What started out as an effort to deliver free and low-cost support and services to entrepreneurs (via SUAP’s network of corporate partners) has evolved into a regional network of startup ecosystems, connecting founders, investors, workers, and, eventually, potential customers. So far, in addition to gathering more than $1.2 billion worth of service offers that have benefited some 3,000 young companies, the group has worked to develop a collection of mentors in these far-flung cities and towns, tapping local entrepreneurs, investors, and others in hopes of growing and sustaining these ecosystems.
“The job of SUAP . . . is not to offer more of the fine words and sugar highs that abound in the world of entrepreneurship, but to redraw the landscape of America’s economy so that more people felt confident enough to start their own businesses,” the organization wrote in its 2012 report on the state of US entrepre-neurship. “There would be cheerleading, of course. But there also would be hard work in the many areas that affect entrepreneur-ship. That hard work would include drawing attention to, and encouraging the study of, legal and policy barriers faced by entrepreneurs. Among the issues that have arisen are tax incentives that could help both startups and the broader economy; changes to the immigration laws to enable more talented people to stay and work in the United States; new models of venture financing, such as crowdfunding; helping to lower the burden of student loan repayments; and providing more free resources to help entrepreneurs spend less to get started.”
In the words of SUAP chairman Steve Case: “What you are doing as entrepreneurs isn’t merely about providing that product and supporting your family. The collective effort is what makes this nation great. What’s your part in the tapestry of entrepreneurship?”
This regionalism isn’t one size fits all, though. Tech ecosystems do share many similar qualities, but the range of needs and unique challenges between cities can be significant. Florida has a large community of high-net-worth individuals and plenty of available capital, but its investors are not familiar with the tech market and as a result are less likely to put their money to work in local startups. Iowa has an established community of IT, software, and biosciences companies, but is having a hard time getting them all to think outside of their silos and work together as an ecosystem. Texas is very capital-rich, but, like Florida, that money isn’t finding its way to startup founders, while Connecticut has money but no functional startup community to invest in. Massachusetts has a wealth of resources of all types available, but they’re all centered in Boston instead of being spread across the state, while states like Nebraska, Vermont, and Maryland are having trouble attracting and retaining talent in the first place.
“The most frequent problem in the regions is that ideas aren’t big enough or innovative enough,” says Donna Harris, managing director of the Startup Regions at SUAP. “Once they grasp that they don’t need our permission to act, the creativity starts to flow. You don’t need man-on-the-moon ideas, just very simple, new ways of thinking about old problems.”
Entrepreneurs themselves are fully aware of the pros and cons of starting a business in one of these new tech cities. For example, Rich Winley, the cofounder of independent restaurant discovery app No Chains, has written widely on the distinctions between the startup ecosystem in the Bay Area versus the rest of the country. He started his company in his hometown of Greenville, South Carolina, before eventually moving the operation to Houston.
“I’ve heard the founders of some of the iconic companies in the Valley say things like, if you want to be a politician go to DC, if you want to be in fashion go to NYC, if you want to be an actor you go to Hollywood, and if you want to be in tech you need to be in the Valley,” Winley wrote on his blog in late 2013. “Now, this statement has a great deal of validation, of course, and I’m not arguing that your chances of succeeding are probably a bit higher if you live there. My problem with the statement is that it can make an aspiring tech entrepreneur feel like he or she can’t make it anywhere but the Valley. So, in my humble opinion, I think statements like that hinder the creativity that we [tech entrepreneurs) are infamously known for in this world. Don’t get me wrong, I know we have small bubbles of tech in other areas of the country, but what do you think really drives a successful tech community? I think it’s based on who’s been there, done that, and exited.”
The real issue, he argues, is that Silicon Valley has a long history of innovation and success backing it up, with dozens of successful companies and founders that have exited and reinvested their capital back into the local community. So when a founder sets up shop in that area, they have access to all of that expertise, funding, and mentorship. And when they eventually exit, they’ll often give back to the community themselves. In short, the Bay Area has an ecosystem that has been refreshed and reinforced over and over again through the years by early players like Hewlett-Packard and Intel to more recent success stories like Facebook, Google, and Twitter.
“So all of these VCs and angels on Sand Hill Road came from being early in a company or exiting out of a company in the Valley ecosystem,” Winley writes. “What makes it work is that they invest back into that community. So with all that being said, it’s hard to build a community like the Valley unless you have some major wins.”
Having that community matters, especially for startup founders, because by definition they are getting started in a business that doesn’t come with a game plan. There’s no template for creating a successful startup; it’s a different kind of business than most, and part of the startup experience is figuring out a way to find success without a map.
“If you’re going to start a real estate brokerage, there’s a template,” explains Darius Dunlap. “It’s very much known, it’s very controlled by laws, and there’s a way you go about it. And, other than the subtleties of it being a relationship-based thing, other than actually running the business and making it successful, you know what business you’re in and you know what the value proposition surrounding it is. You know what you’re going to sell. With a startup, by definition, at least some of those things are unknown, and you’ve got to figure them out as you go, so a community can be really helpful.”
The flipside, of course, is that entrepreneurs need to give back to their community once they find success of their own in order to keep the ecosystem going. That’s the grease that keeps the system running year after year, everywhere from Silicon Valley to Muncie, Indiana: that culture of reinvestment and giving back to the city and community that helped you get where you are. It enables future founders to get a foothold in the market and, over the years, keeps the ecosystem together, that spirit of “give before you get.”
That’s the driving force behind Boulder, Colorado–based venture capitalist Brad Feld’s 2012 book Startup Communities: Building an Entrepreneurial Ecosystem in Your City and his general approach to ecosystem development overall. There are cultural elements at play in every startup city, he argues, many of which are unique to that area, but the importance of community and inclusion are universal.
“Startup communities need both leaders and feeders,” Feld wrote. “The problem comes when the feeders try to lead or when there is an absence of leaders. If the startup community has a culture of inclusiveness, it will constantly have entrepreneurs step up into leadership positions. . . . The entrepreneurial leaders also need to be inclusive of any feeders who want to participate.”
According to Feld, the startup community needs to be a big tent, open to anyone and everyone who wants to participate. But it also needs to have enough structure and leadership in place to ensure that it survives over many years. Investors need to be at the table alongside serial entrepreneurs, job-seeking developers, business mentors, and wannabe founders. The primary rule? The entrepreneurs themselves need to be the leaders of the ecosystem and the ones to decide where the scene is going.
“Today, we are in the midst of a massive shift from the hierarchical society that has dominated the industrial
