I was asked this past week, by someone in a very economically challenged city, how they can start something without the resources so many others have when starting out.
Data on this is more encouraging than the startup world wants to admit so the question drove me to want to help make sure everyone knows that financial circumstances aren’t actually much of a challenge. A 2020 study published in Business Horizons found that poverty is a circumstance, not an endemic characteristic, and that “although they confront more imposing obstacles, those in poverty are otherwise as capable as anyone else of starting a business.” The Goldwater Institute found that for every one percentage point increase in the number of entrepreneurs in a state, the poverty rate drops two percent. Follow that? Increase the number of entrepreneurs a measly 10% and poverty drops by 20%. Then we have research by Neil Lee and Andrés Rodríguez-Pose which confirmed that entrepreneurship is accessible everywhere and success brings measurable income increases for everyone; startups can sell beyond their immediate geography, which in a digital economy means virtually any software or services venture, generating income increases for the broader community, not just the founder.
But what I found in most of the research, notice, is really about how entrepreneurship in rural and underserved communities helps lift a community out of poverty. That’s not quite the same as the question asked of me, “how, when we don’t have the money?”
None of that research was conducted in Palo Alto. It was conducted in places that look a lot more like Arkansas, Mississippi, Louisiana, West Virginia, and Alabama. Like rural Appalachia and inner-city Detroit. Like Lagos, rural India, peripheral cities in Mexico, and the overlooked edges of Romania and Bulgaria. These are the places where these facts are most urgent, but having proven it matters, how?
Might it be true that there, counterintuitively, the conditions for building something new may be more favorable than they appear?
Article Highlights
The Cost of Building Has Effectively Hit Zero
Building a startup today requires a laptop and internet access. At minimum, both are available at most public libraries and many civic centers. AI is accelerating the cost drop dramatically; vibe coding, coined by Andrej Karpathy in early 2025, describes the practice of describing what you want in plain language and letting AI handle the technical implementation, the reality is that accessible, low-cost or free building tools have already existed for decades. Let’s clarify something here, that doesn’t have to mean coding software or web services. We’re also talking about building newsletters, websites, and tools to help grow. Those tools have reached a point where the gap between “I have an idea” or “I don’t know how” and “here is a working product” has collapsed from months to hours, and the cost has collapsed toward free.
Friends with zero software development experience are building in a weekend, at essentially no cost, what used to take teams and weeks. And doing that isn’t exceptional anymore. Sites like Bolt.new, Lovable, and Replit now generate entire applications (with databases, user authentication, payment integrations, and deployment), from a plain English description. Amjad Masad, CEO of Replit, has noted that “75% of Replit customers never write a single line of code.” Founders still get quotes from development agencies for half a million dollars to build something and that’s misleading everyone because no founder should ever be paying to get started! Moreso now, using AI tools, they validate the concept and get something to market that they can market and sell. That gap, between what building used to cost and what it costs now, disproportionately benefits people who never had access to expensive technical resources in the first place. Hire later, pay later, when proven. As a community, show it’s possible and let everyone try, because inspiring that it’s accessible overcomes that frustration that it isn’t.
A useful frame for understanding technology is that it is, at its core, the process of making things better, more affordable, and more accessible. What happens over time to every technology is commoditization; supply increases so much that the price falls through the floor. A 10-year-old laptop is worth almost nothing monetarily, yet it runs every tool described above. Smartphones a generation behind the current model are months from landfills despite being fully functional. WordPress, which is how this site was built roughly 25 years ago without any coding knowledge, was free then and remains free now. The negativity is what holds communities back, “Oh, that doesn’t really work,” or “that tech isn’t that capable,” is a mindset disregarding the fact that even if not now, it will be in 6 months; that, even if not perfect, people can accomplish more now than ever before. The trajectory of building costs has been pointing toward zero since the 1970s. For founders in places that couldn’t access expensive infrastructure before, that trajectory is not a problem, it’s becoming an advantage.
Isn’t the Absence of an Ecosystem a Problem?
The places that developed startup infrastructure early (the coworking spaces, the accelerators, the angel networks, the demo days) developed that because it was necessary at the time.
The cost of building was high, coordination was difficult, and distribution required physical proximity to customers and press. None of those constraints apply the same way anymore, and in some respects the communities that built heavy infrastructure around those old constraints are now dragging that infrastructure behind them like an anchor (the number of large space “startup hubs” that end up cannibalizing founders because they themselves can’t pay rent, is astounding); spending resources maintaining institutions that solved problems that no longer exist at the same scale.
