Startup Communities: Building an Entrepreneurial Ecosystem in Your City

by Brad Feld

During the past three decades, startups in the United States have created nearly 40 million American jobs, all the net job creation in the country over that period. As we recover from a deep recession, our ability to innovate, build iconic companies, put people back to work, and inspire the world will once again be determined by whether entrepreneurs continue taking chances on a dream to start a business. After all, the story of America has always been the story of entrepreneurs going against the grain to imagine a better tomorrow.

Startup America initiative,

“Entrepreneurs embody the promise of America: the idea that if you have a good idea and are willing to work hard and see it through, you can succeed in this country. And in fulfilling this promise, entrepreneurs also play a critical role in expanding our economy and creating jobs.”

cities—any locality in the United States can build a vibrant startup community if it strategically brings together the key partners who support growth. In fact, the barriers to entry have never been lower for many sectors across the economy.

As we emerge from a difficult period in our economic history, we once again turn to entrepreneurs to lead the way to a brighter tomorrow. These startups, the brave men and women behind them, and the many mentors who complement their efforts form the backbone of the startup ecosystem.

In the fall of 2008 the world financial markets were rocked in an unprecedented way. The global financial crisis that ensued created massive uncertainty across our society and resulted in extraordinary actions by governments and companies throughout the world. In a parallel universe, something else was happening. Entrepreneurial companies such as Facebook, Twitter, LinkedIn, and Zynga were growing at an equally unprecedented rate. While these companies, and many others, were emerging from Silicon Valley, communities across the country were brimming with startup activity. My hometown of Boulder had become known throughout the world as a great startup community, but cities like New York, Boston, Seattle, Portland, Chicago, and Austin were also seen as nexuses of startup activity.

As the macroeconomic impact of the financial crisis was felt throughout 2009 and 2010 and society tried to readjust to the new economic reality and constraints generated by the collapse of many traditional and well-established institutions, the startups kept being born, growing, and adding jobs.

Suddenly entrepreneurship was at the forefront of the discussion. While entrepreneurs continued to toil away building their companies from scratch, it became clear that entrepreneurship was a global theme—one that impacted every geography, industry, market, and demographic throughout the world. Overnight everyone started talking about entrepreneurship as the way to revitalize our global economy.

All this activity has created an enormous amount of noise that runs the risk of drowning out the powerful signal that is entrepreneurship. It won’t matter in the long run, as entrepreneurs are going to do what they do, which is create new things (products, companies, jobs, and industries) out of nothing, but it occurred to me that there were powerful lessons that we could learn from the experience I’ve had in Boulder over the past 16 years.

that you can create a long-term, vibrant, sustainable startup community in any city in the world, but it’s hard and takes the right kind of philosophy, approach, leadership, and dedication over a long period of time.

Startup communities consist of many more participants than just entrepreneurs. Government, universities, investors, mentors, service providers, and large companies play key roles in the development of a startup community.

Startups are at the core of everything we do. An individual’s life is a startup that begins at birth. Every city was once a startup, as was every company, every institution, and every project. As humans, we are wired to start things.

Today, we are in the midst of a massive shift from the hierarchical society that has dominated the industrial era to a networked society that has been emergent throughout the information era. The Internet is ushering in a postinformation era, one in which the machines have already taken over and are waiting patiently for us to catch up with them. This postinformation era is one in which man and machine are interwoven.

In this world, the network dominates in both the online and the physical world. Throughout the network are nodes, each of which began as a startup.

Nodes are continually emerging, and a rigid, top-down hierarchy no longer dominates. The energy, activity, and innovation in society is diffused across the network and concentrated in unexpected places that often didn’t exist before.

In the physical world, much of this energy, activity, and innovation occur in small geographic regions, which I call “startup communities.”

Academics

call them “cl...

These startup communities are appearing everywhere. They are no longer limited to historically well-known entrepreneurial regions and large cities such as Silicon Valley, Boston, New York, and Seattle. Startup communities

I’ll discuss a new approach to building a startup community, which I call the Boulder Thesis.

