You don’t need to put down roots in New York or Silicon Valley to thrive in business today. John Dearborn, president of the nonprofit VC JumpStart Inc., offers three tips for maximizing resources in a mid-sized city.
UNITED STATES
OF INNOVATION
New Ideas, New Markets, New Insights
It used to be, if you were serious about starting a tech company, you went to Silicon Valley. But emerging entrepreneurial hubs around the country are giving startups new options. In this series, we talk to leading figures in those communities about what makes them tick.
CLICK HERE for pockets of innovation in other U.S. cities.
Nowadays, anyone can start a business anywhere and thrive. We’ve seen it in all corners of the country, from mobile-app makers in Durham, North Carolina, to iPad kiosk manufacturers in Salt Lake City, Utah. And yet. Nothing quite compares to bumping into top VC execs at Duane Reade and taking b-school classes at Stanford alongside guys from Google and YouTube. Innovation might abound across the United States, but in the resources department, New York and Silicon Valley still play lead.
That’s not to suggest that smaller cities aren’t rife with incubators, investors, and other support needed to succeed in business. It’s just that sometimes it’s hard to know where to look. Here, John Dearborn, president of the Cleveland-based nonprofit VC firm JumpStart Inc., shares three tips for maximizing resources in mid-sized cities.
Let us now praise older men (and women).
“When you think of startups, you tend to think of what the popular press covers, Facebook and really young firms,” Dearborn says. But focusing on sexy young things can miss an enormous swath of potential innovators with experience under their belts. JumpStart’s average applicant is in his mid-40s and out of traditional industry--not necessarily your hip-innovator profile, but definitely undervalued.
Older workers bring not just experience with them, they bring a whole network of people.Many of these older entrepreneurs bring ideas that were the results of recreational tinkering, either at the lab or the factory: useful innovations their bosses deemed either too small-potatoes or too off-industry to pursue, Dearborn says. Others walk in the door with their early-retirement package in hand, looking to fund phase two of their careers. “Older workers bring not just experience with them, they bring a whole network of people” to realize the idea, Dearborn says.
Need investors? Look under a rock.
A frequent complaint among entrepreneurs in smaller markets is lack of investment dollars. It's not unwarranted: If you live in Grand Rapids or Greenville or Bismarck, you won’t be rubbing shoulders with the VC big boys. But that shouldn’t stop you. Many mid-sized cities are teeming with investors, if you know where to look.
Northeast Ohio, for instance, has a plethora of community investment funds, microlenders, and private-equity and accelerator funds, bolstered by statewide resources like Ohio Capital Fund and Ohio Third Frontier Fund. Goldman Sachs just contributed $15 million in capital to Cleveland via its 10,000 Small Businesses initiative. Ohio also has the nation’s largest angel funds (Ohio TechAngels Fund in Columbus, North Coast Angel in Cleveland) according to the Angel Capital Association. Collectively JumpStart calculates Ohio-based organizations like these have offered $1 billion in startup capital in the last five years--that’s since the Great Recession hit. Not too shabby for a Rust Belt state in post-deindustrialized America.
Repurpose old industries.
Manufacturing is back in vogue, though obviously not on the scale it once was. That has created opportunities for many mid-sized cities to adapt existing industrial facilities and skilled workers to the demands of the 21st century. “Say you’re a startup making widgets,” Dearborn says. “You need to get that widget prototyped, get your early runs done, iterate a dozen times to perfect it. You want to do all that close to home. You’ll worry about the per-unit cost later.”
Manufacturing is back in vogue.In Cleveland, clean-tech firms like Echogen Power Systems commercialize waste-heat from factories and other facilities into re-useable energy, while ABSMaterials cleans up volatile industrial spills with “nanosands” and reactive glass products. Firms like these aim to benefit when China’s traditional manufacturing hits the same speed bumps ours once did.
A more offbeat example of repurposed manufacturing skills is Cleveland Whiskey, a bourbon distillery that accelerates production times, reducing costs and still yielded a mellow, smooth-drinkin’ product. Its patent-pending process borrows from its founder’s experience in engineering and thermodynamics--but ultimately stems from bootleg liquors he made in the Navy using sea-water condensers.
“I love the normalcy of Cleveland. There’s regular people there.” That back-handed praise (from the king of normal himself, Drew Carey) captures the way your average bi-coastal snob feels about, well, pretty much any city that isn’t New York, San Francisco or L.A. But the rewards for entrepreneurs in smaller cities can be manifold: lower operating costs, fewer distractions, and heck, maybe even a happier life. America's innovative streak runs much deeper than its coast-centric media image; it takes a true visionary to mine it.
Follow the conversation on Twitter using the tag #USInnovation.
[Image: Flickr user Xiaofan Luo]