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The Changing Face of Startups

By | 04.30.13

The Changing Face of Startups

The economic downturn has been challenging for small business, and a shift is occurring with entrepreneurs leaving big business and tech cities and growing economies elsewhere.

A Manhattan digital business director turned a calendar app into a business in his hometown of Detroit, far away from popular tech hub, Silicon Valley. Greg Schwartz, founder of UpTo says, “Like so many others, I left Detroit during a massive brain drain. But I’d been hearing a lot about what was happening here, and when I thought about this being where my family was and looked at the cost of living and doing business, I came back.” UpTo secured $2.3 million. “I didn’t believe it at first, but there is access to capital here and incredible talent resources from the Michigan universities.”

In response to the significant downturn in Milwaukee’s manufacturing industry, an American Express OPEN-commissioned project, headed by Daniel Isenberg, is growing new and existing businesses in Wisconsin cities experiencing what he describes as a strong “sense of pain, frustration, and urgency and a strong, strong desire to change.” While “Silicon Valley is really interesting” … it is not “the standard or model to be emulated. Somehow there’s the concept that if you’re not Silicon Valley, you’re not entrepreneurial, and I think that’s wrong,” he says.

A Google Australia-commissioned report by Pricewaterhouse Coopers says Australia could see 5,600 new technology startups. Success, says the report, would be AU$200 million in revenue in year eight, a lofty goal, some say. Not so, says Alan Noble, Google Australia’s engineering director. This is an achievable target with the startup sector contributing greater numbers “…if we basically can sustain this momentum and grow the community. It’s by no means an upper bound.”

Long-time Washington, D.C. technical writer, Robert Mandel, returned to his hometown, Chicago, securing funding for government acronym database, Govlish.com, which will be up and running this year. “A lot of the investors here are not necessarily focused on technology and are looking at other areas, like agriculture,” says Mandel. Logan LaHive, founder and chief executive of Belly, which creates digital loyalty programs for businesses, says, “The reputation is that Chicago investors are more practical and grounded, with a Midwest mentality where they’re looking for established revenue growth and noticeable traction.” LaHive moved to Chicago from San Francisco in 2011; Belly is now 100 employees and 5,000 customers strong.

Tim Williamson is easing the way for New Orleans entrepreneurs after spending more than 10 years in Manhattan’s financial district. “Our parents all said to get out of here. There was no opportunity, no jobs, high crime, and the education system was the worst in the country,” he explains. In 2002, he and other returnees funded nonprofit, Idea Village. “The day after Katrina happened, everyone became an entrepreneur. They all had to restart their businesses and rebuild their homes with limited resources,” says Williamson. During Idea Village’s New Orleans Entrepreneur Week, 51 entrepreneurs collaborated on strategic consulting sessions and a pitch fest. In the prior nine months, Idea Village helped 975 start-ups obtain consulting, funding, and support from corporations, mentors, business experts, and investors.

Sources

Klein, Karen E.  “Struggling Cities from Detroit to New Orleans See Startups as Saviors”. Bloomberg Businessweek. 4/18/13.

Lee, Michael. “Startups could contribute $109bn to economy by 2033: PwC“. ZDNet. 4/22/13.

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