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Measure StartupCity’s success on its impact not its incubator

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Measure StartupCity’s success on its impact not its incubator

Geoff Wood

The idea behind StartupCity Des Moines has always been ambitious: create an incubator in the heart of the community that would nurture 10-15 startups in the first year, grow to as many as 30 startups by the third year and have those startups exit at such a frequency that the proceeds from the incubator’s 3 percent stake in each can be reinvested to cover the $750,000 [1] in (mostly) public loans they secured to get it off the ground as well as ongoing operating expenses [2].

To that end, it’s been a failure. That third year kicked off in October and to date they’ve had only 11 total companies in the incubator. While eight of these are operating in some capacity today none have had an exit and only four are attached to the incubator currently.

To the Des Moines startup community, however, StartupCity is a tremendous success and vital component of what many of us are trying to build.

StartupCity is Des Moines’ entrepreneurial center of gravity. It’s the place where the weight of our community is concentrated and the axis it rotates on. While it doesn’t encompass the whole of the community, it’s one floor of one tall building downtown where you can plug into the things that make more established ecosystems flourish: close proximity and a high density of people working on startups.

Capital Factory in Austin, Texas is one of my favorite examples of this (they also coined the term). Joshua Baer, the founder of that space recently described it, “Everywhere you go, people are working on tech startups. They're thinking about tech startups. There are investors and press and government officials and other people coming through to meet with the startups, and it's a community center where there are meet ups and events and classes and all kinds of other things going on to support that.”

In its life thus far, StartupCity has hosted over 100 educational and networking events and more than 4000 visitors. They’ve hosted local politicians, dignitaries from 18 countries, the CIO of the United States, economic development and university staff from around the country and one time Ashton Kutcher recorded a podcast there [3]. It’s our equivalent to Capital Factory.

While those statistics cover 27 operating months, one chief component was missing until recently: critical mass. Nearly a year before StartupCity’s launch, when Christian Renaud announced that he was working on the idea he said, “a key to the success of any incubator is critical mass. The startups need to learn from one another as they go, and take the best pieces from other's experience.” With the number of companies in the incubator perpetually below expectations, critical mass wasn’t something that was able to be achieved in the day-to-day work environment.

To their credit, Christian and Tej Dhawan recognized this and a year ago added coworking to StartupCity. Companies and individuals who want to take part in that environment but weren’t interested in or eligible for the incubator itself could join the space. While some people took to it right away, I didn’t start hanging out there until July. It was a great option for me at the right time but there were many days through the late summer/early fall when it was pretty much a ghost town.

Things changed in a big way in October. At the suggestion of people like Brad Dwyer and Kaylee Williams, the I/OWA Conference hosted a pre-conference day of coworking and workshops at StartupCity that demonstrated the potential of StartupCity to more than a hundred people. Workshops each hour, every coworking spot claimed and even a ping-pong tournament during lunch. Shortly thereafter, Brad and others moved their companies into the space full-time creating new energy, momentum and putting StartupCity on an exciting trajectory that continues today.

Between the incubator companies and the coworkers, there are 32 people who work from StartupCity on some sort of regular basis and that number continues to grow (there’s room to double that before things get uncomfortable).

The initial three years of funding will end in September of this year and Christian and Tej have been preparing the community for the past few months for the likelihood that StartupCity will go away—for sure in its current form and maybe all together—at that time. Regardless of that result and the failure of the incubator model, I’m sure of two things: a new entrepreneurial center of gravity for Greater Des Moines will emerge and every dollar our community has invested in StartupCity has been worth it.

[1] They’ve been frugal and only spent what they need (approximately half of this) [2] Original idea detailed here [3] Statistics were shared this week by Christian via email and are also here

Photo Credit: startupcitydsm.com