicon Valley powerhouses, along with more business-friendly economic policies, have made it an appealing destination for tech startups in recent years. 

For Doug Erwin, Vice President of Entrepreneurial Development for the Economic Development Authority of Western Nevada (EDAWN), the appeal of the smaller Reno market lies in several macro and microeconomic factors. 

“At the macro level, Reno has a very strategic location relative to the Bay Area,” Erwin said. “It gives companies some unique opportunities, especially as the Bay Area ecosystem becomes overheated. At the micro level, shifts in the local economy have broken the hold of the existing political structure.”

Macro-level factors

What was once a sleepy town, primarily driven by construction and gaming, now hosts operations for organizations big and small. Tech startups like Breadware and Bonbora coexist in the Reno market alongside giants like Tesla. The process has been swift, and not entirely without challenges for the market.

“Reno has had to overcome years and years of bad publicity,” Erwin said. “The stereotypes of Reno were not helped by media portrayals, especially the Reno 911 comedy show. That’s why our strategy has been two-fold: top-down with the help of larger corporations and bottom-up, driven by smaller startups and the community as a whole. At some point, those two will meet.” 

For some startups, Reno became an option out of necessity, primarily due to rising costs and tax requirements in California. Nevada offered a friendlier atmosphere, while maintaining the ability to conduct business on the West Coast. 

“The political and economic differences between Nevada and California freed up the mindset for more investments outside of the Bay Area,” Erwin said. “The economics are such that a good company with a good team, even if on the small side, can operate far less expensively in the Reno area.” 

Micro-level factors

While macroeconomic factors help entice companies to Reno, Erwin believes the local community and economy becomes the ultimate selling point. The 2008 recession caused some large-scale changes in Reno’s long-time political and economic structure, to the benefit of entrepreneurs and smaller startups.

“The state started to recognize how much we needed to branch out beyond construction and gaming,” Erwin said. “The changes have been led by advanced manufacturing, which has started to bring people back into the community.” 

The local regulatory framework also helped, as did lower real estate costs compared to the Bay Area. All these factors have led to a revitalized Reno community, driven by enthusiasm rather than pure profit.

“Reno is pitching itself on its authenticity; we want people to be successful here,” Erwin said. “We want them to see the opportunities and the challenges, and to become another part of the heartbeat in our community.”