How mayors can lead the way for entrepreneurial ecosystem building

Supporting entrepreneurs and early-stage businesses is key to economic mobility, opportunity and growth. But it’s one thing for city leaders to “talk the talk” and quite another to implement a strategy that will spark and sustain entrepreneurship.

A report called “Dynamism in Retreat” (Economic Innovation Group, February 2017) stated, “From 2010 to 2014, just five metro areas – New York, Miami, Los Angeles, Houston and Dallas – produced as big of an increase in businesses as the rest of the nation combined.” In fact, across the rest of the United States, many cities were seeing major declines in new business starts.

Since the report was released in 2017 more and more city officials, especially mayors, are embracing the role of “entrepreneurial ecosystem builder” and actively working to create – through policies and programs – an environment within their communities that supports entrepreneurship.

Alejandro Manzanares is a program manager with City Innovation Ecosystems (CIE), a program the National League of Cities (NLC) launched in 2018 to aid cities’ entrepreneurial ecosystem-building efforts. Since the launch of the program more than 100 cities have participated in the first two cohorts.

Manzanares said there’s no one-size-fits-all approach cities should take when it comes to entrepreneurial development efforts. He encouraged mayors and city officials to get creative about their ecosystem initiatives and to embrace programs and policies that consider the current assets, challenges, opportunities and dynamics of their specific communities.

One thing is clear, though, he said: “Entrepreneurs should be at the center of any entrepreneurial development efforts.”

Here’s how the cities of Rochester, New York, and Baltimore, Maryland, developed an infrastructure to support entrepreneurship—with the city mayors and their economic development staff taking lead.

Rochester, New York: Community Wealth-Building for the Finger Lakes Region

According to census data and information collected from benchmark cities, Rochester consistently ranks highly for extreme poverty rates. Mayor Lovely A. Warren recognized the need to reverse this trend and in January 2018 launched the Office of Community Wealth Building (OCWB), the second of its kind in the nation. Community wealth-building is a “bottom-up” economic development strategy advanced by the Democracy Collaborative at the University of Maryland in partnership with the Aspen Institute.

The Office of Community Wealth Building strives to develop policies and initiatives that combine existing government programs, the business community, the nonprofit sector and educational institutions to help citizens build personal and community wealth. One of the office’s original goals was to build an ecosystem that supports prospective entrepreneurs and existing small-business owners.

Dr. Lomax R. Campbell, director of the Office of Community Wealth Building, said entrepreneurship was targeted because eradicating poverty requires being able to build wealth, especially in a capitalistic society. According to Dr. Campbell, true wealth-building occurs when people can own property, invest in the stock market, or start a business.

“There’s not really a lot of other ways to build wealth,” he said. “As a city, it all begins with asking ourselves, do we want more people trying to go take jobs when there aren’t a ton of jobs in the city? Or, do we have to create the businesses in the city that would allow those jobs to exist for people to take? So, the reason entrepreneurship is so important is because as our economy experienced the vacancy through the decline of Kodak, Xerox and Bausch + Lomb, Rochester has to transition from being a ‘company town’ to a ‘town of companies.’ We want to be mini employers. And we know that the biggest employer of America’s citizens are small businesses.”

Dr. Campbell stressed adopting a collaborative approach is critical when cities consider entrepreneurial ecosystem-building. Previously, he said, Rochester’s entrepreneurial and business support services were fragmented and had operated in silos. Campbell began a yearlong undertaking engaging Rochester residents, business leaders and regional stakeholders in entrepreneurship and asset-building.

In April 2019, the Office of Community Wealth Building obtained $40,500 in City Accelerator grant funds to conduct three “undoing racism” workshops for city staff, community members, and local trainers. These workshops were essential to addressing the systemic barriers that hindered Rochester’s ecosystem efforts, Dr. Campbell said. The accelerator initiative helped city officials and other stakeholders gain the insights of minority and women business owners through surveys, focus groups and honest discussion.

“Since the needs of our primary markets are varied, our principal strategy for ensuring their satisfaction is meeting them where they are. This compels us to get to know them in authentic ways,” he said.

A grant from the JPMorgan Chase Foundation allowed the Office of Community Wealth Building to partner with SourceLink® in August 2019 to connect resources, collect and track impact data, and provide high-quality referrals for entrepreneurs within the Rochester and Finger Lakes region of New York.

In the summer of 2020, the Office of Community Wealth Building – in conjunction with the Rochester Institute of Technology’s Center for Urban Entrepreneurship, the Rochester Economic Development Corporation (REDCO), and the Business Insight Center at the Central Library of Rochester and Monroe County – officially launched Nexus i90, an online entrepreneurial ecosystem solution. It consists of SourceLink’s Resource Navigator®; a shared events calendar; a storytelling platform; vital business content for starting, growing and funding local businesses; and a robust client relationship management data system for measuring collective impact and shared success.

