What does ‘local’ mean now for Delaware startup founders?

The workspace landscape for many tech companies changed in 2020, in some cases permanently. The shift begs the question: Does location matter anymore? And if so, what are the advantages of starting and growing a business in Delaware?

We know that incorporating in Delaware is, and will continue to be, a popular option for companies that want to take advantage of the state’s tax laws and Court of Chancery. After all, according to the Delaware Division of Corporations, nearly 68% of Fortune 500 companies are incorporated in Delaware as of 2020, and 93% of all US initial public offerings are entities registered with Delaware. The vast majority of those companies, which include Facebook, Tesla and Coca-Cola, are actually located nowhere near Delaware. It’s something we’re (for the most part) used to.

Delaware companies exist everywhere. But Delaware-based companies, that’s something else.

If you can run a company from virtually anywhere, why choose Delaware?

Greg Plum — who is chair of board for Delaware Tech forum, chair of the Emerging Technology Community for CompTIA and founder of Plum Unified Communications — says Delaware still has its perks, some of which come from the state’s “small town” reputation.

“It sounds kind of kind of hokey, but you know, it’s almost the Mayberry equivalent in this day and age and ecosystem,” he told Technical.ly. “It is a very entrepreneur-friendly environment. It’s highly collaborative, and I don’t feel like there’s territorialism. I feel like everyone’s looking out for everyone.”

There are challenges, too, to be sure. But some of the state’s biggest challengers are those who prod because they want to see it thrive.

‘It was an active decision to stay here’

In talking with a group of RealLIST Startups founders last month, Technical.ly found that some of those who founded or run their businesses in Delaware actually live over the border in Pennsylvania. For Sierra RyanWallick, University of Delaware undergraduate and founder of UP Cycle, Delaware and its collaborative environment is a choice.

“I live right over the border in PA, in Landenberg, and I’ve always just felt this draw to Delaware,” she said. “I feel that entrepreneurial community where everyone wants to help each other, and that is not what it’s like where where I live.”

Although her startup, which includes a sustainable entrepreneurship program at The Warehouse, is Delaware-based, RyanWallick has not physically been in the state since the beginning of the COVID-19 pandemic because of health concerns.

“All of my startup for the past two years has been completely virtual, and we’ve been able to make that work,” she said. “I love the Delaware community because even though I’m not technically there right now, I still feel such a draw and everyone’s always welcoming and willing to help out.”

Dr. Aminul Mehedi, founder of CM Materials based in the Delaware Innovation Space, commutes nearly an hour a day from his home near Philadelphia. The company ended up in Delaware because of the Delaware Innovation Space, said Mehedi, who came to the US from Bangladesh in 2012 to attend the University of Minnesota before eventually moving to the mid-Atlantic to work for Carpenter Technology Corporation in Philadelphia.

He knew little about the First State before landing at DIS.

“It seems like it’s an arranged marriage. We didn’t know each other when we came here,” he said. But “it was an active decision to stay here. It has a more diversified focus on technology — not only biotech, or it’s not only farmers, it’s different things.”

CM Materials has benefitted, too, from a tie to UD, which allows it to access expensive testing equipment that the startup wouldn’t be able to afford outright: “They have so many resources and they are very accessible to the startups,” Mehedi said. The company has hired engineers and interns from the school, too.

‘Just small enough to be big’

Another Delaware founder, Craig Doig, CEO of Markee, ran businesses all over the world before finding Delaware and choosing to make it his home, as well as the home of his business, after leaving Los Angeles four years ago.

“I’ve been a business owner in Austin, Dallas, New York, LA, London and Budapest, Hungary,” he said. “I have had an office in each of those places, and I’ve never been more in love. I don’t know, it seems like a fairy tale here in Delaware because I think it’s like the biggest small town in the world with that sense of community pride.”

One well-known advantage of doing business in Delaware is that those in leadership — including the governor and the state’s US Congressional delegation — are uncommonly easy to speak to directly.

“I have way more access to government officials here,” said Anthony Wright, founder of Green Line Business Group, who grew up in Philadelphia before moving to Delaware and starting the company behind Danio Wellness and I Need A Witness.  “I could pick up the phone and actually speak to them. Whereas a PA, that’s a much harder thing to do.”

“We decided to establish ourselves in Delaware because it’s just small enough to be big,” said HX Innovations cofounder Nicole Homer, who graduated from UD and spent several years with her cofounder and husband, Dr. Von Homer, in the Miami tech ecosystem before the startup was born.

“You make an impact in Delaware,” she said. “You’ll be connected to the mayor or to the senator … and you’ll be having lunch with [Gov. John] Carney like it’s nothing, you know, but you’re essentially making an impact that’s bigger than you probably imagined. I equate it to playing a really great game of chess, just being able to be able to put yourself out there and building relationships.”

‘Nothing but support’

For Jayvon Fairman-Davis, founder of the 2021 Swim with the Sharks winning startup Chess Express Kids, Delaware is all he knows.

“I haven’t been anywhere else,” he said. “I’m a new startup. We’ve only been in business for like a year and a half, but we’ve had nothing but support. Garry Johnson III, who runs First Founders, gave me the confidence to talk to anyone, network with anyone, and feel like I can do that. I don’t pay attention to any of the naysayers. Delaware has been a great community of great support for me.”

Part of the reason there is no lack of support within the entrepreneurial communities in Delaware, Plum said, is because, while there are few venture capital firms, there is a lot of state and local funding available for startups.

“There’s plenty of funding,” he said. “What you see, which I love, is you see these founders that support each other, and I don’t know that you would see that in another environment. If funding was more limited, everybody might get a little bit more cutthroat. But they don’t need to be those founders who are so territorial and secretive.”

Fairman-Davis sees potential for Delaware to be an even better little big town.

“I think there’s a good opportunity to build a larger community of entrepreneurs,” he said. “I would like to try to establish an identity, not only for the entrepreneurial space, but just for Delaware in general.”