6 Ways City Governments Can Support Startups

December 10, 2019

  1. Capital
  2. Innovation
  3. Talent
4 minutes

Whether you’re in government and are ‘here to help,’ or are a resident with ideas about what your City can do for startups, you will likely find the answer by asking: What is needed? What is missing? What can government actually do? 

If you’re in government, take a look in the mirror: you may have a (perhaps well-deserved) reputation for being top-down and prescriptive; if you seek a paradigm shift and are considering a startup program, try a grass-roots, capacity-building orientation, and consider hiring entrepreneurs with the lived experience of starting up vs. a career bureaucrat. Give the entrepreneur-turned public official a few months to find their way around, and embrace their desire to experiment, fail, and try again.

When I was hired as the City of Seattle’s first Startup Advocate in 2014, I spent the first three months listening to entrepreneurs (offering 1:1 support, but also identifying patterns and trends).  This informed the initial programming priorities, which we refreshed though constant community engagement; while a few good ideas may come out of City Hall, when it comes to supporting startups, get out of the building.   

What can and should be done?

1) Providing financial capital: In Seattle, we are fortunate to have a host of committed, early-stage super-angels and VCs who prioritize backing local founders. With these assets, we did not prioritize setting up a City startup fund.  We happen to also have a state constitutional issue prohibiting the “gift of public funds,” so would take some fancy legal footwork if we had that inclination. Lastly, one could legitimately question if governments make good VCs. Here are two examples of funds tackling that very issue:

    • Oregon Venture Fund: Founded in 2007, OVF launches a new $8 million fund each calendar year, with the State as an annual investor (it invests returns into public education in Oregon).  The fund is led by 180 investors where 85% are current or former founders.
    • Startup PHL: Philly noted a lack of seed stage capital, teamed up with the Chamber of Commerce and co-invested with Ben Franklin Technology Fund, who not just matched the investment, but manages the fund ($5M target for Fund II). Way to stay in your lane, Philly, while listening to entrepreneurs and convening partners willing and able to provide a solution.

2) Subsidizing space: Whether it’s for cheap rent or to increase the surface area of your luck, space and serendipitous collisions can reduce barriers to entry for entrepreneurs and may be an asset that governments can provide. In Seattle, it’s not: every bit of City-owned land is targeted for affordable housing, and the private sector has answered market demand, with 40 co-working spaces and counting.  Check out these models for government-supported communities:

    • Commons on Champa: Located within a City of Denver building, this public-private partnership launched in 2015, with a focus on co-working, programming, and community. With ten years of free rent from the city, equipment and sponsorship from the private sector, and a welcoming event space to boot, in the opinion of this author it’s a great complement to Denver’s truly impressive Startup Week.
    • Purely public ventures may have financial constraints and/or goals associated with appropriate use of taxpayer funds; SuperPublic in Paris (which inspired a similar model in San Francisco) is designed for entrepreneurs dedicated to social good and innovating in public policy.

3) Developing talent: Even in a city with an incredibly high concentration of engineers, it’s tough for startups to compete for tech talent, a theme that has been repeated in most every 1:1 meeting and community event, year after year.  As our four-year universities and community colleges don’t have the capacity to keep up with demand, we have worked to support (and funnel federal and state funding into) accelerated, post-secondary training programs such as Ada Developers Academy (serving women), Floodgate Academy (led by and serving people of color) and Unloop (focused on justice-involved individuals).  Note the City is not building such programs and re-inventing the wheel, but rather supporting existing entities.

Another powerful approach to consider: identify community leaders and programs serving youth with barriers to entry into technology careers. Connect youth to relatable and accessible role models in the field—i.e., people who look like them—women, people of color, immigrants and refugees– to enable young people to see themselves in such careers and expand their consideration set.

4) Making connections:  From cataloging resources to providing direct support to startups (in co-working spaces around town vs. in City Hall) triaging and connecting can be a useful role for a government “startup advocate.” The advocate can answer entrepreneurs’ questions, expedite the answer (particularly when navigating government bureaucracy), or connect them to someone who can answer.   

5) Convening: Though not a superpower per se, it’s remarkable who (well-respected) elected officials can seat around a table together: competitors who normally wouldn’t speak, let alone collaborate. While this convening power of government is often used to explore solutions to civic issues, listening sessions can yield real results for startups. Word to the wise: startup communities grow weary of such convenings should they not see evidence of turning talk into action.

6) Amplifying: The most surprising insight I gleaned from convening startup roundtables on the Mayor’s behalf was that, almost to a person, participants urged her to use an asset that costs nothing but can be priceless: her megaphone.  We may have historically suffered from a “Seattle Nice” self-deprecating mentality and will likely never beat our chests and declare we are the “Silicon Valley that never sleeps” (a la former New York Mayor Bloomberg). That said, passionately and authentically amplifying the incredible stories of local startups is an asset that every Mayor has at her disposal.

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With a wide ranging financial investment and feasibility, mileage varies for government initiatives in any given community. Parting thought: referencing Brad Feld’s seminal Startup Communities, bear in mind government is a “feeder” not a “leader” in the community, and entrepreneurs themselves are the beating heart of every successful startup ecosystem.

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