WHAT CITIES CAN DO TO HELP ENTREPRENEURS

Is your city on the side of startups?

By Jonathan Ortmans
Kauffman Foundation

Headliner data no longer impresses startup community leaders examining alternative policy levers for building city ecosystems for entrepreneurs. City decision makers want robust, granular analysis alongside opportunities for more collaboration with their peer cities. So how are startup cities assessing themselves?

Now that urban centers accommodate more than half of the world’s population, they have become important trend setters for local and national policymakers.

For example, the World Economic Forum positions the trend towards the decentralization of governance to regional and local bodies as one of the megatrends that is shaping the 21st century. The McKinsey Global Institute in turn predicts that “the 21st century will not be dominated by America or China, Brazil or India, but by The City.”

NESTA, a Global Entrepreneurship Research Network (GERN) member, has partnered with Accenture and Future Cities Catapult to form the City Initiatives for Technology, Innovation and Entrepreneurship (CITIE). With the goal of supporting city leaders in developing policies to catalyze innovation and entrepreneurship, it has suggested nine roles city governments can play to support innovation and entrepreneurship.

The report then identifies a total of 36 policy levers under these nine areas, and ranked 40 cities based on their performance in them as follows:

Openness
1) City as regulator
a. Existing regulations are enforced proportionately
b. Regulations are reviewed and updated to take account of new business models
c. The full spectrum of stakeholders is engaged to craft balanced regulation

2) City as advocate
a. Ensure a new business focus within the trade and investment function
b. Provide set-up support for new businesses and businesses relocating to the city
c. Promote the city as a hub of business creation
d. Sponsor events relevant to high-growth sectors
e. Help early-stage ventures access global networks

3) City as customer
a. Ensure the visibility of procurement opportunities through a single portal
b. Ensure that pre-qualifying requirements are achievable by new businesses
c. Define targets for spending on new businesses
d. Use problem-based procurement methods
e. Use open innovation methods to engage the ecosystem

Infrastructure
4) City as host
a. Support access to co-working spaces
b. Support incubator and accelerator schemes
c. Enable access to affordable and flexible office spaces
d. Nurture of Innovation Districts
e. Play the role of matchmaker within the ecosystem

5) City as investor
a. Support the provision of coding and technical skills
b. Support for schemes that help young people access the tech sector
c. Help business understand types of financing options
d. Provide funding to kick-start the ecosystem, entice venture capitalists to the city and work with them to multiply the funds available

6) City as connector
a. Support access to high-speed internet
b. Provide free, public Wi-Fi
c. Ensure the high quality and extent of cycling infrastructure
d. Ensure frictionless and integrated public transport

Leadership
7) City as strategist
a. Publish a vision of how to support innovation and entrepreneurship
b. Have a public set of KPIs that measure the success of the city’s vision
c. Have an innovation function within city hall
e. Have senior leadership with responsibility for innovation and entrepreneurship

8) City as digital governor
a. Ensure ‘digital by default’ city services
b. Enable citizens to report city problems on the go
c. Enable citizens to engage in policy decision making

9) City as datavore
a. Use data analytics to optimize city services
b. Publish open data
c. Publish live data with appropriate APIs

Looking at their first attempt at ranking cities using these criteria, we find some interesting insights; most notably that city policymakers across Europe are leading the way when it comes to using policy levers to make their cities more entrepreneurial. After top-ranking New York City, which also has one of the longest trajectories in the field, London, Helsinki, Barcelona and Amsterdam represent the homes of best practices for 2015.

“Cities like Berlin and Tel Aviv and Seattle and Los Angeles that have much more established tech communities were somewhat lower down the list. The reason for is that what we were measuring wasn’t the quantity of tech companies or the volume of venture capital flowing through a city, but rather the quality of the policy environment that was created by city government,” explained one of the authors in an interview to TechCruch.

As TechCrunch pointed out, the report has a more narrow focus on proactive policies for digital and sharing economy entrepreneurship, meaning it fails to capture other startup policy trends and incentives including public-sector intervention. Concepts like ‘innovation’, ‘entrepreneurship’ and ‘good regulation’ are never easy to confine in a study, but the report looks at the thrust of policy activity with regards to startups that most impact city life. This report is a welcome development in the field of entrepreneurship research. It helps cities look beyond their ranking to identify clusters of cities with similar levels of performance and approaches, namely:

• Front Runners: e.g. Singapore and San Francisco
• Challengers: e.g. Buenos Aires and Copenhagen
• Builders: e.g. Sao Paulo and Sydney
• Experimenters: e.g. Johannesburg and Jakarta

This provides each city a group of comparable peers that they can benchmark themselves against over time and with whom to engage to share lessons and avoid common mistakes, beyond, of course, making their cities attractive places in which to settle overall. You can see these groups, here. The CITIE platform also enables you to compare a specific city with others with the similar levels of municipal budget, GDP per capita, population, as well as region.

The upcoming Startup Nations Summit (SNS) in Monterrey, Mexico, has taken a similar approach for national level ecosystems, forming working committees among peers seeking to use and improve comparable policy levers. In many cases, these city policy leaders are the ones setting trends for national level policymaking.

As a group interested in evidence-based policymaking, Startup Nations members will triangulate research outcomes from reports such as CITIE’s and the upcoming Compass report, which has developed a methodology to measure the actual output of 48 city ecosystems, namely the quantity of startups. In this way, Startup Nationsmembers will be able to compare information on the impact of policy interventions against the current and expected quantity of startups and scale-ups.

While collaboration and rigorous analysis on what really works in creating, maintaining and updating the conditions of entrepreneurship at the city level is not new, it is certainly nascent. Advocates for smarter help from policymakers in enabling and inspiring their risk takers and entrepreneurs would be wise to keep a close eye on this type of experimentation at the city level now rapidly expanding across the globe.

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