This article is part three in a series on entrepreneurship and access to capital. I recently talked to Richard Seline, Principal of Global NextGen Advisors, who just spoke at the Crowdfund Texas conference. He also offers support to the entrepreneurial community through his organization, Competitive Texas.
I recently watched a documentary called Something Ventured. It was an excellent view into what made Silicon Valley what it is today and I highly suggest it if you’re into that sort of thing.
For the “CliffsNotes” version, here it is: Not long ago, innovators drove money to Silicon Valley. Eventually, money drove innovators to Silicon Valley. That stands today.
What does this have to do with Austin, Texas? Money is driving innovation to Austin, and as I mentioned in part one of the series, Austin has emerged as a hub of entrepreneurial spirit and innovation. That means growth.
When was the last time you saw three cranes at work in one 90 degree slice of urban skyline in the United States? Maybe you New Yorkers are scoffing at me right now, but I live in Cleveland and we haven’t seen this in the midwest in a long time.
Those cranes were busy building condos. People are flocking to Austin because, as the saying goes, “that’s where the money is.” As a matter of fact, newcomers are moving to Austin at such a rapid pace that it is straining their infrastructure. Traffic is a mess and getting worse.
Meanwhile, housing markets across the country have vacant inventory. From an economic standpoint isn’t this a bit ridiculous? $2000 per month condos are going up in Austin when you could buy a nice house in a lot of cities around the country for half of that, Cleveland included.
But, that’s where the money is!
Not for long.
One comment from Richard Seline surfaced a rather obvious truth and made me realize crowdfunding is about to change all of this in a rather profound way.
Everybody talks about successes and at the same time always says “Well, we ought to learn from our failures…” But no one inventories failure. So the fact is that rarely do you ever hear of somebody who didn’t raise their money and then went away. What typically happens is (one of) two things: Somebody leaves one area of geography to go to another area because it’s easier to raise money, or they just go away. You never hear about the company that left one area and went someplace else unless that one is so wildly successful that everybody gets to kind of point at it.
So if crowdfunding democratizes access to capital at scale, will entrepreneurs and innovators feel the impetus to flock to the traditional cities of economic growth?
Ohio could be the poster child for this phenomenon. We have an excellent group of colleges in this state: Ohio State (Medicine), Miami University (Business and Finance), Ohio University (Journalism), Kent State (Education), John Carroll University (Business), Oberlin (Liberal Arts) and the list goes on.
Every year some of our state’s brightest minds flee to some of the aforementioned cities for some of the aforementioned reasons. We simply don’t have the same opportunities offered in the big entrepreneurial hubs. Co-working spaces are generally few and far between. VC’s don’t usually hang out in our coffee shops. There are a handful of incubators and accelerators doing great work (JumpStart, LaunchHouse, etc) but they need more in the way of resources, too.
Ohio suffers and America suffers. If only local entrepreneurs had a robust way to access capital, maybe Cleveland could also be a hotbed of innovation and growth.
Placing my football allegiances aside, if you want a poster child for this approach take Pittsburgh as an example. Pittsburgh has a famously budding local startup scene. They’re doing a great job of incubating local companies and giving recent area graduates a compelling reason to stay. Entrepreneurs in Pittsburgh have a host of local resources to leverage when starting a company.
For more on Pittsburgh, check out Inc’s article: Pivoting a City: Can Startups Help More Than Themselves
What Cleveland does share with Pittsburgh is a serious sense of local pride. See, we ran into hard times when the steel industry went sour and then we lost our football team and then this basketball player left and… yeah, we’ve had quite a few galvanizing moments here.
Cities like Cleveland could translate that local pride, the low cost of living and robust educational resources into a recipe for a budding local entrepreneurial scene. That inevitably means job growth, economic growth, housing sector improvement and a myriad of other benefits.
We’re only missing two simple things: resources and people power. Give the innovators the tools they need to succeed and they will stay. They’ll rebuild cities.
There is no reason to concentrate the fruit of all of this innovation in a handful of economic centers in this country. Frankly, it’s killing economies elsewhere.
In democratizing access to capital, we may also be democratizing access to economic success.
See other articles in this series: