Cities as Labs for Entrepreneurship Policy
When the Kauffman Foundation focused its annual State of Entrepreneurship Address in 2012 on ideas for a Startup Act for the United States, a new set of questions emerged in the entrepreneurship policy world. Mostly, those questions were around where and with whom it was realistic to focus energy on in order to create better environments and ecosystems for new firms to form and thrive.
While work at the federal and state level remains paramount, it has been encouraging to see such attention given to the local level – particularly by mayors and cities. For those of us who live in national capitals and are plagued by the complexities of reaching any kind of political agreement to get things done, operating on the city level is most refreshing. Beyond the Schumacher notion of “small is beautiful,” one certainly finds some enviable practicality in terms of advancing conditions for entrepreneurs in neighborhoods, communities and cities as opposed to regions, nations and states.
The greatest achievement at the city level in 2014 has been the realization on behalf of many mayors and others that this is no longer about who or how to be the next Silicon Valley. Policymakers at the metropolitan level are increasingly working on designing their own unique policies and programs, and seeking to build organically grown entrepreneurial ecosystems with unique character, seeing that merely trying to copy the Valley as America’s most visible success story has become irrational and futile.
The urban turn in how we build more advanced entrepreneurship ecosystems has happened in large part due to this reality – that policy thinking in the field of entrepreneurship has moved past the paradigm of emulating the characteristics of Silicon Valley. Startup-savvy policymakers instead tend to look deeper to new or unique unveil factors that can help their local ecosystems flourish.
And this trend is global. One of the outcomes from the creation of Startup America has been how it has been replicated across the globe – Startup Britain, Startup Korea, Startup South Africa and so on. In fact the imitation by other nations is so prolific, a network I am a part of called Startup Nations has been formed for the sharing of local approaches and results.
Within this group, I have been approached by many entrepreneur-minded city officials committed to spurring a resilient “entrepreneurial” economy and culture in their localities, despite what may or may not be happening at the national level.
Mariano Mayer, for example, who is leading the efforts in Buenos Aires under the “Buenos Aires Emprende” umbrella, is implementing a host of new policies and programs with Mayor Mauricio Macri, who is now also running for President of Argentina. The City of Moscow even elected to host the Global Entrepreneurship Congress last March in an effort to comb the world for ideas that can be explored especially in other economies where there is, shall we say, less support at the national level for startups.
In Santiago, Chile, sometimes oddly referred as “Chile-con Valley”, the city used targeted immigration policies to bring in talent and networks, noting the documented influence of immigrant entrepreneurial talent in entrepreneurial hubs in the United States. In Medellin, Colombia, incorporating bottom-up entrepreneurial solutions into city government has helped spur a fresh army of local entrepreneurs committed to owning challenges they see in their local neighborhoods. And in Seoul where I was most recently, the city authorities are leveraging “sharing economy” concepts as a basis for urban planning, forming a committee dedicated to this strategy.
There is no silver bullet of course. Several cities have successfully attracted a critical mass of entrepreneurs by pulling various policy levers at the intersections of talent, customer base, networks, funding, infrastructure, and more. Endeavor Insight recently interviewed 150 of the fastest-growing entrepreneurs in the United States and asked them why they chose to start their companies in the specific cities where they did so. Three factors emerged as the main magnets: local quality of life, access to talented employees, and access to customers.
There is a great deal of interest in watching emerging cities beyond the proven entrepreneurial hubs such as San Francisco, London, Berlin or Tel Aviv. The Global Entrepreneurship Network (GEN) that has emerged from the communities around the world that celebrate Global Entrepreneurship Week, has created a Cities Challenge to find new ways in which entrepreneurship can effectively be supported at the urban level. The winner will be announced and showcased at the upcoming Global Entrepreneurship Congress in Milan this March where there will be a spotlight on cities. As the host country of the GEC this year, Italy has instituted reforms that elevate the authority of cities within the Italian political system, something welcomed by mayors in the country and something which will build on their national Startup Italy legislative framework.
The research community is trying to keep pace with new emerging information about metro-level geography of startups, trying to find what policies and programs have been working, and how to effectively map entrepreneurial ecosystems beyond their tech startup successes. Here in the United States, the Kauffman Foundation has led in examining the urban distribution of entrepreneurial business. You might be surprised at the themes that emerge, such as fostering cultural entrepreneurs and makers.
At the global level, you may have seen the recent ranking of 150 startup cities across the globe by SeedTable. The Ecosystem Mapping is a collaborative project of Global Entrepreneurship Research Network (GERN) members Nesta, Endeavor and MaRS, and aims to create the largest and best-maintained database of entrepreneurship ecosystems in the world. The project will include 100 cities within the next five years, with an easy-to-use, open access visualization tool. Researchers and practitioners will be able to use the tool to explore the database along multiple analytical dimensions. (If you want your city included, email GERN Ambassador Valerie Mocker).
While we await solid data and analysis on what works and what doesn’t at the urban level, I offer two observations. First, vanguard smart city development increasingly encompasses strategies that include entrepreneurship-driven job, wealth and welfare creation. Second, the public sector is not doing this alone. The case of DC’s super successful “accelerator” and hub leveraging DC’s “public” assets (e.g. proximity to debates affecting various industries such as health care and education) is a case in point.
More and more, we are counting on cities to deliver smart solutions to big challenges -- and increasingly, city governments are counting on entrepreneurs to birth those solutions in their locations. Local government shows lots of promise for serving as efficient crucibles for learning how we make the path easier for those doers and makers of things in our local communities.
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