A community in rural West Virginia or Lagos that hasn’t built that infrastructure yet isn’t behind, it’s unencumbered. The question isn’t how to replicate what Austin or Berlin did a decade ago; it’s how to build for the current cost structure, which looks radically different from the one that produced those ecosystems.
The SBA has documented that low-income areas are home to 2 out of every 9 workers but only 2 out of every 30 businesses with employees. That gap is not a capability gap, the research is clear that it isn’t, it is an information gap, a permission gap, and an ecosystem gap; the communities around those potential founders have not yet built the support structures that make the difference between a fragile early venture and one that survives long enough to scale. That is fixable, and it doesn’t require replicating Silicon Valley, it requires understanding what support structures actually matter now, not what mattered fifteen years ago.
The Capital Question Is the Wrong Question
Every conversation about startups in underserved communities eventually arrives at the capital question. “We can’t find investors. There’s no VC here. We need a seed fund.” This is the wrong frame, and it consistently leads communities toward the wrong solutions. Heck, speaking with every city, they tell me they are “struggling with attracting capital” but what they’re really saying is, “our founders here are saying they can’t raise capital, so we’re deciding that the issue is a lack of capital.”
No one is pointing out that they’re wrong.
Both the founders and the local leaders are wrong. Founders saying they can’t find funding generally fall in the camp of thinking they need funding because they don’t know what to do, evident in the fact that they aren’t attracting it. Cities saying they need to attract funding are merely saying that because it’s what they hear from those very founders. Both are wrong.
Capital arrives where opportunity creates value, it doesn’t arrive in this regard as an act of charity toward places that need it. Venture capital operates like a wholesaler in a two-sided market: it curates startups and delivers them to institutional investors seeking returns. If the startups in a given region aren’t yet compelling enough (fundable, scalable, and defensible) capital has no rational incentive to show up regardless of how much the community needs it. Trying to attract investment before building genuinely investable companies is the startup ecosystem equivalent of trying to attract Walmart to a community that has no need for one.
The reason capital seems inaccessible in most underserved communities comes down to one of two things: either the startups haven’t been developed sufficiently to warrant it, or challenges remain that make investment riskier than it needs to be. Neither of those problems is solved by recruiting angel investors or hosting pitch competitions, they’re solved by building the community structures that produce better startups: experienced mentors who can be found, potential team members who can be connected, and founders who understand the difference between a startup and a small business (not the same thing and shouldn’t be given the same advice).
What cities, community builders, and economic development offices in these regions need to be doing is fixing the gaps in the ecosystem, not throwing money at the problem. The gaps are almost always the same: conflating startups with businesses and giving both bad advice, failing to connect founders with mentors and peers, and (most pervasively) enabling wrong assumptions about what building actually requires. It doesn’t require a degree. It doesn’t require a tech hub. It doesn’t require existing capital. It requires the marketing discipline to understand a market well enough to build what it actually wants, and the community infrastructure to support founders while they’re figuring that out.
What Scaling Actually Requires
Scaling a startup (and ecosystem), which is the part that most founders in underserved communities feel is out of reach, is a matter of understanding and executing on marketing, which is not the same as advertising or promotion. Marketing is the work of the market: understanding what customers want, at what price, in what form, through which channels, and why they would choose this over anything else available to them. Most founders in any community, well-funded or not, skip this work. They build what they want, what they think customers need, or what they’re technically capable of, which produces products that solve problems no one was urgently trying to solve. This failure mode is not correlated with income or geography; it happens everywhere, funded heavily and unfunded entirely.
Most cities, fail to actually understand what their “customers” want and need in this regard, because as I’ve noted, founders say it’s “capital” so city customer discovery in developing startup ecosystems invariably concludes, “we need to work on capital.” This is misleading feedback that marketers can suss out with a little first principles thinking (essentially, asking further, “why do you need that?”)
The mechanics of scaling, once a marketing foundation is in place, are largely free. An audience of 500,000 is achievable without spending a dollar on paid distribution, through content, through social media groups and newsletters, through platforms like Medium, Substack, Reddit, and LinkedIn that provide distribution infrastructure at no cost. Distribution is free. Even a target market being in another region or another country, is irrelevant. The founders in Lagos and rural Romania who are building scalable software ventures are not distributing locally, they are distributing globally, using the same free tools available to anyone with internet access.