Boulder actually has five startup communities: tech (software/Internet), biotech, clean tech, natural foods, and lifestyles of health and sustainability (LOHAS).

These five startup communities exist in parallel universes. My time and expertise have been focused on the tech segment.

entrepreneurial density = (number of entrepreneurs + number of people working for startups or high growth companies)/adult population.

In 2011, Colorado ranked fourth in the country behind California, Massachusetts, and New York for seed/early-stage dollars invested into startup companies in the state.

Although there are not a lot of local venture capital (VC) investors active in Colorado, there are plenty of VCs from around the United States who view companies in Colorado as attractive to invest in, with many of these companies located in Boulder.

Finally, Boulder is an incredibly inclusive community.

the community is defined by a strong sense of collaboration and philosophy of “giving before you get.”

If you contribute, you are rewarded, often in ...

particularly intolerant of bad actors. If you aren’t sincere, constructive, and collaborative, the c...

was the result of a generation of entrepreneurs drawn to the region first by business necessity, who stayed by choice.

As I got to know Boulder better, I realized it was perfectly configured for the entrepreneurial revolution that took place around the first wave of the commercial Internet. It was a college town, full of smart, independently minded, and intellectually curious people.

“I have a friend who is starting an Internet company. Would you like to meet him?” I did! That person ended up being Andrew Currie, a local entrepreneur who was starting a business with Brian Makare that became Email Publishing, my first Boulder investment.

I discovered that there was a big divide in Boulder between the entrepreneurs and the investors. Many of the entrepreneurs I met didn’t have a lot of respect for the local investors, and as a result, there were a large number of bootstrapped companies.

The local investor options for these entrepreneurs were thin as there were only a few small VC firms and these investors tended to be highly selective about who they worked with, often preferring to work with entrepreneurs they’d worked with previously.

The newest generation of entrepreneurs who emerged in the mid-1990s had a fierce bias to ...

In 1996, I co-founded the Young Entrepreneurs Organization’s (YEO) Boulder

I was part of a group of a dozen entrepreneurs who were meeting monthly.

I put

a stake in the ground to organize the Boulder Internet companies and gathered as many founders as I could find at a restaurant in Boulder to discuss building a loose confederation of companies.

I made a huge emotional shift at that point and started looking forward instead of looking back. I was happy to be alive and realized that it was unlikely, no matter how messy my world got, that the work I was doing every day would kill me.

David Cohen

He presented me with an idea he called TechStars that resulted from his frustration as a nascent angel investor. He’d invested in a few companies, written his $25,000 or $50,000 check, and then felt very disconnected from the company he had just invested

He’d try to help the entrepreneurs, and sometimes he was able to, but often the entrepreneurs didn’t want help, didn’t know how to ask for help, or were just too busy to focus on engaging David.

So David came up with the idea of helping start a lot more companies by investing a small amount of money in 10 of them at a time, putting them through an intense 90-day program during which they worked closely with mentors and other angel investors to get their businesses to the next stage, at which point they’d be ready to raise a full

angel round. This was the core idea at the inception of TechStars.

experienced entrepreneurs, angels, lawyers, accountants, VCs, and senior members of startup teams, involved in helping these new companies get started.

“give before you get” mentality that leads to strong collaboration, and the broader

It’s my belief that Boulder is unique because the entrepreneurs and other participants in Boulder’s startup ecosystem have a greater sense of community than anywhere else in the country.

In Boulder, people are willing to work harder and devote a greater amount of time to help startups succeed with no expectations for reward.

The biggest observation I can offer from having a front row seat to seeing Boulder becoming one of the hottest startup markets in the United States over the last decade is that there was no strategic plan. Government had little to do with it and there weren’t committees wading in bureaucratic quicksand wasting hundreds of hours of people’s time strategizing about how to create more startups. Boulder caught fire because a few dozen entrepreneurs believed in their hearts that a rising tide lifts all boats and they derived great pleasure from helping make that happen.