America has long celebrated the entrepreneur. The dreamer and the doer. The builder of new technologies and the breaker of orthodoxies. But over time, the image of who that entrepreneur is and where he or she lives and works has narrowed in focus. Last year, more than three-quarters of venture capital went to just three states: California, New York and Massachusetts. And many of our most entrepreneurial graduates followed the money to those tech centers.
This concentration of wealth and talent has created a divide. Some people and places have benefited; many have been left behind. Some are understandably concerned that new technologies such as robotics, AI and driverless cars hollow out more middle class jobs.
But there are two principle reasons for optimism.
First, in this next era of innovation companies seeking to disrupt entrenched industries—agriculture, energy, transportation, healthcare—will head to places where those sectors and related expertise exist. Uber, for example, built their research lab in Pittsburgh to take advantage of Carnegie Mellon’s top-rated robotics program.
Second, this regionalization of entrepreneurship is fueled by improved access to capital, and the beginnings of a talent boomerang. The JOBS Act ushered in an era of crowdfunding, giving more entrepreneurs in more places a shot at the American Dream. And regional venture funds are fueling expansion. Meanwhile, people that grew up or went to school in cities like Omaha and Des Moines are returning, sensing an opportunity to be part of the startup renaissance at home.
I have seen this migration in action. Incubators are supporting the next generation of entrepreneurs in places like Durham, North Carolina, where seven companies at the American Tobacco Campus’s tech hub had exits totaling $1.5 billion between 2013 and 2015. Schools are encouraging innovation in places like Salt Lake City, where the University of Utah’s Lassonde Center is a living and working community for the entrepreneurial-minded. And local leaders are pursuing policies to transform decaying neighborhoods into innovation hubs in places like Cincinnati, where the once-struggling Over-the-Rhine neighborhood is now a nascent startup scene.
This geographic diversity is vital to the future. Startups account for nearly all net new job creation. And they can become engines of economic growth in cities once reliant on other industries to provide prosperity. The communities they form, the talent they attract, and the innovations they pursue can transform cities and the lives of those who live in them.