Startups Draw Talent and Opportunity to Cities

What if I told you a city’s “magnetism” doesn’t begin with a Fortune 500 relocating its headquarters, but with a small, scrappy startup raising its first round? Let’s talk about smarter economic development. Cities that craft startup ecosystems don’t just chase large employers; they become destinations for opportunity, pulling in both job-seekers and job creators. Interestingly, I said they don’t “just“ chase large employers because in fact, entrepreneurs need a sense of security that comes from being able to fall back on jobs – our work to attract employers to a city is important to entrepreneurship but I want to explore with you why startup ecosystem economic development is not the same as traditional economic development and how having a healthy ecosystem for entrepreneurs does far more than foster startups, it attracts talent and attention in a way that big companies can’t.

In the world of regional growth, you must draw a line between corporate / workforce development and entrepreneurial / startup support. If you don’t, you end up applying a one-size economic playbook to two different games, and losing. Let’s dig into why this matters, how people respond to “cities of opportunity,” the ideas in a compelling video you’ll embed, and a concrete playbook (with six to ten tactics) cities can deploy, with experienced, global startup programs as a critical lever.

Why “jobs” isn’t Enough: Opportunity and Culture Matter

We often hear, “People move to where the jobs are.” That’s true but incomplete. The decision to relocate is rarely binary. People also move to where opportunity feels alive. A city that markets itself purely as job provider is playing yesterday’s game because that person is just as likely to leave when their next opportunity is found elsewhere; a city that signals openness to new ventures, to risk, to creative hustle: that becomes a beacon.

Empirical research supports this. In studies of amenity?driven migration, researchers find that high-skilled workers are drawn not only to wages or employers, but to lifestyle, creative ecosystems, peer networks, and local innovation culture (e.g. Florida’s work on the “creative class”). Likewise, venture capital flows (and startup formation) cluster around ecosystems that offer dense networks, signaling effects, narrative legitimacy, brand, and local identity.

In practice, cities that succeed in building startup reputation (think Austin, Boulder, Tel Aviv, Berlin, Seattle) see a virtuous cycle: founders and investors land, create visible successes, the narrative strengthens, more talent moves, more startups launch, and eventually more stable companies emerge. The startup culture becomes a signal to both job-seekers (especially ambitious, early-career people) and job-creators (founders, investors) that “this place is possible.”

So yes, people will move to a job, but many also move to a place where creating a job feels possible. The difference is that startup cities attract both sides of that equation.

The Tension Between “jobs” and “startup opportunity”

One of the hardest realizations for cities is that people seeking employment move to where it is. Jobs in a company are not the same as jobs or opportunity in startups. Retaining the entrepreneurs is a matter of appreciating that that culture and that ecosystem is completely different than most of the workforce and employer base; there are people who will happily work for startups being underpaid, frankly, because they love it.

Workforce development (i.e. helping people land stable, sustainable work) and startup ecosystem development must co-exist. They are different gears. You can’t accelerate startups with the same incentives you use to land corporate headquarters.

People drawn by stable employment are not the same as those drawn by innovation, risk, and experiments. A city needs to staff two pipelines: (1) attract and grow companies that can employ at scale, (2) nurture startups so that founders, early employees, and investors see the city as fertile ground. These reinforce one another over time.

Why many cities fail (or underperform) on this distinction

Before prescribing what to do, let’s call out where many cities fall short.:

• Many economic development offices treat startups like “small business,” offering generic grants, ribbon-cutting accelerators, or “innovation districts” as real estate gimmicks rather than recognizing startups’ distinct risk, network, and ecosystem needs.
• They conflate incentives meant for large job-creating firms with incentives for early ventures, which have different cost structures, timelines, and risk profiles.
• They overemphasize events, accelerators, and pitch competitions (which are visible but often shallow) rather than deeper infrastructure (mentors, deal flow, narrative, talent pipelines).
• They neglect narrative, identity, and branding. Many regions lack a compelling “story” about innovation or opportunity, so even when startups exist, outsiders don’t notice them.
• They underestimate the role of policy, regulation, and governance. Zoning, broadband, tax regimes, procurement rules, local permitting, all these can strangle startups even if you have good programs.
• They ignore connectivity and network effects. Venture capital “avoids your startup ecosystem” often not because of idea scarcity, but because of lack of investor networks, mentor connections, and poor local signaling.

