Can a city regain its startup mojo with government’s help?

Maria Teresa Cometto —  June 12, 2013 — Leave a comment

“It isn’t clear how cities can best foster entrepreneurship—or even whether it’s possible to do so. Even success stories haven’t necessarily been the result of government policies, Harvard economist Edward Glaeser says -. “It’s not at all obvious that governments know how to promote entrepreneurship. The theory is sound. Whether or not they’re actually going to be able to produce this is much less sure.”

It is a comment about a recent trend: “cities and states across America that have established venture funds, tax incentives and other programs meant to encourage new businesses; such efforts have been especially popular in cities such as Pittsburgh, Detroit and Cleveland that have seen their industrial economies decline in recent decades” as reported today on the Wall Street Journal in a very interesting article about St. Louis trying to “Regain Its Startup Mojo”. There, “a coalition of local leaders from both the public and private sectors (…)  plans to raise $100 million over five years to invest in and support local startups.”

“The project, a joint effort by the city and county governments and several private groups, aims to raise private money from local companies, investors and foundations to provide firms with not just seed funding (…) but also with enough capital to stay in the city as they expand.”

Is it the right approach? Will it be successful? It’s different from the Bloomberg administration, as we explained in “Tech and the City”: in New York the City has not invested directly in startups, but it has just facilitated their lives. Anyway we wish all the best to St. Louis startups, among which there is LockerDome, “a sports-themed social network – the WSJ writes – that recently raised $6 million in venture capital from, among others, Jim McKelvey, a St. Louis native who co-founded mobile-payments company Square Inc. In a mark of the city’s progress, LockerDome’s new backers are letting the company stay in St. Louis rather than move to Silicon Valley, something both the firm and its investors say once would have been unlikely.”

Maria Teresa Cometto