Dr. Campbell said, “We’ve never been able to say, ‘What are the top two or three barriers or challenges for any given entrepreneur? What are the top goals and aspirations of an entrepreneur? What are the shortcomings in terms of the skill set knowledge? How many meetings are held before they achieve their goals? What percentage isn’t achieving their goals? How much capital are these businesses getting when they’re awarded grants and loans?’ Now we can answer those questions by just looking at the data and producing an annual report.”

He noted the Office of Community Wealth Building will continue to play the role of convener, engaging and collaborating with key stakeholder groups in even more robust ways so the program remains sustainable. For example, the team will establish regular meetings of issue- and affinity-based advisory councils to inform ongoing initiatives and ensure mission alignment.

“When I came on as director, one of the first things I asked was, ‘How do we make this sustainable? So, as we’ve rolled out projects, we’ve recruited partners from the nonprofit sector and other areas to conceptualize, administer and roll out these programs,” Dr. Campbell said.

He’s also discussed the possibility of the Office of Community Wealth Building being absorbed into the Department of Neighborhood and Business Development to ensure its continuity beyond Mayor Warren’s tenure. Another option being considered is strategic planning activities for all business-serving activities to eventually be absorbed by one of the key partners, like the Rochester Economic Development Corporation, since it’s a separate organization from the city.

Such a plan, Dr. Campbell said, “gives the Rochester Office of Community Wealth Building a continuity buffer.”


Baltimore, Maryland: Creating Connections and Continuity

A few hundred miles directly south of Rochester, officials in the City of Baltimore, Maryland, also began to consider the importance of entrepreneurship to economic development and job creation.

“The small business community is the greatest driver for jobs,” said Paul Taylor, the director of the Mayor’s Office of Minority and Women-Owned Business Development, which takes the lead role in the city’s provider network. “Even though it’s always nice when a large corporation moves into the city, it’s really at the most basic level, the small-business owner, the store owner, the professional service providers who are driving the job creation and our economy. It’s critical for us to focus on that.”

But city officials grappled with how to connect their various entrepreneurial resource organizations with each other and with entrepreneurs.

Although the city recognized that chambers and other community-based organizations were serving as business resources, there was a lack of a coordinated network uniting these organizations under a “singular purpose for why we exist and what are we are doing,” said Taylor.

According to Taylor, the mayor’s office was the perfect place for starting to build the network of support for those resource providers.

“It’s the place where we can convene the conversation,” he said. “We can make sure that we illuminate the resources that are available, can measure performance, and understand where we need to tweak resources or improve our response to small businesses.”

Once the decision was made to develop a formal network from the “loosely operating organizations” the Office of Minority and Women-Owned Business Development engaged SourceLink. “Beginning in 2016, we met with our 137 organizations – whether they were city, state or nonprofits that were providing technical assistance – to identify the services they provide. That also organically started those organizations talking to each other and connecting with each other.” Soon following this, Baltimore SourceLink was launched.

Taylor also recognized that when an elected official leads the charge for an entrepreneurship initiative, there’s always a danger of the initiative fizzling if the successor isn’t on board. To keep the continuity intact during mayoral transitions, he and others sat down with the mayor who initiated the program and the incoming mayor to explain why Baltimore SourceLink is integral to sustaining the infrastructure for a vibrant entrepreneurial ecosystem.

“It’s important that you bring the new administration into it so they understand the value and the importance of such a resource. Every year we invest in licensing SourceLink, but that is pennies compared to the benefit it brings for ensuring resources reach the small business community,” Taylor said.

What’s more, the data tracking the SourceLink model provides the Office with measurable performance: “We were able to show the mayors and their staff not just anecdotal information but actual business outcomes and progress.”

For example, Taylor said, “Using our network database, we were able to see how many referrals occurred. Last year, there were over 600 referral connections made. We’re also able to see which classes are being promoted by different organizations within our network, how many people attended, and share the outreach and response we’re getting from the business community.”

Taylor cautions that once a network is up and running, additional effort is necessary to keep it relevant and growing. The City of Baltimore has maintained the network’s visibility in the community through social media and coordinating marketing with key partners like the Baltimore Development Corporation, mayor’s office and city council.

He advised that to keep both aspiring and established entrepreneurs engaged with the resource organizations, cities must commit to keeping the information in their network updated.

“Making sure we’re consistent in updating information is one reason people return to our network for trusted help. The other thing we’re able to see, by looking at analytics, is what they’re coming to find. We learned, for example, they spent time looking for permits. So, we were able to say, ‘either our permitting system in Baltimore is not as good as it should be, or people get lost because it’s not a very logical system. So, we were able to help them by focusing more on that. We’re able in real time to match the relevancy of the information we’re providing and optimize it so small businesses can reach the things they’re looking for.”

Cities that overlook entrepreneurs in their economic development plan are missing a key component for driving growth in their communities. Having elected officials – especially mayors – on board to carry the banner for such initiatives is also important for ensuring buy-in among diverse stakeholders.

Interested in learning about city-led entrepreneurship development initiatives? Contact us at [email protected].