Inside fDi: serious about start-ups? Then cut the coffee shops
Cities the world over are scrambling to attract start-ups in the hope that they'll be able to crown themselves 'the next Silicon Valley'. However, Courtney Fingar advises that no amount of chic coffee shops and quirky art galleries will have the same effect as the decidedly unsexy trinity of financial backing, the right technology and minimal red tape.
From what I can tell, the obsession with attracting entrepreneurs started a decade ago, or maybe less. Before that, investment promotion agencies were of the 'size matters' mentality: the bigger the company and the bigger the investment, the better. Most of these agencies were geared towards trying to land inward investment projects from major multinational companies. The economic developer’s dream was cutting the ribbon on a shiny new greenfield facility bearing the logo of a world-famous company. SMEs were usually lost in the fray and start-ups were considered too small to count.
Then economic developers and their political paymasters woke up to the fact that organically grown companies needed nurturing too, and if fed properly could grow into job creators in their own right. Eyeing Silicon Valley with undisguised envy, every city with a few software developers declared itself a tech hub, and a mad scramble to create city-centres cool enough to attract trendy young entrepreneurs began (“If we build quirky coffee shops, they will come!”). Some cities are clearly doing better than others on this score, but the shift in focus is notable.
Entrepreneurs should welcome this new attention and appreciation for their potential contributions to the economies in which they operate. Yet beneath all the hype and the proclamations of start-up love, what do entrepreneurs really need to succeed? Our cover story explores precisely this. I have some anecdotal experience too, as entrepreneurship is a subject very close to home for me: I am married to an entrepreneur who runs start-up companies in three countries.
I could probably write a book on the ups and downs up of international entrepreneurship and the daily dramas involving patents, product registrations, public tenders and all the rest (a real page-turner) but, just to synthesise, from my up-close view of what innovative start-ups need in their very earliest stages, three crucial things matter above all: money, science and regulation. It’s not a sexy trio but it is the truth. An entrepreneur with a good idea needs funding to get going (and to keep going); the right technology and the researchers or scientists to bring it to fruition; and a path to market without too many bureaucratic barriers. Everything else is just a distraction.
The locations that want to be truly supportive to start-ups and to appeal to global entrepreneurs need to focus on the hard factors that can make or break a fledgling business. Coffee shops, cafes and retro-fitted exposed-brick office spaces don’t factor in, I’m afraid.
Courtney Fingar is editor-in-chief of fDi Magazine. Email: firstname.lastname@example.org
The fDi Report 2016
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