It’s a great time to be a founder. As more cities seek to build ecosystems that support and nurture business growth, leaders are investing in dedicated physical spaces that remove some of the obstacles that often hinder young, cash-strapped businesses.
Every startup — especially nascent ones — needs one quality an abundance: focus. Startup centers such as 1871, Chicago’s technology and entrepreneurship center, and coworking spaces like Galvanize alleviate concerns founders have about where to meet with vendors and mentors or to host events and unveilings. These spaces demonstrate their respective cities’ support for startup communities while making it easier for young companies to find local investors, team members, and customers.
The most successful hubs, however, provide more than just a nice facility. These locations foster a true sense of community among entrepreneurs and achieve a critical mass of startups by offering friendly tax policies, access to talent and capital, and abundant working spaces that entrepreneurs want to join. These hubs grow. Unfortunately, others don’t.
Failure to Launch
Much like startups, every city seeks profitable growth. By designating themselves as startup hubs, cities convey positive momentum and sufficient resources. But also like startups, hubs can fail. The recent demise of once-promising incubator 1776 provides a sobering example of how things can fall apart.
Established in 2013, the Washington, D.C.-based hub leveraged its early momentum into new campuses in San Francisco, New York, and Dubai. The success, it turns out, was unsustainable. Six years after it opened, 1776’s founders sold off their physical spaces to focus on developing a digital platform.
When a hub fails, it’s often because its advertised offering doesn’t exactly align with its host city’s resources and opportunities. Plenty of emerging ecosystems want to show their upward trajectory, but signaling momentum isn’t the same as creating it.
Chicago-based hub 1871 accomplished this by narrowing its focus solely to companies in its area. Building a productive ecosystem takes time and patience; placing a singular focus on one geographic area allows 1871 to evolve at a manageable pace. Similarly, CIC launched in Cambridge, Massachusetts, in 1999 but didn’t expand beyond the city until 15 years later — and it’s still managed to work with more than 5,000 companies.
Any city attempting to cultivate an ecosystem should seek to achieve a sort of product-market fit at home before thinking about entering unknown markets. The greatest gift any hub can offer startups is collaborative opportunities. Attempting to build an ecosystem that only produces the most profitable businesses and sucks the wind out of others in the process will ultimately backfire. Success is contagious, and the hubs that share the wealth are the ones that thrive.
The Anatomy of an Ecosystem
The creation of a startup ecosystem is a group effort; it hinges on an area’s ability to provide valuable services and support to company founders. With that in mind, here are three strategies for leaders who want to build startup communities in their own cities:
- Seek collaboration instead of conflict. Competition breeds innovation, and leaders must learn to view conflict as a positive. Instead of seeing similar ventures as competition, view them as teammates working to build a burgeoning startup hub.
If you’re part of a VC firm, try to attract competing firms to the area. If you’re a tech entrepreneur, share your positive view of your city with the leaders of those competing companies. If you’re a real estate investor, band together with other investors to finance properties that will draw businesses to your area. In a truly successful startup hub, all members of the ecosystem benefit. Don’t be afraid to share the burden (or the spoils). - Look for passion. There are enthusiastic people everywhere who know what it takes to build companies and launch incubators. Identify these people in your area and figure out how you can support or amplify their efforts.
Look at cities with an affinity for certain industries (e.g., Detroit for automotive, Silicon Valley for technology, etc.). Most founders have a passion for their business, but they’re equally excited by general entrepreneurship. Give them an outlet to share this passion with others. - Share your expertise. Experience is an attractive quality.If you’re a founder or VC who’s mentored others on how to scale businesses, chances are good that you know how to build a successful hub.
Find ways to share your knowledge with people who could harness it. Look for individuals interested in gaining knowledge and entrepreneurial best practices. These insights can help hubs build an informed crop of startup leaders who can continue to share those insights with future groups of startup founders.
The officials and business leaders who stick their necks out to bring resources to their cities deserve support. Show your support by using the spaces they provide and participating in the events they organize. You may not reap the rewards immediately, but everyone will benefit eventually.
Written by Will Koffel.
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