In short: cities try “innovation theater” (launch a shiny coworking center, host a demo day) instead of building the deeper scaffolding that turns one or two startups into ongoing momentum.

6 Considerations for Economic Development of Startups (a lens)

We can frame what a city should pay attention to through 6 perspectives:

1. Culture of competition, potential, creativity – you must signal that people can win, that risk is honored, that creativity isn’t shunned.
2. Reasonable wealth available – early exits, angel returns, serial founders; you need some wealth recycling in the system AND pipelines for investors from elsewhere.
3. Innovative employers – anchor companies with innovation DNA that can hire talent and spin out people/ideas while also creating stability when entrepreneurs need to fall back on a job.
4. Little to no government interference – avoid heavy regulation, protect founder autonomy.
5. Access to startup-experienced people – mentors, operators, serial founders, domain experts.
6. Credible and distinct promotion of the region – you must brand your startup identity credibly; not pretend you’re Silicon Valley while finding what is more meaningful about there than merely saying you’re great for “tech” or “startups.”

Cities that score poorly on one or more of these will lag. For example: lacking startup-experienced mentors kills founder success, lacking narrative kills investor interest, too much regulation kills experimenters.

VCs Avoid Weak Ecosystems – and What That Teaches Cities

If you’re like most cities with which I’m having conversations, you’re hearing entrepreneurs say they’re having trouble with funding and can’t find venture capital. Where you’re misinterpreting the problem expressed is in something we teach founders known as Perception Bias – you know you need active investors in your city and the “customer” for that, founders, are confirming it to be true. What that tends to set you down the path of doing as a city is building an accelerator or hosting demo days and startup awards, to get interested investors in the community and in front of some startups.

That sounds like the right thing to do as you perceive the problem to be consistent with what you think is the problem: local investors are a hard to find. The mistake made is that founders don’t need local capital, they need smart capital, ideally suited to what they’re doing. It doesn’t matter from where it comes.

The top reasons VCs skip your region are (in order) risk aversion (23%), limited network connections (21%), poor startup quality (15%), lack of investor awareness (12%), and infrastructure / regulatory barriers (10%).

The takeaway: VCs won’t show because of an event or accelerator branding, they come when risk feels lower, deal flow is visible, founders prove credibility, networks exist, and policy isn’t hostile. Cities must lower the systemic friction of investing – not just signal “come pitch us.”

This overlaps with the 6 considerations: you need access to experienced people, credible narrative, minimal interference, etc. Many cities try to bribe capital with panel discussions and meetups with a bottle of Cabernet Sauvignon, but fail to fix the upstream issues of founder support, deal quality, and network signal.

You don’t bootstrap a startup economy by replicating what you see elsewhere (accelerators, coworking, “innovation districts”), but by carefully layering local strengths, building trust, focusing on repeatable paths, and iterating steadily; adapt to local contexts, cluster around domain strength, and avoid the trap of copying shiny programs from other cities.

How cities can do better: 10 levers that shift from theater to engine

If you’re on a city council, economic development office, or chamber of commerce, heck, anyone reading this with perspective to the city in which you live, you can adopt these as strategic moves to better align with startup ecosystem logic:

