Why 75% of VC goes to three cities—and why that's the best thing that ever happened to me
"Have you thought about moving to San Francisco?"
I've heard this question dozens of times. From investors. From advisors. From other founders.
Always asked with a tone suggesting it's the obvious next step. Like it's some kind of graduation you go through as a "real" founder.
My answer has always been the same: No.
Not because I have anything against San Francisco. It's a great city with incredible energy and talent.
But because the premise of the question is fundamentally broken.
The idea that you need to be in one specific city to build a successful company is the biggest lie in the startup world.
Let me show you why—using my actual numbers, not hypotheticals.
Building From a Dorm Room in Waterloo, Ontario
When I started SimpleDirect in 2019, I was 19 years old, in my second year at the University of Waterloo.
Computer science major. Living in a dorm room in Waterloo, Ontario—a small college town an hour from Toronto that most Americans have never heard of.
I was a recent immigrant from China. I barely understood how Canadian banks worked, let alone how to start a company.
Me, Arashdeep (our CTO), and a few other co-founders each put up a few thousand dollars at the beginning. That was it. That was our "seed round."
We kept expenses extremely low:
- No office
- No fancy tools
- Just students building something between classes
We were broke. Like actually broke.
But here's what we had going for us: we didn't have money to burn.
So we had to be smart about every single expense.
The Geography Trap That Catches Everyone
Here's the stat that made me realize the game was rigged:
75% of US venture capital goes to just three metro areas:
- San Francisco Bay Area (45% of all VC dollars)
- New York (18%)
- Boston (12%)
If you're not in one of those three cities, you're fighting for scraps.
The math is even more brutal when you look at it per capita:
- San Francisco: $15,000 per person in VC investment
- Rest of US: $600 per person
That's a 25x difference based purely on your zip code.
And if you're in Canada like me? Only 2-3% of North American VC flows north of the border, mostly to Toronto and Vancouver.
Waterloo? Kitchener? Calgary? You're invisible.
Your business could be incredible. Your team could be world-class. Your traction could be undeniable.
But if you're not in the right zip code, you don't exist to VCs.
The $800/Month Engineer Who Changed Everything
By year three, we needed to hire a software engineer.
Arashdeep was doing all the heavy lifting on the engineering side, but we needed more capacity.
Problem: In Canada, a median software engineer salary is $60,000-$80,000 CAD. Even for a junior position.
Did we have $60,000-$80,000 in the bank? Absolutely not.
So I had an idea: hire a developer from India.
A few things made me confident this would work:
- I came from a CS background and could evaluate technical work
- Arashdeep was there to train and monitor
- We couldn't afford to fail—this was our money, not VC money
We couldn't even afford full-time at first. So we hired part-time.
His salary: 45,000 Indian rupees per month. About $800 USD.
Compare that to $60,000-$80,000 CAD for a Canadian junior engineer. That's roughly $4,500-$6,000 USD per month.
We got the same output for 1/6th the cost.
And the developer was great. Talented. Hardworking. Eager to prove himself.
This wasn't some "offshore outsourcing nightmare" story. This was hiring great talent from a different market and paying them well by local standards while keeping our costs sustainable.
The Brutal Restructuring
In early 2023, we went through a massive restructuring.
At our peak, SimpleDirect had 14 people. I thought we were lean. I thought we were being smart about hiring.
I was wrong.
After that restructuring, we went down to 3 people.
Two years later, in 2025, we're at 5 people total. And 3 of them are based outside of North America.
The Real Numbers: $10K/Month Burn Rate
Let me show you our actual burn rate:
I pay myself $4,000 per month after tax.
That's it. That's my "founder salary." Not the $200K+ that SF founders pay themselves.
The rest of the revenue stays in the business and keeps compounding.
Our total monthly burn: around $10,000.
Read that again. $10,000 per month for two profitable businesses.
Compare that to typical startup burn:
- 5 employees in SF: $68,000/month
- 5 employees in Toronto: $40,500/month
- SimpleDirect with 5 employees: $10,000/month
We're running at 15% of the cost of a comparable SF startup.
And we're profitable. They're burning VC cash hoping to raise the next round.
The Runway Math That Changes Everything
Here's where geography becomes a massive competitive advantage.
If you raise $1M in funding:
San Francisco:
- 3 engineers @ $180K/year: $540K
- Office space: $96K/year
- Benefits & payroll tax: $120K/year
- Miscellaneous: $60K/year
- Total annual burn: $816K
- Monthly burn: $68K
- Runway: 14.7 months
Toronto:
- 3 engineers @ $110K/year: $330K
- Office space: $48K/year
- Benefits & payroll tax: $72K/year
- Miscellaneous: $36K/year
- Total annual burn: $486K
- Monthly burn: $40.5K
- Runway: 24.7 months (66% longer)
SimpleDirect approach:
- 5 people (3 outside North America)
- Remote-first (no office)
- Lean operations
- Total monthly burn: $10K
- Runway: 100 months (over 8 years)
With our burn rate, $1M gives us 8+ years of runway.
That's not a startup. That's a sustainable business.
