You might know that your hometown is a great place to do business, but to investors and entrepreneurs across the country, it’s just another city with big Silicon Valley dreams. Generally, it takes several successful public offerings or high-priced exits to put a city on the map. What’s a second or third-tier market to do while it waits to reach those benchmarks?
For some, it’s time to get creative. Check out the attention-grabbing ways these three cities are convincing entrepreneurs to set up shop in their neighborhood, while also working to address gaps in their startup ecosystem.
Buffalo, New York
In 2014, Governor Andrew Cuomo launched the “Buffalo Billion” initiative, pledging to commit $1 billion to various endeavors to spur economic growth in Buffalo, New York. One of those initiatives is the 43North competition, designed to convince entrepreneurs across the country to start up in Buffalo.
While the results from the Buffalo Billion initiative have drawn mixed reviews, there’s no denying that the benefits offered by the 43North competition are enticing for cash-strapped entrepreneurs: the grand prize winners receive $1 million in funding, free space in an incubator for a year, and mentorship from various executives in the Buffalo business community (43North does take some equity in the grand prize winners and runners-up). Winners are also eligible to apply to the StartupNY program, which gives companies 10 years of freedom from New York state corporate taxes, and their employees 10 years of freedom from personal income taxes (if they stay in the state for 10 years). Runners-up can receive prize money ranging from $300,000 to $650,000. Startups must commit to doing business for at least a year in Buffalo.
Now currently accepting its fourth round of applicants, more than half of the 21 companies who have finished the program have stayed in the Western New York area, according to Peter Burakowski, the marketing director for 43North.
“We’re very transparent about what we [Buffalo] are strong at, and what other communities are better at,” Burakowski says. “When you don’t find alignment [with applicants], it’s important to know that early on.”
When Jill Ford moved from San Francisco to become the Head of Innovation and entrepreneurship for the City of Detroit, she encountered a puzzling problem. Many of the city’s entrepreneurs struggled to find commercial office space to lease. After doing some research, Ford found out that many of the owners of commercial buildings lived outside of Detroit, making it difficult for aspiring tenants to reach them. So she created the Motor City Match program. Aspiring entrepreneurs can apply to receive one of four types of prizes–a free business planning class if all they have is an idea, assistance in finding a space for their business, help finding an architect to redesign the space, or up to $100,000 if they have an office space ready to go. Launched in 2015, the Motor City Match is funded in part by the City of Detroit and the Department of Housing and Urban Development. The city goes through a new round of applications every three months. In its two year history, the Motor City Match has worked with 572 businesses, and has doled out $2.9 million in grants.
“It really helped us shift up the pipeline in terms of business development,” Ford previously told Inc.
Albuquerque, New Mexico
Many second- and third-tier markets find that recruiting more startups to their cities often requires busting pre-conceived notions about their towns. Take Albuquerque accelerator ABQid, which came up with an attention-grabbing way to show national entrepreneurs and investors that there’s more to New Mexico than deserts and “Breaking Bad.” For the past three years, ABQid has hosted a Ski Lift Pitch contest at the Taos Ski Valley ski resort. Each investor is paired up with an entrepreneur, who then has to deliver a startup pitch over the course of an approximately 10-minute ski lift ride. Now in its third year, the first place winner takes home $10,000 for their startup. At this year’s competition, judges traveled to attend the competition from nearby Arizona, Utah, and Colorado, while startups came from as far away as Vermont.
The pitch contest may not necessarily lead to more companies staying put permanently in Albuquerque, but that’s not necessarily the primary goal. “What we’re doing is we’re getting people here who would never come to New Mexico and look at investing in companies otherwise,” Gary Oppedahl, the economic development director for the city of Albuquerque, told NPR in a profile piece on the competition.