Building scale into the solutions is an important part usually neglected, things like: referral mechanisms, community features, mobile-first design, and retention hooks, the structures through which users drive growth without requiring paid acquisition. One more piece is building with a genuine competitive advantage, and that advantage rarely lives in the solution itself; it lives in the team, the go-to-market strategy, relationships with partners or policymakers, or early mover positioning in a market that doesn’t yet have a clear leader. None of these require capital to design. Can you see how a founder and a startup ecosystem can determine and go at those? They require thinking, market research, and iteration, all of which are available to a founder in West Virginia at exactly the same cost as a founder in any city that considers itself a startup hub.
The Places That Seem Left Out Are Not Behind
In the 1990s and early 2000s, most startup knowledge, experience, and mentorship was geographically concentrated. Other places simply didn’t have it yet. Around the 2010s, as people, knowledge, and experience migrated and as distribution of information became effectively universal, some cities caught up; Austin, Nashville, Chicago, and others emerged as legitimate ecosystems not because they received capital injections but because the knowledge and community infrastructure developed. The places still feeling left out are not behind because building there is impossible, they’re behind because the wrong assumptions: that it requires capital, that it requires a tech hub, that it requires credentials and connections. This has been allowed to persist without challenge, and because the local institutions that could correct those assumptions have instead reinforced them by focusing on the wrong solutions, many cities are stuck.
The founders most likely to build something durable from a disadvantaged starting point are not the ones waiting for resources. They are the ones paying close enough attention to their own context to see opportunities that better-resourced founders in more established ecosystems simply cannot see, because they don’t live there. That contextual knowledge, that proximity to underserved markets, that firsthand understanding of what’s missing in a community… these are not handicaps! They are advantages, and the founders who recognize them as such are the ones who tend to build something worth building.
The startup infrastructure your region doesn’t have, likely isn’t what you actually need. What you need is what has always built scalable companies: a real understanding of a real market, the discipline to build what that market wants rather than what you wish it wanted, and enough community around you to keep going when the inevitable hard parts arrive. Two of those three things are entirely within reach right now, in any community, with the tools currently available at effectively zero cost.
Ten Things Your Community Can Do Right Now
Okay, so that’s a lot of bluster. And in complete fairness, I’m not in such circumstances, but I’m pissed off that founders struggle and that when we know (KNOW) that entrepreneurship and startups lift a community out of poverty, shame on us all for not doing more, effectively. Drawn from the playbook for building effective startup ecosystems, do this, right now…
1. Create one shared space and one shared calendar. Start a free Facebook Group or WhatsApp group for every entrepreneur, support program, SBDC, and local business owner in the region. Put everything in one place. Stop letting five organizations run five separate email lists that never talk to each other. One list. One place. Free.
2. Run a weekly open “office hours” session at the library or a local diner. The founders stuck between idea and first revenue need someone to talk to who has built something. Let me be clear though, no consulting and no providers of service! This is mentorship and if anyone helping is seeking clients, they need to be held out. Find three people locally who have run any kind of business and put them in a room every week. No curriculum, no agenda, just questions and answers. Free.
3. Start a peer group, not a program. Find six to ten founders at a similar stage and put them in a room monthly to share what’s working and what isn’t: no speakers, no presentations, no guest experts. Peer accountability consistently outperforms formal programming for early-stage founders and costs nothing to run.
4. Ask your SBDC, chamber, and any local support program one question: is anyone making money yet? Add that single question to every check-in and meeting. Not how many workshops people attended. Whether the businesses are producing income. Track it and share it publicly. What gets measured gets managed; right now, most communities are measuring the wrong things entirely.
5. Bring founder education to your city. Not an accelerator! Not a small business development program! Not marketing classes! Not coding classes! We have learned how to teach people to be founders, that’s what you need; the methodology works, the curriculum is established, and you can more or less just launch it.
6. Go to where people already are. Church halls, community centers, barbershops, the parking lot of the hardware store on Saturday morning; don’t wait for founders to find your program (because odds are you’re not promoting it well!). Show up where the community gathers and ask what people are trying to build. The talent that never shows up to events or registration pages is there.
7. Use your public library as a coworking space. Most public libraries have free meeting rooms, free internet, free printing, and free access to all the tools online. Designate one afternoon a week as an open working session for anyone building something. Ask the library director (they will almost certainly say yes, because no one ever asks).
