What makes a good start-up city?

Silicon Valley may be the tech mecca that birthed a generation of innovation, but seeds of the future are being planted across the globe in cities like Austin, Toronto, Seattle, Shanghai and beyond.

What is it that these cities have that lends themselves to being innovative start-up hubs?

Early internet and tech pioneers took advantage of “low-hanging fruit” in the Valley, occupying lucrative niches like search, social and e-commerce. But by the time later-comers like Pinterest came along, the pickings had gotten slimmer.

Fortunately for the tech entrepreneurs of tomorrow, the options aren’t limited to Silicon Valley to find funding and a community. Many other cities with lively and relevant tech scenes also have unique cultures to offer.

Look at Austin—it’s home to over 5,500 start-ups, as well as big players like Google, Facebook and Apple. Similar to the Bay Area, Austin is loaded with educated millennials who embrace the city’s vibrant scene—but at a lower cost of living. Nearly half of San Francisco’s, in fact.

Some of the most promising new tech towns have a strong focus on entrepreneurial education, a culture that encourages diversity and local policies that support both.

Educating the next generation

The ambition behind education is to solve tomorrow’s problems, right?

What’s necessary to create a population of problem-solvers isn’t an evolution or reform of education, it’s a revolution in what’s taught and how it’s taught.

Open-mindedness, critical thinking, challenging the status-quo, iterating fast and trying different things, being data-driven—these are qualities and values we commonly see demonstrated in tech entrepreneurship. Fostering that sort of work ethic and way of thinking as a culture starts in a classroom.

In Canada, for example, policy makers recognized this and started to place a strong focus on entrepreneurial education in order to create and attract top talent. The University of Toronto now offers students a growing ecosystem of entrepreneurial support, in the form of commercialization services and incubation programs.

The University also takes care to double down on areas of technology that are driving the next frontier, like AI at the moment.

Education is vital to innovation. By committing to entrepreneurship and experiential ed, cities can develop more ripe breeding grounds for talent.

Diversity is fundamental to innovation

If education is vital to innovation, diversity is fundamental.

Being the center of tech for decades, Silicon Valley has lent itself to a certain degree of homogeneity. And one of the biggest threats to innovation is predictability.

As blockchain engineer Preethi Kasireddy put it in her open letter about why she left the start-up capital: “Silicon Valley is paradoxically a predictable place founded on the idea of being unpredictable.”

This notion isn’t just about Silicon Valley, but rather the industry as a whole.

According to the US Census Bureau, the US is well on its way to becoming a majority-minority nation. But that demographic shift isn’t reflected in the country’s tech and high-opportunity sectors.

Diversity reports from behemoth corporations in recent years have shown that despite big talk, the percentage of minorities working in the industry is still astoundingly low. When Google reported in 2016 that its workforce is only 3% Hispanic and 2% African-American—unchanged since their first report in 2014—the tech giant was widely criticized. Similarly to Facebook, who reported about the same numbers this year.

Suddenly the industry’s much-lauded diversity efforts seemed (and the numbers proved) to be lip service. If the biggest names in the game weren’t practicing what they were preaching, how could smaller businesses with less resources bridge their own diversity gaps?

The industry has to build with the perspectives of all that it serves. Just about everyone in the developed world uses technology, so everyone should be represented in the creation of that technology. Diversified pools of opinion are what drive powerful teams that tackle real world problems.

Chicago is a city that’s come into its own as a global start-up hub. In 2017, the city even witnessed record student interest in its thriving tech sector.

But the key to Chicago’s future is what has always been its strength: a rich culture of diversity in people, industries and ideas.

Jason VandeBoom, CEO of Chicago start-up, ActiveCampaign, has explained Chicago’s draw this way: “It helps that we have a thriving incubator culture, where people from a diverse range of backgrounds can come and change career paths, nurture new talents and transform into tech professionals. A former painter, math teacher, video editor and a limo driver are all now highly talented developers at ActiveCampaign. This diversity of unique skill sets, thoughts and experiences has not only bolstered the quality of our product, it’s made our culture what it is.”

Some diversity backlash is still stinging in Silicon Valley, and entrepreneurs are more thoughtfully considering where they set up shop. It’s become increasingly important for cities to demonstrate an appreciation for diversifying.

A more entrepreneur-friendly destination

A city establishing itself as a beacon of innovation and entrepreneurship is a long-term play. The work doesn’t stop at learning opportunities and diversity efforts. Committing a culture to this kind of growth and transformation comes down to programs and policies that hold a city accountable to the promise of opportunity.

AKA, funding and accessibility—cities need to put their money where their mouth is.

Washington State’s FundLocal program has Seattle business owners bypassing old-school lenders in favor of crowdfunding. Likewise, in Toronto, Prime Minister Trudeau has actively developed policies that foster values around opportunity, announcing fast-track visas for high-skilled workers in 2017.

With proposals from the highest seat in the country for deep cuts in innovation programs, it’s becoming increasingly important for local governments to advocate for and implement policies at a regional level.

Policy advocacy isn’t easy work, but tax credits, grants, loans—think of them as tools for young leaders.

Entrepreneurs are made, not born. It’s the DNA of a city and the opportunities it cultivates that sets the foundation for innovation.

The diversity of tech across the country stems from one common need: Making life better for the future.

If the tech industry, one of the most high-opportunity sectors in the US, can set the standard for progressive and accessible change, it may have a positive ripple effect on everything from culture to economy.  

Silicon Valley was an entrepreneurial north star for decades, but it’s time to admit that it isn’t the only place that world-changing technology and engineering is happening.

It was the perfect place to take risks. And it created a future. Now that future is limitless.