Every few years, there’s a new discussion about where all the best companies get built – the US, Europe, remotely…forget all of it.

What matters isn’t the country or city—it’s the network. Your startup isn’t just a product, it’s a node in a system. And where you place that node has compounding effects.

This key principle is often lost in emotionally charged discourse. For example, founders in Europe are often told they must move to the US to be successful. But that general advice doesn’t hold up to the most basic scrutiny. You can simply point to great European companies like Spotify, or Klarna and the hundreds of fast-growing startups there as a counterargument. Not to mention a cadre of strong Israeli startups. Success comes in many environments and forms.

That said, we often speak with founders in the US and abroad about the “network math” – or unseen forces that hasten a company’s success. These networks create currents of advantage that the best founders know how to ride. Where you decide to build your company is a major contributor to that network math.

For some founders, in some circumstances, re-locating to the right network can get them moving 100x faster. But only if you understand why.

The Basic Networks Behind Your Company

Your startup is part of many networks AND is a network itself.

Your startup will be part of a network of investors. A network of competitors. A network of talent.

Your goal is to attach or “bond” those people to your network in turn. Creating a new network comprising these nodes.

The more nodes you bond, the easier it gets. A strong early investor signals credibility. That credibility attracts talent. Talent builds product. Product draws users. Users bring press. Press brings more investors.

But once those nodes bond to you, it’s easy to hire the next team through referrals, word of mouth, etc. A new phenomenon kicks in, called preferential attachment. More resources begin to flow your way.

Startups who raise from a well-networked seed investor double their chances of raising a Series A, compared to those that don’t.

If you get covered by the press once, you’re far more likely to get covered again.

Once you accrue a certain amount of network gravity resources flow your way.

Early on, it’s far harder to bond nodes to your network.

Once you’re successful enough, perhaps you can risk being in a geography that’s far from investors, talent, and press. But when you’re in the delicate, early stages, you need to rig the math to your advantage.

When an investor opens your pitch deck, you need to be pitching them, in person, the next day. You can’t afford to go back and forth over zoom calls. The company down the street is already in the room.

When there’s a meetup of founders in your area, you want to be there before the event begins, and after it ends. You need to hear what people are saying off the record. That’s when the real intel gets shared.

The effects of proximity and speed can’t be overstated. When you’re still a small node, hoping to bond others to your network, you have to be in their face constantly. Or you’re forgotten.

The city you live in can be a huge factor in how fast you build that preferential attachment, or if you build it at all.

The Network Effects of Cities and Companies

One of the most popular articles we have ever published on nfx.com is “The Network Effects of Your Life.” Here, our colleague James Currier covers why the city you live in is so powerful, and offers 6 guiding questions that can help clarify where you want to spend your life (as a founder and a person).

The key question to consider when evaluating where to build your company is:

Are people in this city like me? Do they care about what I care about?

Each city, or even country, has an identity that brings out certain qualities. The key is to surround yourself with ambitious, creative, energy in your field. When you find belonging based on shared ambition and interest, it’s like swimming downstream. You’ll realize that by, not fitting in, by being that weirdo who decided to build a startup, you’ve been subtly draining your energy.

You’ve been running with a mental tab open—always questioning your environment, your speed, your fit. When you find your place, that tab closes.

Find a city that matches your energy, and gives you on-the-ground resources to support your vision.

That city will largely depend on who you are, and what you’re building. For example, we work with many Israeli founders who have strong network connections in Israel, and have found that their networks there contain the energy, resources, and knowhow to help them move faster. During the COVID-19 era, Miami became a center of gravity for the crypto ecosystem. There were network benefits to being a builder there.

There is little doubt that, right now, San Francisco is the center of the universe for AI. Here, the infrastructure is all set up.

The capital is here. In 2024, over 70% of AI-related funding rounds were awarded to companies based in the Bay Area.

There’s talent everywhere. But in terms of engineering talent, the Bay remains unmatched. An estimated 49% of tech employees and 27% of startup engineers live in the Bay Area.

Critically, this is talent with a certain mindset. Top talent here is more than willing to leave an incumbent to join a fast-moving startup. In fact, these days, it’s a status symbol. You won’t find that mindset, en masse, anywhere else.

Finally, information about how to build with AI is being shared through osmosis. You can walk into a coffee shop here, and learn five things about how to fix your product before breakfast.

We’re seeing it ourselves. Two years ago, in the very early days of the AI revolution, we sent a documentary team into hacker houses, events and AI meetups in Cerebral Valley. We saw founders leaving their traditional jobs, dropping out of graduate programs, and in some cases, moved across the world to be here building with AI.

Several of the teams we interviewed in our documentary have gone on to raise significant rounds, and reach valuations of over $500M.

Watch it for yourself here:

The people here will force you to triple your speed, and shift your thinking.

If you are serious about building your company, you must go where that energy is. For most founders working in AI, that place is San Francisco.

Common Concerns About Moving as a Founder

When we speak with Founders considering moving during early stages, there are a few common concerns.

1. Cultural Mismatch

It may not seem that way from the outside, but this tends to be less of a concern that many think it will be. People in the Bay tend to be very open to new ideas and people.

There are also countless groups and organizations that can help new founders get on their feet here. Many are very vocal about their experiences.

2. Recruiting

Salaries, on average, are higher in the US. But, provided you’re getting the talent you need, this shouldn’t be an issue.

We are moving toward a world where we will hire fewer people. But those people will be exceptionally talented. The moat on hard skills is shrinking. It’s being replaced by a premium on execution speed, taste, and creativity.

At NFX, we would rather hire four A+ people for the same price as 10 medium hires. They will set your cultural DNA.

3. Distraction

This is the concern that holds the most water. In the short term, moving your company will slow you down.

But you are optimizing for execution speed. Once you arrive at a center of gravity, you’ll move so much faster that the temporary slowdown will be worth it.

4. Moving away from existing customers

If you’re looking to build a best-in-class tech company, proximity to demand isn’t your top concern.

Building the best possible product is.

Demand is far more portable than people think.

Making the Choice

Deciding to move to a new place to pursue your company is almost as large a psychological leap as starting the company itself.

Ultimately, you should feel the same pull toward moving that you felt toward starting your company. You have to do it. That need will drive you to make the right decision.

And 99% of the time, moving to a center of gravity for your industry is the right decision.

Move for the math. Not the hype.

And go where the network gravity is strongest.