St. Louis: A Model For Aspiring Tech Hubs
ENTREPRENEURS | 7/25/2013
Only a few U.S. cities can claim to be technology meccas. Silicon Valley, Boston, Seattle, and — recently — New York City are responsible for the lion’s share of successful tech startups in the U.S., but they can no longer stake a sole claim. New tech hubs, like St. Louis, are emerging. St. Louis’ rise can serve as a model for other would-be hubs.
I started my company six years ago in St. Louis. I remember the challenge of finding talented local personnel for key roles like Ruby on Rails developer and search engine optimization consultant. Fortunately, the St. Louis entrepreneurial ecosystem has come a long way. The city recently birthed a host of impressive venture-backed tech companies such as Appistry, CrowdSource, LockerDome, and Bonfyre. And government leaders recently announced a plan to raise $100 million over five years from local companies, investors, and foundations to help entrepreneurs start and grow their businesses in St. Louis.
I believe there are a few key reasons why St. Louis (and cities like it) has been successful in fostering tech entrepreneurship. When smaller cities play to their strengths while simultaneously working to shore up their deficiencies, they can attract talented entrepreneurs and help them succeed. These contributing success factors include:
Reduced costs: Thanks to cloud servers and Web services that reduce upfront capital requirements, it’s less expensive than ever for people to launch a digital company anywhere. Not only that, St. Louis has an incredibly low cost of living. These two factors make it inexpensive to start a company here.
Local support from universities: In our city, Washington University in St. Louis and Saint Louis University offer nationally respected entrepreneurship programs. The students and graduates are highly talented and knowledgeable, and the program’s incubators and accelerators are yielding high-potential startups. I was a student of the WashU program when I formed Varsity Tutors, and I continue to marvel at the advances and achievements of my fellow graduates.
Growth of local VC firms: Several early-stage tech VC firms, like Cultivation Capital, have opened their doors, complementing the established later-stage venture and private equity firms already in operation here. This gives local investors the chance to reinvest in their hometown communities.
Emergence of wealthy angels: During the past 20 years, a huge number of St. Louis-based Fortune 500 companies have been acquired, including Anheuser-Busch, McDonnell Douglas, Trans World Airlines, and Ralcorp. Many executives at these companies experienced massive buyouts, and some are looking to reinvest those windfall profits into local startups. My hope is that today’s entrepreneurs in St. Louis will choose to reinvest their capital and create a sustainable ecosystem like the ones seen in Silicon Valley, Boston, and Seattle.
Mentoring assistance from entrepreneurs: It’s crucial for business owners who’ve experienced substantial success to give back to their communities by mentoring up-and-coming entrepreneurs. This has been the backbone of Silicon Valley’s success, and St. Louis is starting to follow suit with several formal programs.
Attracting entrepreneurial talent: Local St. Louis accelerators are wisely offering modest prizes and grants to companies that move their operations. Arch Grants and Capital Innovators have both been successful in convincing entrepreneurs to relocate to St. Louis for $50,000 worth of funding. The quality of each of their respective classes of startups continues to improve, elevating the local talent level for an incredibly modest investment per company.
Emphasizing education: New York City recently began highlighting the importance of computer science to students at a very young age. This is a prime example of how to integrate real-world, employable skills into the educational culture of a city. My hope is that St. Louis officials take note of Mayor Bloomberg’s efforts in this regard.
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