8. Email your state economic development office, your nearest university extension program, and your local government economic development contact on the same day. Ask each one the same question: what resources exist for early-stage startup entrepreneurs in this zip code? You will get three different answers pointing to programs that don’t know each other exist. Connect them. That coordination role is almost always vacant and costs nothing to fill.
9. Find the one thing your region does that nowhere else does as well. Timber, agriculture, healthcare, a specific immigrant community with global trade ties, proximity to a military base, a particular manufacturing legacy; every region has something. Identify the one industry where local founders have knowledge and relationships an outsider couldn’t replicate and focus all startup conversations there first. A generalist tech hub takes a decade to build from nothing while serving generically. Building on existing local competence produces solutions in weeks.
10. Partner with an existing global model rather than inventing your own. Contact Founder Institute, Startup Grind, or explore a venture studio model with 9point8 as we did for Abilene, Texas. These organizations have frameworks, curricula, networks, and credibility already built. Bringing an existing model to your community is faster, cheaper, and more effective than building a local program from scratch with no track record and no network to draw from.
The startup infrastructure your region doesn’t have, likely isn’t what you actually need
I was asked this past week, by someone in a very economically challenged city, how they can start something without the resources so many others have when starting out. The answer is that perceiving that entrepreneurship requires resources is wrong.
Hear you go again, promoting the heretic ‘buy low/sell high’ philosophy. What are you thinking!?
Brilliant…again!
I might be borderline masochist LOL
“Flyover country” and former steel cities like Pittsburgh and so many other spots across the country – affordable, smart, liveable.
My apologies for taking up bandwidth so consistently.
I think you have a lot of the details right, but I think you have it framed from the wrong direction.
It’s not the poorest places. It’s the places where the ratio of human talent to local costs is the best. It’s the places where already existing local knowledge can be best combined to create something useful.
It’s places that are cheap.
Don’t conflate impoverished with cheap. Impoverished places can be very expensive. First rungs can be impossibly steep.
Cool and cheap can be very, very powerful together.
It’s places that bring the opportunity for hybridization that are often the best candidates for great progress. When people who approach an idea from different places get after it, that idea has a much better chance to exhibit staying power. Monocultures can do well, of course, but they can also be taken out directly by nearly any change in environment.
Artie Gold never apologize for your always valuable perspective
Framed to get the right attention. The point is that everyone is chasing capital and thinks it requires capital. They’re going at it wrong; ergo, poorer cities are just as capable.
Going to your local chamber and asking whether anyone’s making money are fighting words. Worse if you know another chamber is.
Elizabeth Horne bring it!
I can say, I am personally pursuing all of the items on that list, though my current location considers itself a Next Silicon Valley candidate. (I am on the entrepreneur side, not the decision-maker side…)
If anyone looks at modern Silicon Valley as a goal for replication, I suggest they are doing it wrong. Silicon Valley emerged from an agricultural center near the coast, got a break with the gold rush, and got its real start when Leland Stanford took money he made selling picks and shovels and started a little school named for his son. Everything starts somewhere (STARTups in particular).
Ecosystems are interdependent, Access to Capital may come second or third in the cycle…
“The places without legacy startup infrastructure aren’t behind. They’re unencumbered.”
Since 2018, my North Star has been the word “unaffiliated”.
“Unencumbered” just broke a barrier.
It amazes me that that some founders still think you need to be in a “tech hub” with a $2M seed round to build a software company in 2026.
There are many advantages of being far away from parasitic gatekeepers that plague most startup ecosystems, namely so you can focus on actually building your business and providing value for customers.
We’re going live this Monday to talk about practical ways founders can get the most out of SXSW on a budget, hope you can join!
https://www.linkedin.com/posts/antivc_if-your-fundraising-strategy-for-sxsw-involves-activity-7435709696759496705-U53s/
Wait, somebody doesn’t need to be paying roughly a million dollars a month for a squalid studio apartment in San Francisco to be doing agentic coding?
Jessica Sophia Wong, Eddy Hernández, Jessica Price, Demetrius Harris, Youmie Jean Francois, Jared Lerner, looking forward. Saleem Ahmad and Marc Nathan, cheers.
Anyone in Bakersfield, my door is open. And Paul, please say beauty salon, not just barbershop.
“Scarcity is the precursor to innovation.”
Completely agree with this! And doing.
You are spot on about capital in underserved areas. It aligns with the reality in Dallas; particularly South Dallas. Organizations hyper-focus on “fixing” founders, missing that the ecosystem infrastructure is weak. Scaling takes a functioning ecosystem, which drove me to create the Dallas Collaborative for Capital Access.
