The Small Town Advantage: How to build a small entrepreneurship ecosystem
About half of the world’s urban population lives in cities with under 100,000 inhabitants, but when it comes to entrepreneurial ecosystem research, smaller cities are often ignored. And yet, small towns may offer more relevant insights for cities trying to develop entrepreneurial ecosystems at an earlier stage than the larger ecosystems of megacities. In fact, the entirety of the Bay Area’s ecosystem grew out of Palo Alto, a town of about 65,000 inhabitants; Boulder, the other poster child of successful entrepreneurship networks in Colorado, has only recently reached the 100,000 level.
Rather than forcing a small city to become the next Silicon Valley, a conceptual paper by Philip T. Roundy pushes for more research on “small town” entrepreneurial ecosystems – ecosystems in cities with populations under 250,000. His paper suggests strategies for local stakeholders to overcome the challenges they typically face by leveraging their own local advantages.
Small towns, of course, have smaller entrepreneurial networks: they have fewer experts and role models to provide the resources that entrepreneurs need. On the flip side, their networks can be much denser with more tight-knit relationships, because members of these communities are likely to know each other from more than one setting.
Below are some examples of how this and other advantages can be leveraged.
1. Engage local entrepreneurs to become angel investors.
Small towns, which rarely have the eye of VCs and other institutional investors, can instead focus on building angel investor networks by training successful local business owners or other potential investors on the value and opportunities for local investment.
2. Help local entrepreneurs scale locally.
While markets in smaller cities may be smaller and less robust, this also means less competition, lower operating costs, and higher consumer loyalty – all of which can be leveraged to nurture local entrepreneurs, especially early stage ventures.
3. Leverage support organizations with already existing ties to the community.
Instead of setting up new accelerators or incubators, small towns can leverage existing industry associations or chambers of commerce – which already have strong ties to the ecosystem and industry – as early stage hubs for entrepreneurship.
4. Use lower costs of living to attract human capital.
Small towns can draw on human capital from outside the city and develop strategies to transfer these skills to the local population. They can attract human capital from outside the area by leveraging advantages like lower costs of living, lower operational costs and less congested transportation.
5. Promote the right role models in the community.
Rather than trying to force social norms that value risk-taking and individual success in cities where they are not very dominant, a more effective approach could be leveraging success stories that benefit the city or help “put it on the map”- especially in cities that have a strong sense of community. Elevate the stories entrepreneurs who not only became successful, but also shared their success through mentorship, angel investment, or other ways.
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Contributed by Maha AbdelAzim.