Everywhere I go, I hear the same thing. Investors want to create opportunity in their own backyards.
Not surprising! In geography, we talk about a “love of place,” a powerful feeling and drive that is strongest at home, whatever we define “home” to be. In this case, home is our community. It is where we live and work and where the people we love reside.
We want opportunity to abound in our communities. We want jobs for our young leaders to blossom, grow, and perpetuate our way-of-life. We want taxes to drive urban renewal of our downtowns. We want local merchants to reap the rewards of economic prosperity on our main streets. We want our children to grow up and find jobs in our communities so they stay close so we can share their lives.
We must face some realities. Economic development was once focused on recruiting large manufacturers to a given community. That was the mill or the factory. But, manufacturing left the continent in the 90’s. The information technology age was come and already been outsourced going viral across the world. In both cases, we are competing with radically different labor costs. Although, specialized manufacturing is rebounding, we can’t rely on recruiting large manufacturers to a community to create a sustainable economy or in garden-variety tech jobs at this point. We need to face the fact we are the entrepreneurs of the world. That is what we do. The great part of this equation is intellectual property and opportunity to create value abound across the heartland. That is the American way. And, we should embrace these facts.
So, where does that leave us?
It is time to start business from scratch. The literature defines a “sustainable” community as one in which environment, economics, and culture are all equally balanced. But, this is a paradox. How can you have a strong environment or cultural community if the economics are not sound? The answer is you can’t. Unless there is sustainable economic opportunity, all else is just rhetoric of a dying community. We all want to believe in a utopian society where everyone reuses and recycles and plants broad-leafed trees that will one-day shade parks where above-average children play, run, and laugh. But, the reality is quite different. There is always a struggle between environment and economics. And, culture is either the casualty or the mitigating force.
In business we talk of the “cold-start” dilemma. In other words, if you are creating a marketplace, you need both customers and a product in sufficient supply to serve them to be successful. At the start, you don’t have clients and you can’t afford inventory. If you have the customers, you can afford the inventory. If you have the inventory, you can supply the customer base. Which one to focus on first? The same is true of many communities. For the community, the equation is straightforward (notice I did not say “easy!”). If you have capital, you can create companies, or if you have companies, you can create capital. The truth is creating capital is the easier and faster route in a community with visionary leaders.
Why is that? How do we do that?
The short answer is the major winds have changed in our economy. Banking has changed. There is no credit for startups. Venture Capital has changed. It has moved out of the early stage investing space. Competition has changed. The bar to start a company has never been lower, but competition has never been stronger or more global in nature. The Internet has liberated people to work where they want to live, and we have never been as attuned to the need for a work-life balance! Innovation is occurring your backyard…just need to cultivate it.
The Great American Community
We believe we are witnessing the resurgence of the great American Community. America was great when the middle class resided in communities all over the nation with sustainable economic conditions – agriculture, banking, manufacturing, service, life-style businesses, etc. Since that time we have seen a shrinking of the middle class and a growing disparity between the haves and have-nots. The answer is not some draconian/socialistic realignment or redistribution of wealth. It is investing in startups in communities across the heartland. This is the next great realization in the practice of economic development. The great American Community now includes technology-based jobs to replace the manufacturing ones lost.
Create the Community you Deserve!
To create the community you deserve, you must start with strong, visionary leadership. If you have this, the rest is a matter of vision and execution. If not, you have to create it. But, the benefits are clear:
1. Stop the brain drain
2. Create new tech and new age manufacturing economy jobs
3. Create a new echelon of young leadership
4. Create on local and regional economic impact
5. Create growth industries and enterprises
6. Create wealth
Capital is the key first step. Capital creates “gravity” for entrepreneurs and businesses. To reimagine your community, entrepreneurs must see tangible capital options. Otherwise, they go where the capital is or the jobs are. A committed capital fund is a bond with a community to find and foster the best and the brightest. It is a demonstrable statement on the culture of a community. The fact that community leaders want to invest in local and regional deals makes a powerful statement to entrepreneurs looking to put their assets at risk and venture to create businesses in a self-reinforcing system.
The second step is to engage a national angel syndicate to access great minds and greater capital. This will provide the community access to national talent/and expertise to grow your entrepreneurship community. Fast, efficient, scalable continuum of capital is critical. This is the key to creating great investors who mentor startups in your community. And, it is difficult for one angel group to support even one great company from concept to exit, much less a dozen. Working with peers around the country to find, cultivate, and invest in the best and brightest lifts all the proverbial ships.
The third step is to engage your community. Embrace the creative class, who want the culture and the environmental aspects of your community to be in balance. Create code schools and learning opportunities for your young leaders and entrepreneurs. Create “Shark Tank” events for your community to highlight the best and brightest and to give them experience at pitching a venture. Leverage your college/university programs. Help to create entrepreneurial course and colloquia options. Seek intellectual property that can be commercialized. Encourage students to create startup opportunities that the community can foster. Create accelerators and expand to co-working spaces with the expectation they will be filled. Happy collisions of creative people are where new ventures are spawned. Create a mentor community to guide young entrepreneurs. Be tolerant of failure. It is just a stepping stone to success. Most of all, be patient. This does not happen overnight. It will take two to three years of work to create the culture of cultivating startups. It can take five to seven years to see the monetary returns, but the benefits along the way will be tangible. That is why we talk about creating economically RESILIENT communities! Your investments now will pay dividends for decades to come.
It only takes a few visionary leaders in a community to turn the tide. Become one!