Perceived risk in disinvested communities blinds markets to real talent. I’ve mentored these founders, and their potential is undeniable. Data proves it. An analysis by Camoin Associates shows just $5M in debt capital in Southern Dallas yields a 1.22 multiplier, 57 jobs, and $3M in earnings. We must build better support structures for sure.
If risk wasn’t an issue, and the talent and opportunity clearly exist, would the perception finally change?
Tarsha Hearns, EDP “If risk wasn’t an issue, and the talent and opportunity clearly exist, would the perception finally change?” I think the inherent problem is perception in a way that has nothing to do with risk.
Cities hear founders say they need capital, so they focus on developing capital… which doesn’t manifest because no one is actually developing the founders properly… perpetuating the myth that it’s a lack of capital.
You’re right, talent and opportunity exist, and risk is always an issue… what’s missing is the functioning ecosystem and teaching how to start AND scale (the latter with which, 95% of startup programs I see are terrible). Without that, you have unnecessary risk coupled with higher fail rates because founders don’t know how to grow -> perpetual state of struggle.
Great list and thoughts. I’d add, 11. Learn the difference between a small business, angel/early exit company, and venture-scale business. Help steer people toward realistic goals. I think it’s worth considering building small and finding product/market fit then moving to a hub is worth it if you really want to go venture scale.
Michael Waggoner absolutely. The small business vs. startup point is in the article more, but as you might know, I beat that like a dead horse. I don’t think cities and local leaders grasp this substantially enough:
Treat startups like small businesses and they will fail
Treat small businesses like startups and they will fail
Aren’t we moving away from calling them “poor”? I’m not the biggest one for “PC” everything no matter what (especially no longer living in Portland) but I thought we were moving away from “poor.” Some of the “poorest” economic places have been the “richest” BY FAR, when it comes to things like…happiness, joy, community, etc. So, just some food for thought if you continue writing about these kind of topics.
I’m overdue to move to Claude but Chat said: low-income communities, economically disadvantaged areas, under-resourced neighborhoods, underserved communities, historically under-resourced communities, communities with limited access to resources, equity-priority communities.
Quinn Rose totally fair, I’m responding as I was asked. And “poorer” is a relative context, not a label; economically disadvantaged is more of a label.
Austin is poorer than New York, not under-resourced
Miami is poorer than Silicon Valley, but just as capable of entrepreneurship, because the point is that thinking it requires having funding or capital, is wrong
Paul O’Brien Thanks for the reply! Agree to agree 🙂
Quinn Rose Low-wealth is the new buzzword.
Paul O’Brien The 10 actionable steps prove rapid market entry is achievable. Partnering for growth in these regions maximizes strategic ROI.
Oh my goodness! Preach! That really highlights ecosystem gaps.
Prisca T. thank you because I’m a little disappointed in myself even only for suddenly realizing this. Came together quickly
I’d like to see you, Steve Case, and Nick Smoot do a panel on this
Steve Case Nick Smoot I can grab us a room for an impromptu during SXSW
Seriously, any time. Would make a great series of talks.
This is such a cool angle. I am building a product community, thinking wise. Would love some feedback:https://thefoundersproduct.substack.com/p/most-startups-start-backwards?utm_source=substack&utm_content=feed%3Arecommended%3Acopy_link
This end clinched it for me, “A startup is just a product decision made at a much larger scale.” Hard disagree. I appreciate you asking, but you might not like my answer.
In the last 25 years, we’ve seen Product take precedent over Marketing. And that shift has caused this product-oriented thinking that is largely why most startups now fail.
Before that, Marketing > Product. In fact, Product is just one of the 4Ps of Marketing (which is to say, it’s one of the fundamental deliverables of marketing). All of the questions you’re proposing founders seek answers to are the result of marketing. Most founders don’t do it; they’ve been misled to perceive marketing as promotion, what is done after the product is ready.
Most of the startup sector is trying to fix this. Call it Market Research, Talking to Customers, or Storytelling, it’s what comes first, foremost, and your quote might accurately read, “A startup is an innovation valuable in the market, determined by that market.”
I think this is an important narrative. I grew up in rural West Virginia and I now live in the capital city. My hometown is dying because they lost several community champions and are looking for new ways to rebuild. Thanks for sharing.
Have in my book a rather extensive section about how cities need to support ecosystem builders; the people already doing the work, usually voluntarily.