We don't need to raise a Series A. We don't need to hit aggressive growth targets. We just need to serve customers and stay profitable.
The Companies That Prove It
Let me tell you about two companies in the same space:
Basecamp (now 37signals):
- Location: Chicago (then remote)
- Team: 60 employees
- Revenue: $200M+ annually
- Status: Fully profitable, never raised VC, 100% founder-owned
Asana:
- Location: San Francisco
- Team: 1,800 employees
- Revenue: $196M annually
- Status: Losing $50M per quarter despite similar revenue
Both in productivity software. Similar revenue. Basecamp has 60 people and prints money. Asana has 1,800 people and loses money.
The difference? Basecamp optimized for profitability. Asana optimized for VC growth.
And it's not just Basecamp. Look at these companies built outside Silicon Valley:
- Shopify: $150B+ market cap (Ottawa, Canada)
- Atlassian: $50B+ market cap (Sydney, Australia)
- Canva: $40B valuation (Sydney, Australia)
- SpaceX: $150B valuation (Hawthorne, CA—not SF)
- Wealthsimple: $5B valuation (Toronto, Canada)
The biggest winners aren't in San Francisco.
They're in Ottawa, Sydney, LA, Toronto—anywhere founders decided to build.
What Actually Matters
Geography doesn't determine success.
You know what determines success?
- Solving real customer problems
- Generating revenue
- Managing your burn rate
- Building something sustainable
None of those require you to be in San Francisco.
In fact, being outside SF makes most of those things easier:
- Lower burn = longer runway = more time to find product-market fit
- Global talent access = better hiring at lower costs
- Less competition = easier to attract and retain great people
- Geographic arbitrage = better quality of life on the same income
The only real disadvantage is access to VC capital.
And as I showed you in the previous articles, that's not actually a disadvantage.
It's a forcing function to build with revenue instead of funding.
The Future Is Remote. The Future Is Global.
Look at what happened from 2020-2025:
- SF's share of VC funding dropped from 47% to 40%
- Remote startups now raise at 75-85% the rate of SF companies (up from 60%)
- Global talent became accessible to everyone
- The best companies are being built everywhere
The geographic lottery is over.
You don't need to win the birth lottery and be born in the Bay Area.
You don't need to uproot your life and move to the most expensive city in the world.
You just need to build something people want and charge them for it.
From wherever you are.
The $35K/Month Reality
Today, SimpleDirect and ANC combined are pushing $35K/month in revenue.
SimpleDirect (B2C): Converting the service business into product ANC Startup School: ~$25K-30K MRR (mix of 1-on-1 consulting, group programs, early products)
Goal: $50K/month by Month 18.
All from Waterloo/Toronto. With a $10K monthly burn. With a team of 5 people, 3 of whom are outside North America.
Zero VC funding. 100% ownership. Complete control.
And the best part? I could be anywhere.
I've traveled over the past two years. I've explored where I could move and still operate the business.
The only things tying me to Toronto right now are family, expectations, and convenience.
But I could be in Thailand. I could be in Portugal. I could be in Dubai.
I could be anywhere with internet access and still run these businesses.
My Advice If You're Not in SF
Stay where you are.
Pay yourself a reasonable salary that works for your local cost of living.
Enjoy the lower costs and longer runway.
Hire great people regardless of where they live.
Focus on customers and revenue, not VC networking events.
And if you do raise capital (if you choose to), do it from a position of strength—because you have revenue, not because you moved to the "right" city.
San Francisco doesn't build companies. Founders do.
Geography is one factor. Not the determining factor.
Key Takeaways:
I built from Waterloo:
- Started with a few thousand dollars from co-founders
- Hired an $800/month developer from India instead of $60K+ Canadian engineer
- Went from 14 people (bloated) to 5 people (actually lean)
- Current burn: $10K/month for two businesses pushing $35K/month revenue
The math:
- SF startups: $68K/month burn for 5 people = 14.7 months runway on $1M
- Toronto: $40.5K/month burn = 24.7 months runway (66% longer)
- SimpleDirect: $10K/month burn = 100 months runway (8+ years)
Success rates converging:
- SF companies succeed ~12% of the time
- Non-SF companies: ~10-11%
- The gap is statistically insignificant
What matters: Lower burn + longer runway = more time to find product-market fit
Global talent access = better hiring at lower costs
The only "disadvantage" is VC access—which forces you to build with revenue instead
Next Article: In the next piece, I'll show you the exact consulting-first framework I used to build both SimpleDirect and ANC—including the month-by-month roadmap from $0 to $10K MRR without writing a line of code.
Want the full location-independent playbook? Download Chapter 3 of The Anti-Unicorn where I break down:
- The complete burn rate comparison (SF vs Toronto vs remote)
- How to hire globally without losing quality
- The 16-24 month runway rule and why it matters
- Geographic arbitrage strategies for the next 30 years
George Pu is the founder of ANC Ventures and author of The Anti-Unicorn. He's built two profitable businesses to $35K/month from Waterloo/Toronto without raising venture capital—proving that geography is a choice, not a requirement.
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