Cities Should Think Creatively about Entrepreneurship Ecosystem Building

cohort members share lessons learned

As the City Innovation Ecosystems program begins its third cohort, participating cities demonstrate diverse approaches to ecosystem building commitment. Plus, the program adjusts to address the COVID-19-related issues city ecosystem builders are dealing with.

In the past, entrepreneur ecosystem building efforts were often left to the private sector or to nonprofits. But, as more elected officials—especially mayors and economic development staff— understand the importance of entrepreneurship to economic growth, entrepreneurship development is fast becoming the domain of cities themselves.

Mayors are increasingly committing to programs, practices and policies designed to improve the environment for entrepreneurs in their cities. Further, they recognize the need for someone from within city hall itself—if not the mayor, then their appointed representatives—acting as ambassadors for their efforts.

Alejandro Manzanares is a grants operations program manager at the National League of Cities’ Center for City Solutions. In 2018, NLC launched the City Innovation Ecosystems (CIE) program to support cities focusing on innovation and entrepreneurship as part of their economic development strategies. Manzanares works with mayors and economic development staff across the country who have decided to commit to a specific initiative or policy intervention that could advance innovation and entrepreneurship in their cities and strengthen their regional innovation ecosystems.

He said one thing the mayors of the cities he works with have in common is a mindset that “entrepreneurship should be baked into the overall economic development strategy of the city rather than thinking of entrepreneurship as something that is external and they don’t have control over.”

After working with more than  100 municipalities during its first two years, CIE kicked off its third cohort of cities in July 2020.

A Three-Pillar Model

Manzanares said the 12-month program is based on a commitment model featuring 10 commitments. Beginning with the program’s second cohort, mayors meet at the Kauffman Foundation’s Mayors Conference on Entrepreneurship to opt in and choose their commitment. Manzanares said cities “range in size from the City of Potosi, Missouri, which is under 3,000 in population, to Houston, which has 2.3 million people.”

“Our model is based on three pillars: cities, NLC staff, and subject matter experts, in this case, program experts, which are national nonprofits that guide a city throughout the year, providing technical assistance at no charge for implementing the city’s chosen initiative,” Manzanares said.

SourceLink, for example, is one of the nonprofit thought partners. Participating cities may also contract with SourceLink to assist with ecosystem mapping of resources within their communities.

Participating cities can also receive up to $25,000 in funding from the Ewing Marion Kauffman Foundation for entrepreneurial ecosystem-building work.

No One-Size-Fits-All Approach

Manzanares said participating cities have entered the CIE program with different approaches to building their entrepreneurial ecosystems.

He encourages officials of cities that might be interested in participating in the next cohort to think creatively about specific initiatives or policy commitments that could foster entrepreneurship in their communities. Here are several examples Manzanares offered of cities committed to various end results.

·       Establishing a Seed Fund for Entrepreneurs. Potosi, Missouri, Mayor T.R. Dudley identified a Kauffman FastTrac affiliate in the city and decided he wanted to support Main Street entrepreneurs who graduated from the program. Manzanares said Dudley worked with his city council to establish a 5% sales tax to establish a seed fund to support graduates of that program in order for them to launch their own business in the city.

·       Entrepreneurial Ecosystem Mapping. Nicole LaChappelle, mayor of East Hampton, Massachusetts, had a vision of mapping the community’s entrepreneurial resources to support small businesses. As part of the CIE program, the city partnered with SourceLink to work with East Hampton’s Office of Economic Development to do the mapping so entrepreneurs can get connected with local ecosystem resources that fit their needs (e.g., connecting with a local accelerator, incubator, angel investor community, venture capital funds, chambers of commerce, etc.).

·       Building an Innovative Workforce. The mayor of Detroit, Michigan, Mike Duggan, understands that for any entrepreneurial ecosystem to thrive in today’s innovation economy, players such as a local university, research centers, the city, the innovation district, and other innovation assets all need to be aligned under one unified city strategy. Mayor Duggan approached the CIE program with the intent of partnering with the GlobalEIR (Global Entrepreneurship in Residency), a nonprofit that partners with U.S. cities to invest in their innovation ecosystems. GlobalEIR is one of CIE’s nonprofit partners.

Manzanares said that Duggan’s commitment to the CIE program required the mayor to identify a local university that would apply for the H-1B visa program. That program would help establish a legal pathway for an immigrant high-growth entrepreneur to launch a business within that city in the United States. In return, there would be a founder’s pledge of 1% back to the local community and also mentoring of students in that local university.

“That,” Manzanares said, “creates the sort of diversity that breeds innovation at the city level.” He noted that similar initiatives are underway with mayors in Hartford, Connecticut, and Pittsburgh, Pennsylvania.

·       Hiring an Ecosystem Ambassador. Mayor G.T. Bynum of Tulsa, Oklahoma, committed to funding a local entrepreneurship ecosystem ambassador. As a result, the city hired its first ambassador in November 2019, who is now actively engaging local stakeholders in Tulsa and local entrepreneurial support organizations. From the city angle, Manzanares said, “he is driving the narrative of how entrepreneurship is critical to long-term, medium-term, and short-term economic development strategy.”

He offered Providence, Rhode Island, and Akron, Ohio, as additional cities where mayors have appointed or hired innovation and entrepreneurship ambassadors within the cities themselves. These individuals are tasked with linking entrepreneurs, entrepreneur support organizations and philanthropic efforts, corporations, nonprofits and educational institutions.

Impact of COVID-19 Pandemic

Manzanares said that although COVID-19 has created challenges, the need for the CIE program is greater than ever.

“COVID, civil unrest and the shifting economic climate that city budgets are facing has made our work even more important,” Manzanares said. “We’re very intentionally driving equitable economic recovery and equitable and inclusive entrepreneurial ecosystems as foundational pillars for positioning the CIE commitment program.”

He added that since CIE’s commitment program is jointly delivered with program experts doing work around supporting small businesses, innovation and entrepreneurial ecosystems, “we knew the timing to launch the third cohort was ideal. Basically, cities need all the help they can get right now.”

In addition to program experts that are already working with the CIE program (Kiva, SourceLink, FastTrac, etc.), Manzanares said they are bringing in even more experts “that are in tune with this new reality.”

He said, for example, they are working with Rising Tide Capital “to assess and bring a city’s BIPOC ecosystem actors into the mix and make sure that underrepresented populations are baked into all ecosystem efforts on the front end. We’ve definitely seen a greater need and interest to partner with program experts such as Kiva, due to many small “micro” businesses being left out of the federal response. Lastly, we’ve pivoted our programming content so that it’s COVID-centered.”

While there are many common high-level goals for entrepreneurial ecosystem building, there are multiple specific approaches for achieving those goals. Manzanares encourages city elected officials and staff to consider what approaches could produce the best end result for their city and consider committing to the CIE program to help them achieve it.

For more information about NLC’s CIE program, please contact Alejandro Manzanares. Or, register for the 2020 Mayors Conference on Entrepreneurship, to be held virtually Sept. 17-18, 2020.