When the NFL Draft comes to Pittsburgh next week, civic leaders will be using the spotlight to celebrate football’s Steelers—and the city’s growing reputation as a technology and artificial intelligence hub. The events include an AI pitch competition where judges including area native Mark Cuban will award startups from a 1.75 million prize pool—with preference given to companies with a presence in Pennsylvania.
There’s a growing number of startups that fit that bill.
As the name suggests, VC firm Valley Capital Partners is based in Silicon Valley. But for the past few years, firm general partner Mitchell Kokko has been living across the country in Pittsburgh. The firm considered expanding to a number of cities but was drawn by factors like the area’s universities, relatively affordable housing, a strong business environment, and its location in the Eastern time zone. In Pittsburgh, he says a growing startup scene is taking advantage of strong talent networks, a close-knit business community including nationally known firms, and the area’s low cost of living.
“Pittsburgh really offers differentiated networks to founders who are looking to sell to enterprise companies,” says Kokko. “Because it’s a smaller hub than a San Francisco or New York City, the major companies all do business with one another.”
And local business leaders are willing to give startups a chance and work directly with their founders, which Kokko says can be critical to the enterprise businesses his firm invests in. “They get faster feedback cycles, and in early-stage startups that can mean the difference between life and death,” he says.
Mayor Corey O’Connor, who took office in January, ran on a platform that included support for businesses large and small, through an economic development program he said would help revitalize business districts across Pittsburgh and also keep affordable housing available even as the city grew. Startups are increasingly setting up shop in the city, though some long-time residents have expressed concern about gentrification with rents on the rise, even while still low by national averages.
One such startup is Factify, a Valley Capital Partners-backed firm that in January announced a $73 million seed round supporting its efforts to build a next-generation document format that it sees as a potential successor to the PDF. The Tel Aviv-based company deliberately chose Pittsburgh as its first US “base of operations,” says founder and CEO Matan Gavish. That was in part based on its desire to work with a tight-knit community of businesses in regulated industries that would adopt the software and collaborate with one another using Factify’s document standard. The city’s closely linked business community made it a natural choice, he says.