1. Segment your economic development agenda
   Dedicate separate tracks for corporate / anchor recruitment & workforce development versus startup / entrepreneurial support. Don’t mix budgeting and leadership, or one will cannibalize the other.
2. Build and sustain founder mentorship & advisor networks
   Incentivize high-net-worth entrepreneurs, alumni founders, domain experts (e.g. from local industries) to mentor startups – you need startup experience more than know-how. Startup support fails when founders are alone or worse, misled.
3. Seed local angel funds or matchmaker platforms
   Rather than trying to bring in VCs directly, help local angels form syndicates, match co-investment, or seed “micro-funds.” These funds recycle local wealth into startups, building track record and confidence. Train people to be Angel Investors, we do this, ask me how.
4. Institutionalize founder support in public policy
   This means startup representation in zoning, permitting, procurement, tax, and infrastructure decisions. Let founders “sit at the table” when the city debates broadband, data access, mixed-use regulation, and even mobility.
5. Brand, narrative, and storytelling
   Create a distinct identity (not “Silicon whatever”) through stories, media, city marketing, success showcases, and consistent messaging. Get investor newsletters, spotlight startups, host regional pitch circuits. Visibility matters.
6. Talent pipelines into startups
   Work with universities, Founder Institute, vocational schools, even local high schools to expose students to startups (internships, hackathons, co-ops) so that talent feels startup is a path. Prevent “leakage” of creative youth into only safe employer roles because those that want to work in startup will leave town to do so.
7. Domain cluster strategy
   Rather than chasing technology broadly, lean into your local industrial strengths (e.g. health tech, ag tech, logistics, aerospace, energy) and help startups build in those domains where you have proximity advantage.
8. Light regulatory / compliance sandbox
   Offer experimental regulatory relief or fast routes to permit small pilot projects or prototyping zones (e.g. for autonomous vehicles, drones, clean energy) to reduce barrier for experimentation.
9. Measure and reward outcomes, not inputs
   Track metrics like number of startups surviving past 3 years, capital raised locally, exits, talent retention. Reward EDO and city staff not for how many events they host, but how many Entrepreneuring paths are catalyzed evident in what the founders establish as KPIs.
10. Leverage anchor firms as startup partners
    Encourage corporate R&D, procurement, or venture arms to partner with local innovation; imagine a city working with big local employers to pilot recruit founders or sponsor “intrapreneurs.” Those “innovative employers” help create demand for startup talent.

If you layer those levers intentionally (with feedback loops, consistent commitment, and avoiding vanity projects) you stand a real chance of turning from a city of jobs into a city of opportunity.

As a startup becomes a company, employment changes; the people who want to work on startups will likely move on to keep doing that in something else, if your city embraces entrepreneurship. As the startup matures to company, it creates jobs for everyone else.

Experience is Key so Appreciate Why Founder Institute is a Critical Path

In the work people like me do to develop meaningful ecosystems for entrepreneurs, let me first be clear that I’m not even about to promote Founder Institute; what I want you to appreciate is that you need access to experienced mentors, well development and tested methodology, and pathways for founders to investors well beyond the borders of your community. There are a handful of programs in the world so capable and if you’re doing things well for your startups, you’d have us all involved.

• FI provides a scalable, repeatable methodology for development and a founder onboarding system. It becomes a semi-outsourced engine for the “how to found” training and network infusion that many cities can’t build from scratch.
• A meaningful program works with local chapters in hundreds of cities, which means FI becomes a local “node” of global network, carrying credibility, curriculum, standards, and alumni connectivity into your region.
• We work in public affairs; engaging governments in policy, representation, regulatory advocacy, and education alignment. VC avoids cities not just because of lack of startups, but because of broken connections, weak communication, and poor public policy – ask for help intervening in these dimensions.
• A platform helps knit together network connections (mentors, investors, alumni) which is one of the top failures in a local ecosystem wherein even if you’re doing it well locally, who founders need are likely elsewhere.
• By standardizing founder onboarding and success ladders, Founder Institute helps cities avoid reinventing bad accelerators or weak programs. Instead, cities can integrate what is done well into their own playbook.

My peers in civic and policy matters will appreciate this most; that what you must be doing is coalition building so that various partners are working together to provide what they do best, embedded in local chapters, subsidizing participants, helping align curriculum with local industries, and using global networks and history to ensure mentors, capital, and visibility are part of the equation.

Move From “Jobs City” to “Opportunity City”

Cities that treat entrepreneurs as business owners – expecting them to fit into the same incentives as big employers – will lose the race for talent and innovation. What you really want is to become a place that draws people who want to build, risk, and create. Because as those people come, they build not only startups but also the human infrastructure (networks, stories, wealth) that transforms wanderers into permanent residents.

Job-seekers and startup-seekers are different audiences; your policy must reach both because startups and the reality they create for you of “opportunity” are the job creators. Fix the network, narrative, regulation, and mentorship frictions that repel VCs and founders. Act beyond hype and real estate; embed structural support. And partner with credible organizations to accelerate your learning and credibility.

Stop thinking about only chasing big companies and start designing your city for people who make things. Start demanding from your mayor, chamber, or EDO: “Where’s our entrepreneurial pipeline? What’s our narrative? How are we connecting founders and capital?” Your region’s next Amazon, Canva, or biotech pioneer is sitting in the wings, waiting for a place that believes in them.