What are American Cities Doing to Help Startups Grow?

nov citiesAs federal governments around the world increasingly explore how national policy can help the country’s economy, it is important that we not lose sight of local efforts that have the potential to be replicated on a larger scale. With four of the top five startup ecosystems in the world, according to the Compass 2015 Startup Ecosystem Report, U.S. cities are still at the forefront of experimenting with new policies and programs.

Earlier this year, the Kauffman Foundation released its Guidelines for Local and State Governments to Promote Entrepreneurship, encouraging policymakers to avoid approaches like public venture funds and traditional incubators. Rather, it suggested a focus on fostering connections and learning, while also addressing regulatory issues.

Many successful cities and states are following those guidelines. Below are just a few examples that have resounded with policymakers – from three of the top four startup ecosystems in America.


Startup Ecosystem Rank: #1
Strengths: Performance, Funding, Talent, Startup Experience

Digital transport and short-term housing solutions are new territory for most cities. The digital startup sector has moved faster than a city’s ability to fit new business models into existing regulatory frameworks.

In this regard, San Francisco was one of the quickest to attempt to strike a balance. For example, it was one of the first major U.S. cities to legalize Airbnb through special regulation – such as a 90-day rental cap when the host is not present, and unlimited days when the host is present.

“Taking into account the specific challenges facing its city, the San Francisco Board of Supervisors carried out research, listened to stakeholders, drafted various amendments and engaged in discussions before casting a final vote,” reported CITIE, a joint project of Nesta, Accenture and Future Cities. Research suggests that Airbnb could contribute $56 million to the local economy and support 430 jobs in the city.

Regulating the sharing economy is not an easy task for municipalities. Even in San Francisco, there are doubts about whether the city has the infrastructure to enforce compliance. The world looks to what is and isn’t working for San Francisco, as an unprecedented number of digital start-ups are tripping up on outdated regulation. We expect there will be no single way of doing it right.


Startup Ecosystem Rank: #2
Strengths: Market Reach, Performance, Funding,

New York has been heralded as an example of how a city government can act as a network builder for its start-ups. Upon formally recognizing the tech startup community as an important element of the city’s economy, former Mayor Michael Bloomberg chose to endorse local startups by creating a ‘Made in NY’ brand.  

Through the joint work of the city’s Media and Entertainment commissioner and Chief Digital Officer, Bloomberg’s print, digital and publicity campaigns showcased the creative energy in the city. According to anecdotal evidence, the campaign lured local talent to support local and join new businesses. The publicity also featured 60-second videos profiling ‘Made in NY’ startups, which helped create a network of business with at least 75 percent of development based in the city.

“The gravitas of a strong brand can attract new entrepreneurs, partners, investment, talent and customers both locally and globally,” explains CITIE. “This can help SMEs to develop their own credibility and find a scale of opportunities that they could not achieve alone.”


Startup Ecosystem Rank: #4
Strengths: Performance, Funding

In the meantime, Boston’s Mayor Martin Walsh has announced the launch of a Housing Innovation Lab that will seek solutions to the city’s vexing middle-income housing challenge. The lab is tasked with identifying ways to lower the costs of building, buying and owning homes in the city, explained the mayor’s office. The housing lab team will actively solicit ideas and other feedback from both Boston residents and housing experts. After the 18-month innovation program, the lab team will report on how to best and most efficiently create the 20,000 workforce housing units.

This civic innovation approach is increasingly being adopted by major cities in the United States. New York, for example, has been working to establish avenues for collaboration between schools, hospitals, utilities and City Hall to create a permanent infrastructure for the kind of collaboration that helped it deal with Superstorm Sandy. During Superstorm Sandy, the city successfully collaborated with the data-science community to provide real-time flood predictions and map out the areas where volunteers were needed most.


Policy experimentation to spur new business creation and growth is not just the realm of the globally-recognized hubs, but is increasingly a common trait among American city leaders. The third annual Mayors Conference on Entrepreneurship, hosted by the Kauffman Foundation, recently highlighted successful efforts in Louisville, Knoxville, Albuquerque and more.

We look forward to sharing more details with you on those efforts in the weeks ahead. In the meantime, however, we want to know what your city is doing to help entrepreneurs and support startups. As always, I look forward to reading about those efforts in your comments. 

Photo Credit: Flickr


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