Startup ecosystems are the key to growing a vibrant regional economy. Time and time again, these clusters of talent and science drive job creation, new business formation, and attract investment capital. Ultimately, these are the elusive ingredients that lead to greater prosperity and equity in our communities. The Amazon HQ2 opportunity was a wakeup call for many business and civic leaders. Despite all the applications from smaller and mid-size cities, Amazon chose to invest in two metro superstars: New York and Washington, D.C (and the company wound up pulling out of plans for the New York headquarters). That result was an indication that the traditional economic development strategy of deploying taxpayer dollars as subsidies and incentives in exchange for corporate relocations is a waste and needs to be replaced by an intensive focus on public investment in startup ecosystem infrastructure.
How to Attract Startups and Tech Companies to a City Without Relying on Tax Breaks
Instead of simply seeking tax breaks in exchange for jobs or providing donations to a powerful politician’s favorite initiative, business leaders interested in having a civic impact should instead roll up their sleeves and collaborate with political leaders to invest in basic infrastructure and leverage diverse talent to help foster vibrant ecosystems. Startup communities and ecosystems are the key. They are more vibrant and widespread than ever, and their contributions to economic growth and job creation are well-documented. Less well-documented are what actions the public sector can undertake to promote the growth of these communities – and what business leaders can do to encourage these actions. The authors propose three areas of focus where civic and business leaders can leverage underutilized community resources and drive economic growth: First, invest in institutions of higher education as engines of innovation and job creation, particularly leveraging their ability to attract international talent. Second, foster diverse communities, utilizing untapped talent to drive higher economic returns as well as greater equity. Third, build basic infrastructure to ensure future growth and to retain a highly-trained local workforce.